State RegulationsAZ specificDifficulty 2/5
A policyholder with an Arizona participating life policy asks when dividends must begin. Under A.R.S. 20-1207, what is the statutory rule?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
A.R.S. 20-1207 mandates that divisible surplus be apportioned annually, with apportionment beginning no later than the end of the third policy year. The policyholder can therefore rely on a statutory dividend timetable rather than insurer discretion.
Why the other options are wrong
- A) The statute imposes a mandatory timetable on participating policies; it is not left wholly optional.
- B) There is no quarterly board-vote requirement in A.R.S. 20-1207.
- D) Maturity is not the trigger; apportionment must begin by the third policy year.
Memory hook
Annual apportionment, third-year deadline.