Non-forfeiture of ordinary policies

(1) An ordinary policy shall not be forfeited by reason only of the non-payment of any premium (in this section referred to as the overdue premium) if143 (a) three or more years’ premiums have been paid on the policy; and (b) the surrender value of the policy (calculated as at the day immediately preceding that on which the overdue premium falls due) exceeds the sum of the amount of the debts owing to the company under, or secured by, the policy, and the amount of the overdue premium. (2) The company may, until payment of the overdue premium, charge compound interest on it, on terms not less favourable to the policyholder than such terms (if any) as may be specified in the policy. (3) The over due premium and any interest charged on it under this section and unpaid shall for the purposes of this Act be deemed to be a debt owing to the company under the policy. (4) Without affecting the generality of the foregoing provisions of this section, an ordinary policy on which three or more years’ premiums have been paid shall not be forfeited by reason only of the non payment of a premium unless, on or after the day on which the premium fell due– (a) the company liable under the policy serves a notice on the policyholder stating– (i) the amount due or payable to the company at the date of the notice in respect of the policy; (ii) that the policy will be forfeited at the end of twenty- eight days after the date of the notice if a sufficient sum is not paid to the company in the meantime; and 144 (b) a period of at least thirty days has passed after the service of the notice. (5) For the purposes of sub-section (4), a notice posted to the last known address of the policyholder shall be deemed to be a notice on the policyholder.