Wyo. Stat. §26-16-108 — what it says, and how the exam tests it

26-16-108. Policy loans. (a) As used in this section: (i) "Policy" includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans; (ii) "Policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer; (iii) "Policy loan" includes any premium loan made under a policy to pay one (1) or more premiums not paid to the life insurer when due; (iv) "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; or (B) If the Moody's Corporate Bond Yield Average-Monthly Average Corporates is no longer published, a substantially similar average established by regulation of the commissioner. (v) "The rate of interest on policy loans" authorized under this section includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy. (b) After three (3) full years premiums are paid and after the policy has a cash surrender value and while no premium is in default beyond the grace period, the insurer will advance, on proper assignment or pledge of the policy and on the sole security of the policy, at a specified rate of interest, an amount equal to or at the option of the entitled party less than the policy's loan value. The policy loan value shall be at least equal to the cash surrender value at the end of the then current policy year, provided that the insurer may deduct from the loan value or from the loan proceeds, any existing indebtedness not already deducted in determining the cash surrender value including any interest then accrued but not due, any unpaid balance of the premium for the current policy year and interest on the loan to the end of the current policy year. (c) The policy may also provide that: (i) If interest on any indebtedness is not paid when due, it shall be added to the existing indebtedness and shall bear interest at the same rate; and (ii) If the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the policy loan value, the policy terminates and is void after notice is mailed by the insurer within at least thirty (30) days to the last address of record with the insurer of the insured or other policy owner and of any assignee…