Okla. Stat. tit. 36, § 36-4008

A. There shall be a provision that after three (3) full years'

premiums have been paid, the insurer, at any time while the policy

is in force, will loan on the execution of a proper note or loan

agreement by the owner of the policy, and on proper assignment of

the policy and on the sole security thereof, at a specified rate of

interest, not in excess of six percent (6%) per annum, on policies

issued prior to January 1, 1976, a sum equal to or, at the option of

the owner of the policy, less than the cash value of the policy at

the end of the current policy year and of any dividend additions

thereto. A policy issued on or after such date and prior to July 1,

1982, shall contain either, but not both, of the following policy

loan interest rate provisions:

1. A provision that a policy loan shall bear interest at a

specified rate, not in excess of eight percent (8%) per annum; or

2. A provision that all loans under the policy shall bear

interest at a variable rate, not in excess of eight percent (8%) per

annum, specified from time to time by the insurer. The effective

date of any increase in such variable rate shall not be less than

one (1) year after the effective date of the previous rate.

B. With respect to policies providing for a variable rate, the

insurer shall:

1. When a loan is made and when notification of interest due is

furnished, give notice of the variable rate currently effective;

2. As to any loans outstanding forty (40) days before the

effective date of any increase in the variable rate, give notice of

Oklahoma Statutes - Title 36. Insurance Page 827

any such increase at least thirty (30) days before such effective

date; and

3. As to any loans made during the forty (40) days before the

effective date of this increase, give notice of such increase when

the loan is made.

Every such notice shall be given as directed by the policy owner

and any assignee as shown on the records of the insurer at its home

office.

C. With respect to policies issued on or after July 1, 1982,

the following provisions shall apply:

1. For purposes of this subsection, the "Published Monthly

Average" means:

a. Moody's Corporate Bond Yield Average - Monthly

Average Corporates as published by Moody's Investors Service, Inc.,

or any successor thereto, or

b. in the event that Moody's Corporate Bond Yield

Average - Monthly Average Corporates is no longer published, a

substantially similar average, established by regulation issued by

the Commissioner;

2. Policies issued on or after July 1, 1982, shall provide for

policy loan interest rates as follows:

a. a provision permitting a maximum interest rate

of not more than eight percent (8%) per annum, or

b. a provision permitting an adjustable maximum

interest rate established from time to time by the life insurer as

permitted by law;

3. The rate of interest charged on a policy loan made under

subparagraph b of paragraph 2 of this subsection shall not exceed

the higher of the following:

a. the Published Monthly Average for the calendar

month ending two (2) months before the date on which the rate is

determined, or

b. the rate used to compute the cash surrender

values under the policy during the applicable period plus one

percent (1%) per annum;

4. If the maximum rate of interest is determined pursuant to

subparagraph b of paragraph 2 of this subsection, the policy shall

contain a provision setting forth the frequency at which time the

rate is to be determined for that policy;

5. The maximum rate for each policy must be determined at

regular intervals at least once every twelve (12) months, but not

more frequently than once in any three-month period. At the

intervals specified in the policy:

a. the rate being charged may be increased whenever

such increase as determined under paragraph 3 of this subsection

would increase that rate by one-half of one percent (1/2 of 1%) or

more per annum, or
policy must be determined at

regular intervals at least once every twelve (12) months, but not

more frequently than once in any three-month period. At the

intervals specified in the policy:

a. the rate being charged may be increased whenever

such increase as determined under paragraph 3 of this subsection

would increase that rate by one-half of one percent (1/2 of 1%) or

more per annum, or

Oklahoma Statutes - Title 36. Insurance Page 828

b. the rate being charged must be reduced whenever

such reduction as determined under paragraph 3 of this subsection

would decrease that rate by one-half of one percent (1/2 of 1%) or

more per annum;

6. The life insurer shall:

a. notify the policyholder at the time a cash loan

is made of the initial rate of interest on the loan,

b. notify the policyholder with respect to premium

loans of the initial rate of interest on the loan as soon as it is

reasonably practical to do so after making the initial loan. Notice

need not be given to the policyholder when a further premium loan is

added, except as provided in subparagraph c below,

c. send to policyholders with loans reasonable

advance notice of any increase in the rate, and

d. include in the notices required above, the

substance of the pertinent provisions of paragraphs 2 and 4 of this

subsection;

7. The loan value of the policy shall be determined in

accordance with Section 4029 of this title, but no policy shall

terminate in a policy year as the sole result of a change in the

interest rate during that policy year, and the life insurer shall

maintain coverage during that policy year until the time at which

the policy would otherwise have terminated if there had been no

change during that policy year;

8. The substance of the pertinent provisions of paragraphs 2

and 4 of this subsection shall be set forth in the policies to which

they apply;

9. For purposes of this subsection:

a. the rate of interest on policy loans permitted

under this subsection includes the interest rate charged on

reinstatement of policy loans for the period during and after any

lapse of a policy,

b. the term "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 they fell due,

c. the term "policyholder" includes the owner of

the policy or the person designated to pay premiums as shown on the

records of the life insurer, and

d. the term "policy" includes certificates issued

by a fraternal benefit society and annuity contracts which provide

for policy loans;

10. No other provision of law shall apply to policy loan

interest rates unless made specifically applicable to such rates;

and

11. The provisions of this act shall not apply to any

insurance contract issued before the effective date of this act

Oklahoma Statutes - Title 36. Insurance Page 829

unless the policyholder agrees in writing to the applicability of

such provisions.

D. The company may deduct from such loan value any existing

indebtedness on or secured by the policy not already deducted in

determining such cash value including interest due or accrued, and

any unpaid balance of the premium for the current policy year, and

any interest which may be allowable on the loan to the end of the

current policy year; provided, that the policy shall reserve to the

insurer the right to defer the granting of a loan, other than for

the payment of any premium to the insurer, for six (6) months after

the application therefor is made. The policy may also provide that

if interest on any indebtedness is not paid when due it shall then

be added to the existing indebtedness and shall bear interest at the

same rate, and that if and when the total indebtedness on the

policy, including interest due or accrued, equals or exceeds the

amount of the loan value thereof, then the policy shall terminate

and become void, but not until at least thirty (30) days' notice
if interest on any indebtedness is not paid when due it shall then

be added to the existing indebtedness and shall bear interest at the

same rate, and that if and when the total indebtedness on the

policy, including interest due or accrued, equals or exceeds the

amount of the loan value thereof, then the policy shall terminate

and become void, but not until at least thirty (30) days' notice

shall have been mailed by the insurer to the last-known address of

the insured or policy owner and of any assignee of record at the

home office of the insurer.

The policy, at the insurer's option, may provide for an

automatic premium loan, subject to an election of the party entitled

to elect. No condition other than as herein provided shall be

exacted as a prerequisite to any such loan. This provision shall not

be required in term insurance, nor shall it apply to temporary

insurance or pure endowment insurance, issued or granted in exchange

for lapsed or surrendered policies.