A. No life insurer shall deliver or issue for delivery in this state:

(1) as part of or in combination with any life insurance, endowment or annuity contract, any agreement or plan, additional to the rights, dividends and benefits arising out of any such contract, which provides for accumulation of profits over a period of time and for payment of all or part of such accumulated profits only to members or policyholders of a designated group or class who continue as members or policyholders until the end of a specified or ascertainable period;

(2) any "registered" policy; that is, any policy (other than one "registered" as a security under applicable state or federal law) purporting to be "registered" or otherwise specially recorded, with any agency of this or any other state or jurisdiction, or with any bank, trust company, escrow company or other institution other than the insurer, or purporting that any reserves, assets or deposits are held, or will be so held, for the special benefit or protection of the holder of such policy by or through any such agency or institution;

(3) any policy or contract under which any part of the premium or of funds or values arising from the policy or contract or from investment of reserves, or from mortality savings, lapses or surrenders, in excess of the normal reserves or amounts required to pay death, endowment and nonforfeiture benefits in respective amounts as specified in or pursuant to the policy or contract, are on a basis not involving insurance or life contingency features:

(a) to be placed in special funds or segregated accounts or specially designated places; or

(b) to be invested in specially designated investments or types thereof, and the funds or earnings thereon to be divided among the holders of such policies or contracts, or their beneficiaries or assignees. This paragraph does not apply to any policy or contract authorized under Section 395 [59A-20-30 NMSA 1978] (Variable Contract Law) of this article;

(4) any policy providing for segregation of policyholders into mathematical groups and providing benefits for a surviving policyholder arising out of the death of another policyholder of such group, or under any other similar plan;

(5) any policy providing benefits or values for surviving or continuing policyholders contingent upon lapse or termination of the policies of other policyholders whether by death or otherwise;

(6) any policy providing that on death of anyone not specifically named therein, the owner or beneficiary of the policy shall receive the payment or granting of anything of value. This provision shall not be deemed to prohibit family policies insuring unspecified members of a family, nor to prohibit payment to unspecified beneficiaries of a class which has been expressly designated as such by the insured or policy owner;

(7) any policy containing or referring to one or more of the following provisions or statements:

(a) investment returns or profit sharing, other than as participation in divisible surplus of the insurer under a regular participation provision as provided for in Section 373 or Section 387 [59A-20-8 or 59A-20-22 NMSA 1978] of this article.

(b) special treatment in determination of any dividend that may be paid as to such policy;

(c) reference to premiums as "deposits";

(d) relating policyholder interest or returns to those of stockholders; or

(e) that the policyholder as a member of a select group will be entitled to extra benefits or extra dividends not available to policyholders generally.

B. This section does not prohibit provision, payment, allowance, or apportionment of regular dividends or "savings" under regular participating forms of policies or contracts, or any values, benefits or returns lawfully provided under Section 395 [59A-20-30 NMSA 1978] (Variable Contract Law) of this article.

History: Laws 1984, ch. 127, § 394.

Section not circumvented by foreign divisions. — A foreign insurance company operating in New Mexico cannot sell dual pay policies on lives of New Mexicans and place them in divisions established in some state other than New Mexico. 1943 Op. Att'y Gen. No. 43-4324.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 43 Am. Jur. 2d Insurance §§ 241, 472.

44 C.J.S. Insurance § 349.