Title 16. Life Insurance and Annuities — Subtitle 2. Life Insurance Policy Provisions
Statutes in effect as of October 1, 2026.
Md. Code Ann., Ins. § 16-201 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–201LinkCopy Citation
(a)
Except as otherwise provided in this section, a policy of life insurance may not be delivered or issued for delivery in the State unless it contains in substance each applicable provision required by §§ 16-202 through 16-213 of this subtitle.
(b)
This section does not apply to:
(1)
group life insurance;
(2)
pure endowments;
(3)
annuity contracts; or
(4)
a provision of a policy of life insurance or contract supplemental to the policy that relates to disability benefits or to additional benefits for death by accident or accidental means.
(c)
To the extent that a provision or part of a provision required by this subtitle does not apply to a single premium or term policy, the provision or part of the provision need not be included in the policy.
Md. Code Ann., Ins. § 16-202 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–202LinkCopy Citation
(a)
(1)
Each policy of life insurance shall contain a provision that a grace period shall be allowed within which the payment of any premium after the first may be made.
(2)
The grace period shall be:
(i)
30 days;
(ii)
at the option of the insurer, 1 month of not less than 30 days; or
(iii)
4 weeks, for a policy of industrial life insurance with premiums payable more frequently than monthly.
(b)
The policy continues in full force during the grace period.
(c)
If a claim arises under the policy during the grace period, the amount of any premium due or overdue may be deducted from the policy proceeds.
Md. Code Ann., Ins. § 16-203 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–203LinkCopy Citation
(a)
Each policy of life insurance shall contain a provision that the policy is incontestable, except for nonpayment of premiums, after the policy has been in force during the lifetime of the insured for 2 years after its date of issue.
(b)
The incontestability provision described in subsection (a) of this section does not apply to policy provisions that relate to disability benefits or to additional benefits for death by accident or accidental means.
(c)
A provision in a policy of life insurance that provides that the policy is incontestable after a specified period:
(1)
precludes only a contest of the validity of the policy; and
(2)
does not preclude the assertion of defenses based on provisions in the policy that exclude or restrict coverage, whether or not the restrictions or exclusions are excepted in the provision.
Md. Code Ann., Ins. § 16-204 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–204LinkCopy Citation
(a)
Each policy of life insurance shall contain a provision that the policy, or the policy and the application for the policy if a copy of the application is endorsed on or attached to the policy when issued, constitute the entire contract between the parties.
(b)
If the application is made part of the policy, the policy shall contain a provision that the statements in the application, in the absence of fraud, are considered representations and not warranties.
Md. Code Ann., Ins. § 16-205 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–205LinkCopy Citation
(a)
Each policy of life insurance shall contain a provision that if the age of the insured or of any other individual whose age is considered in determining the premium or benefit has been misstated, the amount payable or benefit accruing under the policy shall be the amount or benefit that the premium would have purchased had the correct age been stated.
(b)
(1)
If an application or policy expressly limits the insurable age and the correct age at the date of issue is outside the insurable age limit, the policy is voidable at the option of the insurer during the lifetime of the insured, but not later than 3 years after the date of issue of the policy.
(2)
If the insurer exercises the option to void the policy, the insurer shall return to the insured the aggregate of gross premiums charged on the policy, less:
(i)
dividends paid in cash or used to pay premiums on the policy; and
(ii)
any indebtedness to the insurer on the policy, including interest due and accrued.
(3)
The insurer may not exercise the option to void the policy more than 30 days after the correct age is established.
(4)
Subject to paragraph (5) of this subsection, if the insurer does not exercise the option to void the policy or if the age discrepancy is not discovered within 3 years after the date of issue of the policy, the insurer may not void the policy and the amount payable shall be determined in accordance with subsection (a) of this section.
(5)
If the premium rates of the insurer at the date of issue of the policy do not include a rate for the correct age, the amount payable shall be determined in accordance with established actuarial principles.
Md. Code Ann., Ins. § 16-206 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–206LinkCopy Citation
(a)
(1)
Each participating ordinary life insurance policy shall contain a provision that:
(i)
each year the insurer shall determine and apportion any divisible surplus under the policy that will accrue on the policy anniversary or other dividend date specified in the policy; and
(ii)
the dividends arising from the apportionment shall be credited each year beginning not later than the end of the third policy year.
(2)
Each participating industrial life insurance policy shall contain a provision that:
(i)
each year the insurer shall determine and apportion any divisible surplus under the policy that will accrue on the policy anniversary or other dividend date specified in the policy; and
(ii)
the dividends arising from the apportionment shall be credited each year beginning not later than the end of the fifth policy year.
(3)
The policy may not contain a provision that the payment of any dividend payable under this section is contingent on the payment of any premium due on or after the date when the dividend becomes payable.
(b)
(1)
Subject to paragraph (2) of this subsection, each policy shall contain a provision that the party entitled to the dividend may elect to have the dividend:
(i)
paid in cash;
(ii)
applied to the payment of any premium then due;
(iii)
applied to provide paid-up additions to the policy; or
(iv)
left to accumulate at an interest rate not less than the rate specified in the policy.
(2)
A term policy need not provide the dividend options specified in paragraph (1)(iii) and (iv) of this subsection.
(3)
Each participating ordinary life insurance policy shall contain a provision that a specified option becomes effective unless the party entitled to the dividend notifies the insurer in writing of a different option within 30 days after the date on which the dividend is payable.
(c)
If a participating policy provides that the benefit under any paid-up nonforfeiture provision is to be participating, the policy may provide that any divisible surplus apportioned while the insurance is in force under the nonforfeiture provision shall be applied in any manner specified in the policy.
(d)
This section does not prohibit an insurer from granting to the party entitled to the dividends the right to elect another dividend option offered by the insurer in addition to the options required by this section, whether or not the additional option is specified in the policy.
(e)
This section does not prohibit payment of additional dividends on default of payment of premiums or on termination of the policy.
Md. Code Ann., Ins. § 16-207 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–207LinkCopy Citation
(a)
This section does not apply to:
(1)
term policies;
(2)
term insurance benefits provided by rider or supplemental policy provisions; or
(3)
industrial life insurance policies.
(b)
Each policy of life insurance shall contain a provision that, on proper assignment or pledge of the policy and on the sole security of the policy, the insurer shall advance an amount equal to, or at the option of the party entitled to the advance, an amount not exceeding the loan value of the policy:
(1)
after premiums have been paid for at least 3 years;
(2)
after the policy has a cash surrender value; and
(3)
while no premium is in default beyond the grace period.
(c)
(1)
Except as provided in paragraph (2) of this subsection and subject to § 16-208 of this subtitle, the insurer may charge interest on the advance at a rate specified in the policy not exceeding an effective rate of 6% per year.
(2)
The Commissioner may authorize an interest rate exceeding an effective rate of 6% but not exceeding 8% per year if the Commissioner finds that a greater rate will reduce the net cost of life insurance offered by the insurer in direct relationship to the revenue from the increase.
(d)
(1)
Subject to paragraph (2) of this subsection, the loan value of a policy shall at least equal the cash surrender value of the policy at the end of the current policy year.
(2)
In determining the cash surrender value of a policy, the insurer may deduct from the loan value or from the proceeds of the loan:
(i)
any existing indebtedness to the insurer not already deducted including any interest then accrued but not due;
(ii)
any unpaid balance of the premium for the current policy year; and
(iii)
interest on the loan to the end of the current policy year.
(e)
Each policy may also contain a provision that:
(1)
interest on any indebtedness that is not paid when due shall be added to the existing indebtedness and shall bear interest at the same rate; and
(2)
the policy terminates if:
(i)
the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value of the policy; and
(ii)
at least 30 days before termination, the insurer mails notice to the last known address of the insured or policy owner and of any assignee of record at the home office of the insurer.
(f)
Each policy shall allow the insurer to defer granting a loan, other than for the payment of a premium to the insurer, for 6 months after application for the loan.
(g)
Except for those policies that require weekly premium payments, each policy shall provide for an automatic premium loan, subject to an election by the party entitled to elect.
Md. Code Ann., Ins. § 16-208 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–208LinkCopy Citation
(a)
(1)
In this section the following words have the meanings indicated.
(2)
“Policy” includes:
(i)
a certificate issued by a fraternal benefit society that provides for policy loans; and
(ii)
an annuity contract that provides for policy loans.
(3)
“Policyholder” includes:
(i)
the owner of a policy; and
(ii)
the person designated to pay premiums as shown on the records of the life insurer.
(4)
“Policy loan” includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as the premiums fell due.
(5)
“Published monthly average” means:
(i)
Moody’s corporate bond yield average - monthly average corporates as published by Moody’s Investors Service, Inc. or its successor; or
(ii)
if the Moody’s corporate bond yield average - monthly average corporates is not published, a substantially similar average that the Commissioner establishes by regulation.
(b)
Each policy of life insurance issued on or after July 1, 1983, shall contain a provision that:
(1)
allows a maximum interest rate on a policy loan, including the interest rate charge on reinstatement of a policy loan during and after any lapse of a policy, not exceeding an effective rate of 8% per year; or
(2)
allows an adjustable maximum annual interest rate on a policy loan, including the interest rate charge on reinstatement of a policy loan during and after any lapse of a policy, set by the insurer as allowed by law not exceeding the greater of:
(i)
the published monthly average for the calendar month ending 2 months before the date the rate is determined; or
(ii)
the annual rate used to calculate the cash surrender values under the policy during the applicable period plus 1%.
(c)
(1)
If the maximum rate of interest is determined under subsection (b)(2) of this section, the policy shall include provisions that disclose the frequency at which the rate will be determined for the policy.
(2)
The maximum annual interest rate for each policy with an adjustable policy loan interest rate must be determined at regular intervals at least once every 12 months, but not more than once in any 3-month period.
(d)
For a policy with an adjustable policy loan interest rate, at the intervals specified in the policy:
(1)
the interest rate may be increased if the calculation under subsection (b)(2) of this section would increase the annual rate by at least 0.5%; and
(2)
the interest rate shall be reduced if the calculation under subsection (b)(2) of this section would reduce the annual rate by at least 0.5%.
(e)
(1)
This subsection applies only to a policy with an adjustable policy loan interest rate.
(2)
When a cash loan is made, the life insurer shall notify the policyholder of the beginning annual interest rate on the loan.
(3)
When a premium loan is made, the life insurer shall notify the policyholder as soon as is reasonably practical after making the initial loan of the beginning annual interest rate on the loan.
(4)
The life insurer shall give reasonable advance notice to policyholders with outstanding loans of any increase in interest rates.
(5)
The notices required under this subsection shall include the substance of the relevant provisions of subsections (b) and (c)(2) of this section.
(f)
(1)
This subsection applies only to a policy with an adjustable policy loan interest rate.
(2)
The loan value of the policy shall be determined under Subtitle 3 of this title.
(3)
A policy may not terminate during a policy year solely as the result of a change in the interest rate during the policy year.
(4)
The life insurer shall maintain coverage during the policy year until the time that the policy would otherwise have terminated had there been no change in interest rate during the policy year.
(g)
Unless made specifically applicable to policy loan interest rates, other provisions of law do not apply to policy loan interest rates.
(h)
On request, a life insurer shall notify the policyholder each year of the cash value of the policy for the current policy year.
(i)
A life insurer that offers policies with an adjustable policy loan interest rate shall establish a written pricing or dividend policy that provides that the policyholders shall receive the benefits from increased earnings of the insurer that result from the use of an adjustable rate by receiving higher dividends, higher cash values, lower premiums, or a combination of benefits.
Md. Code Ann., Ins. § 16-209 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–209LinkCopy Citation
If a policy of life insurance provides that the proceeds may be paid in installments or as an annuity, the policy shall contain a provision that so states and shall include a table that shows the amount and period of the installment or annuity if determinable when the policy is issued.
Md. Code Ann., Ins. § 16-210 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–210LinkCopy Citation
(a)
Each policy of life insurance shall contain a provision that, subject to subsection (b) of this section, a policy of industrial life insurance will be reinstated within 2 years and any other policy of life insurance will be reinstated within 3 years after the due date of the first premium in default on:
(1)
written application for reinstatement;
(2)
the production of evidence of insurability satisfactory to the insurer; and
(3)
the payment of all premiums in arrears and the payment or reinstatement of any other indebtedness to the insurer on the policy, with interest on the premiums and other indebtedness at a specified rate not exceeding an effective rate of 6% per year compounded annually.
(b)
The policy shall provide that reinstatement is not allowed if:
(1)
the policy has been surrendered for its cash surrender value;
(2)
the cash surrender value of the policy has been exhausted because of policy indebtedness; or
(3)
any paid-up term insurance has expired.
Md. Code Ann., Ins. § 16-211 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–211LinkCopy Citation
(a)
Each policy of life insurance shall contain a provision that when benefits become payable because of the death of the insured, settlement shall be made on receipt of proof of death and, at the insurer’s option, on surrender of the policy, proof of the interest of the claimant, or both.
(b)
The provision also shall state that benefits include the refund of premiums paid after the month in which death occurred.
Md. Code Ann., Ins. § 16-212 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–212LinkCopy Citation
(a)
(1)
Each policy of life insurance shall have the name of the beneficiary designated on the policy, or in the application or another form if attached to the policy, with a reservation of the right to designate or change the beneficiary after the policy is issued, unless the beneficiary is irrevocably designated.
(2)
An insurer may include in the policy a provision that a designation or change of beneficiary is not binding on the insurer until endorsed on the policy or otherwise accepted by the insurer.
(b)
(1)
Subject to paragraph (2) of this subsection, a policy of life insurance may provide that the insurer may make a payment under the policy to:
(i)
the estate of the insured;
(ii)
any relative of the insured by blood, legal adoption, or connection by marriage; or
(iii)
a person that appears to the insurer to be equitably entitled to the benefits because the person is a named beneficiary or has incurred expenses for the maintenance, medical attention, or burial of the insured.
(2)
The insurer may make a payment under paragraph (1) of this subsection only if:
(i)
within the period stated in the policy, which may not be less than 30 days after the death of the insured, the beneficiary designated in the policy does not make a claim under the policy or does not surrender the policy with proof of death;
(ii)
the beneficiary is the estate of the insured;
(iii)
the beneficiary is a minor;
(iv)
the beneficiary dies before the insured; or
(v)
the beneficiary is not legally competent to give a valid release.
(3)
A policy of life insurance may include a provision that is similar to that described in paragraphs (1) and (2) of this subsection and is applicable to any other payment due under the policy.
(4)
A policy of industrial life insurance also may provide that the insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life of the insured.
Md. Code Ann., Ins. § 16-213 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–213LinkCopy Citation
(a)
A policy of life insurance other than a policy of group life insurance may not be delivered or issued for delivery in the State unless the policy has a legible and brief description of the policy on the first page of the policy.
(b)
The brief description shall include:
(1)
the title or type or plan of policy, including the term “industrial” or “wholesale” if applicable;
(2)
how long premiums are to be paid;
(3)
if and when the premium may change, except for a change because of a supplementary agreement;
(4)
if the benefit is not level, the use of the term “graded benefit” or a similar term to so indicate;
(5)
whether the policy is participating or nonparticipating;
(6)
if the policy is written on a rated underwriting basis, the terms “substandard class” or “rated class” or a substantially similar term; and
(7)
if the policy provides for the return of premiums as an additional benefit, the period during which the benefit is applicable.
(c)
Notwithstanding subsections (a) and (b) of this section, the brief description need not contain the items of information described in subsection (b) of this section, except for the items described in subsection (b)(1) and (5) of this section, if in the opinion of the Commissioner any of those items are:
(1)
already contained in and presented conspicuously in tabular form on the first page of the policy; or
(2)
presented conspicuously elsewhere in the policy and referred to in the description on the first page of the policy.
Md. Code Ann., Ins. § 16-214 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–214LinkCopy Citation
A policy of life insurance may include a rider or supplemental policy provision that offers an insured or certificate holder reimbursement or payment for long-term home health care or long-term care in a nursing home or other related institution:
(1)
instead of or in addition to benefits payable because of the death of the insured or certificate holder; or
(2)
instead of all or part of the cash surrender or other nonforfeiture value of the policy.
Md. Code Ann., Ins. § 16-215 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–215LinkCopy Citation
(a)
Except as otherwise provided in this section, a policy of life insurance may not be delivered or issued for delivery in the State if the policy excludes or restricts liability for death that is caused in a specified manner or occurs while the insured has a specified status.
(b)
(1)
Except as provided in paragraph (2) of this subsection, a policy of life insurance may contain a provision that excludes or restricts coverage for death under any of the following circumstances:
(i)
death as a direct or indirect result of:
(1)
a declared or undeclared war;
(2)
action by military forces;
(3)
an act or hazard of a declared or undeclared war or of an action by military forces;
(4)
service in the military forces or in civilian forces auxiliary to the military forces; or
(5)
any cause while the insured is a member of the military forces of any country at war, declared or undeclared, or of any country engaged in an action by military forces;
(ii)
death as a result of aviation or air travel;
(iii)
death that occurs within 2 years after the date of issue of the policy as a result of a specified hazardous occupation or avocation;
(iv)
death that occurs within 2 years after the date of issue of the policy while the insured resides outside of the continental United States and Canada; or
(v)
death that occurs within 2 years after the date of issue of the policy as a result of suicide while sane or insane.
(2)
A policy of life insurance may not be delivered or issued for delivery in the State if the policy excludes or restricts liability for death that is the result of an act of terrorism that the covered person did not commit and in which the covered person did not participate.
(3)
If a policy contains an exclusion or restriction listed in this subsection, the policy also shall provide that, for death under the circumstances to which the exclusion or restriction applies, the insurer shall pay a determinable amount of at least:
(i)
the reserve calculated in accordance with the Commissioner’s reserve valuation method on the basis of the mortality table and interest rate specified in the policy for the calculation of nonforfeiture benefits; or
(ii)
if the policy does not provide nonforfeiture benefits, the reserve calculated in accordance with a mortality table and interest rate determined by the insurer and specified in the policy.
(4)
The table and interest rate used under paragraph (3) of this subsection must be acceptable as a standard for the valuation of the policy in accordance with Title 5, Subtitle 3 of this article with adjustment for indebtedness or dividend credit.
(c)
This section does not apply to:
(1)
group life insurance;
(2)
reinsurance; or
(3)
a provision in a policy of life insurance that relates to additional disability benefits or to additional benefits for death by accident or accidental means.
(d)
This section does not prohibit any policy provision that in the opinion of the Commissioner is more favorable to the policyholder than a provision allowed by this section.
(e)
Notwithstanding any other provision of law, in any newly issued policy of life insurance, the 2-year exclusion for death as a result of suicide allowed in subsection (b)(1)(v) of this section is deemed to begin on the date on which the insurer first issued a life insurance policy to the insured except that:
(1)
the exclusion for death as a result of suicide may begin on the date of issue of the new policy if the prior policy terminates:
(i)
before the date of issue of the new policy; or
(ii)
more than 12 months after the date of issue of the new policy;
(2)
if the newly issued policy provides death benefits in excess of the amount of death benefits payable under the prior policy, the exclusion for death as a result of suicide as to the excess amount of death benefits only may begin on the date of issue of the new policy; and
(3)
for purposes of the exclusion for death as a result of suicide, if more than one prior policy is terminated within the 12-month period specified in item (1) of this subsection, the suicide exclusion period for the amount of death benefits represented by the terminated policies is deemed to have begun on the dates of issue of those policies.
Md. Code Ann., Ins. § 16-216 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–216LinkCopy Citation
(a)
Subject to subsection (b) of this section, a policy of life insurance may not contain:
(1)
a provision that the insurer may reduce or deny liability under the policy because the insured has previously obtained other insurance from the same insurer;
(2)
a provision that gives the insurer the right to declare the policy void because the insured has had a disease or ailment, whether specified or not, or has received institutional, hospital, medical, or surgical treatment or attention; or
(3)
a provision that gives the insurer the right to declare the policy void because the insured has been rejected for insurance, unless the right is conditioned on a showing by the insurer that knowledge of the rejection would have led to a refusal by the insurer to issue the policy.
(b)
Subsection (a)(2) of this section does not prohibit a policy provision that gives the insurer the right to declare the policy void if:
(1)
the insured has received institutional, hospital, medical, or surgical treatment or attention within 2 years before the policy was issued; and
(2)
the insured or a claimant under the policy fails to show that the condition occasioning the treatment or attention was not serious or was not material to the risk.
Md. Code Ann., Ins. § 16-217 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–217LinkCopy Citation
A policy of wholesale life insurance may not be delivered or issued for delivery in the State unless:
(1)
the policy contains the provisions and conforms to the requirements that the Commissioner sets by regulation; and
(2)
a copy of the form for the policy has been filed under § 12-203 of this article and approved by the Commissioner.
Md. Code Ann., Ins. § 16-218 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–218LinkCopy Citation
A policy of life insurance may include a rider or supplemental policy provision that operates to safeguard the contract from lapse in the event of involuntary unemployment.
Md. Code Ann., Ins. § 16-219 (2026)
Title 16. Life Insurance and Annuities
Subtitle 2. Life Insurance Policy Provisions
§ 16–219LinkCopy Citation
(a)
(1)
If a policy of universal or variable life insurance contains a provision that allows a policyholder to reduce the face amount of the policy, the insurer shall provide a written notice to the policyholder.
(2)
The notice shall state:
(i)
that the policyholder’s policy allows for a reduction of the face amount of the policy as an option to retain coverage;
(ii)
the amount to be paid to prevent the policy from lapse; and
(iii)
the insurer’s customer service telephone number.
(b)
The notice shall be sent to a policyholder’s last known address:
(1)
at the beginning of the grace period under § 16–202 of this subtitle; and
(2)
at least 30 days before termination of coverage.