(1) In the case of contracts issued prior to the effective date of this amendatory act,² such provision shall specify that, if the contract, after having been in force for three full years, shall by its terms lapse or become forfeited because any stipulated payment to the company shall not have been made, the reserve on such contract, computed according to the standard adopted by said company in accordance with section three hundred and one of this act³ shall, after deducting one-fifth of the said entire reserve and any indebtedness to the company under the contract, be applied as a net single payment according to said standard for the purchase of a paid up annuity or pure endowment contract, which may be nonparticipating and which shall be payable by the company under the same terms and conditions, except as to amount of the original contract. A company may provide, in lieu of said paid up values, for a paid up annuity or pure endowment contract in an amount bearing the same proportion to the original annuity or pure endowment contract as the number of stipulated payments, which shall have been made to the company, shall bear to the total number of stipulated payments required to be made to the company under the contract, and if there be any indebtedness to the company under the contract, the amount of such paid up annuity or pure endowment shall be reduced by an amount bearing the same proportion to such paid up annuity or pure endowment as such indebtedness bears to the reserve on such paid up annuity or pure endowment, computed according to the standard adopted by said company in accordance with section three hundred and one of an act, approved the seventeenth day of May, one thousand nine hundred and twenty-one (Pamphlet Laws, seven hundred and eighty-nine), as amended;

(2) In the case of contracts issued on or after the effective date of this amendatory act, such provisions shall be in accordance with section 410C.⁴

(1) Provisions (a), (b), (c), and (e) of this section, except that under provision (a) the company may, at its option, provide for an equitable reduction of the amount of the annuity payments in settlement, or an overdue or deferred payments in lieu of providing for a deduction of such payments from any amount payable upon a settlement under the contract.

(2) A provision that, if the age of any of the persons upon whose lives the contract is based, has been misstated, the amount payable under the contract shall be such as the stipulated payments to the company would have purchased at the correct ages.

(3) A provision that the contract may be reinstated at any time within three years from the date of default in making stipulated payments to the company upon production of evidence of insurability satisfactory to the company, provided that all overdue payments shall be made or paid with interest thereon at a rate to be specified in the contract, but not exceeding eight per centum per annum, any indebtedness to the company shall be paid with interest thereon at a rate or rates determined in accordance with section four hundred and ten F, compounded annually.

Any of the foregoing provisions, or portions thereof, not applicable to nonparticipating contracts nor to contracts for which a single stipulated payment to the company is made, shall to that extent not be incorporated therein, and any such contract may be delivered in this Commonwealth, which, in the opinion of the Insurance Commissioner, contains provisions, on any one or more of the several foregoing requirements, more favorable to the holder of the contract than hereinbefore required.

Nothing herein contained shall be construed to prevent a life insurance corporation, which issues life insurance on a participating basis, from issuing annuities, reversionary annuities, or pure endowments on a nonparticipating basis.

Any such contract or any application, endorsement or rider form used in connection therewith, issued in violation of this section shall, nevertheless, be held valid, but shall be construed as provided in this section, and when any provision in such contract, application, endorsement, or rider is in conflict with any provision of this section or with any other statutory provision, the rights, duties, and obligations of the company, of the holder of the contract, and of the beneficiary or annuity thereunder shall be governed by the provisions of this section. The provisions of this section shall not apply to contracts of reinsurance, nor to contracts for deferred annuities or reversionary annuities included in life insurance policies.