(1) Where a life policy has been in force for three years or more, it shall not lapse or be forfeited by reason of non-payment of premiums but shall have effect subject to such modification as to the period for which it is to be in force, or of the benefits receivable under it, or both, as may be determined in accordance with the system of the licensed life insurer which is applicable to the life policy.
(2) No licensed life insurer shall adopt a system for the purpose of subsection (1) unless it has filed the particulars of the system with the Bank at least thirty days before the effective date for adoption of the system.
(3) Where the Bank considers the system of a licensed life insurer inappropriate for any reason, it may require the licensed life insurer by notice in writing to amend the system in such manner as the Bank may specify.
(4) A licensed life insurer shall inform the policy owner at the time of issue of the life policy the system under subsection (1) applicable to that life policy and the system shall not be altered except in favour of the policy owner while that life policy is in force.
(5) A licensed life insurer, upon receipt of a notice under subsection (3), shall not use the system unless it is modified as specified.
Penalty: Five hundred thousand ringgit. Default penalty.
(6) Notwithstanding subsection (1), a licensed life insurer may provide the benefit under this section for a life policy which has been in force for less than three years.