This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Policy and Application - Entire Contract. 1. This Policy and the application herefor (a copy of which is attached hereto) constitute the entire contract between the parties. All statements made by the Insured shall, in the absence of fraud, be deemed representations and not warranties, and no statement of the Insured shall avoid this Policy or be used in defense of a claim hereunder unless it is contained in the said application and a copy thereof is attached to this Policy when issued.
Suicide and Aviation. 4. If within one year from the date hereof the Insured shall die in consequence of having engaged in an aerial flight, or if he shall, whether sane or insane, die by his own hand, the liability of the Company shall be limited to the amount of the reserve hereon.
Incontestability. 5. This Policy shall be incontestable after one year from its date of issue except for non-payment of premium. If the age of the Insured has been misstated, and the error shall not have been adjusted during his lifetime, the amount payable shall be such as the premium paid would have purchased at the correct age.
Premium Payments. 6. The insurance under this Policy is based upon annual premiums payable in advance, but payments may be made semi-annually or quarterly, in advance, at the premium rates now in use by the Company. Change may be made on any anniversary of the Policy. No premium after the first will be considered paid (except it be duly charged as a premium loan) unless a receipt, signed by the President or Secretary of the Company and countersigned by an agent author used to receive such premium, shall have been given therefor. Upon default in the payment of any premium this Policy shall cease and determine except as hereinafter provided.
Grace. 7. A grace of thirty-one days, during which time the insurance will remain in full force, shall be allowed for the payment of every premium except the first.
Reinstatement. 8. This Policy may be reinstated at any time within five years succeeding default in premium payment, upon evidence satisfactory to the Company of the. insurability of the Insured and payment of all premium arrears with interest at the rate of five per cent. per annum, and the payment or reinstatement of any indebtedness which existed at the time of such default, with interest from that date.
Dividend Options. 9. This Policy while in force except under the extended term insurance provision shall participate in the surplus of the Company. The Company will annually determine and account for the divisible surplus accruing hereon until all such surplus found to have arisen from this Policy shall have been returned. Any such dividend of surplus may at the option of the Insured: (a) be withdrawn in cash; or (b) be applied towards the payment of premium hereon; or (c) be applied to the purchase of a participating paid-up addition to this Policy; or (a) be left to accumulate, subject to withdrawal,,at such a rate of interest not less than three per cent., credited annually, as may be determined by the Company. Unless the Insured shall otherwise elect in writing dividends will be paid in cash.
10. Non-forfeiture, Surrender and Loan Provisions. The following provisions shall become operative only after payment of premiums for two full years and no request, revocation or change in connection with such provisions shall be effective until duly made in writing and filed at the Home Office of the Company:
Basis of Surrender Values. 10a. The cash surrender value of this Policy at any time prior to default in premium payment or within the grace period, shall be the then reserve on the Policy and any dividend additions then existing, less any indebtedness to the Company on account hereof, and less also a surrender charge which during the fifth or any previous policy year shall be at the rate of ten dollars per $1,000 of insurance and thereafter shall diminish annually at the rate of one dollar per $1,000 of insurance.
Premium Loans. 10b. Upon request of the Insured, and Assigns if any, made prior to default in premium payment and remaining unrevoked, the premiums thereafter falling due and not paid will be charged as a premium loan with interest at the rate of six per cent. per annum, provided the then cash surrender value be sufficient to cover such loan. Any premium loan may be repaid at any time.
Extended Insurance. 10c. Upon default in payment of premium, unless paid within the grace period, the amount of this Policy and any existing dividend additions, less any indebtedness to the Company on account hereof, shall be extended automatically as non-participating term insurance for such time from the date of default as the then cash surrender value will provide at the net single premium rate for the attained age of the Insured according to the American Experience Table of Mortality with interest at three per cent.
Paid-up Insurance. lOd. Participating paid-up insurance for such an amount as the then cash surrender value, including any policy loan indebtedness which shall remain as a lien against this Policy, will provide at the net single premium rate for the attained age of the Insured according to the American Experience Table of Mortality with interest at three per cent., may be secured in lieu of automatic extended term insurance upon written request of the Insured, with the Beneficiary and Assigns, if any, made prior to default in premium payment or within the grace period.
l0e. Change from automatic extended term insurance to paid-up insurance, or vice versa, may be made in accordance with the respective provisions therefor at any time prior to default in premium payment or within the grace period.