SECTION 3.202. Specification of Certain Participating Policies

Consistent with the definitions and principles contained and expressed in §3.201 of this title (relating to Definition of Certain Participating Policies), and without limiting their generality, the types of policies described in paragraphs (1) and (2) of this section are also defined as "certain participating" policies.

(1) Charter or founder's policies. A "charter policy" or "founder's policy" is that form of life insurance policy or annuity contract, usually issued by a newly organized insurer, which is sold on the basis that its availability will be limited to a specific predetermined number of units of a fixed dollar amount and which generally provides that the policyholder shall participate in the earnings resulting from either the participating policies or the nonparticipating policies sold by the insurer, or perhaps both. The prospective purchaser may be led to believe that he will receive a special advantage in any future distribution of earnings, profits, or dividends not available to those persons holding other types of policies issued by the insurer.

(2) Profit-sharing policies. A "profit-sharing policy" is that form of life insurance policy or annuity contract which contains provisions representing or tending to create the understanding that the policyholder will be eligible to participate in any future distribution of general corporate profits, with special advantages not available to persons holding other types of policies issued by the insurer to individuals of the same class and equal expectations of life.

Source Note: The provisions of this §3.202 adopted to be effective January 1, 1976.