Paid-up policies

(1) A policyholder who desires to discontinue further premium payments on a policy on which three or more years’ premiums have been paid shall, and if the policy has a cash surrender value, on application to the company, be entitled to receive, instead of that policy, a paid-up policy. (2) The paid-up policy shall be payable upon the happening of the contingency upon the happening of which the amount insured under the original policy would have been payable.