Every life policy form used by a domestic insurer shall be approved by the Commissioner prior to such issuance as provided in § 18306; provided that it shall contain in substance the following provisions:

(a) A provision that the insured, after three (3) months’ premiums have been paid, is entitled to a premium grace period of not less than thirty-one (31) days during which period of grace the policy shall continue in full force; provided that in case the policy becomes a claim during any period of grace, the amount of such premium due may be deducted from the amount payable under the claim;

(b) A provision that the policy shall be incontestable after it has been in force during the lifetime of the insured

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for a period of two (2) years from date of issue, except for nonpayment of premium;

(c) A provision that the policy as issued shall constitute the entire contract between the parties; provided that the insurer may make the application for the policy a part of the contract by endorsing it upon, or attaching it to, the policy;

(d) A provision that if the age of the insured has been misstated, the contract shall be valid but the amount payable under the policy shall be such as the premium would have purchased at the correct age in accordance with the table of premium rates of the insured;

(e) A provision that in the event of default of any premium payment after three (3) full annual premiums shall have been paid on such policy, the net value of such policy, which net value shall be at least equal to its entire net reserve at the date of default, less a surrender charge of not more than two and one-half percent (2 1/2%) of the face amount of the policy and less any indebtedness to the company on or secured by the policy, shall be applied as a single premium to the purchase of one of the following forms of insurance, unless the policy holder shall elect the cash surrender of the policy:

(1) Paid-up term insurance for such a period as the net value outlined above will purchase at the net single premium at the attained age of the insured at the time of the lapse;

(2) Paid-up insurance payable at the time and on the conditions named in the policy for such an amount as the net value outlined above will purchase at the net single premium at the attained age of the insured at the time of the lapse;

(f) A provision that in event of default of any premium payment after three (3) full annual premiums shall have been paid, the policy may be surrendered to the insurer within sixty (60) days after date of premium default for a

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cash value which shall be at least equal to the sum which would be otherwise available for the purchase of paid-up insurance as provided above if the insured so elects.

SOURCE: GC § 43163.