State RegulationsAZ specificDifficulty 1/5
Under A.R.S. 20-1207, a participating life insurer in Arizona must begin apportioning divisible surplus dividends to policyholders annually no later than the end of which policy year?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under A.R.S. 20-1207, a participating insurer apportioning divisible surplus among its policyholders must do so annually beginning not later than the end of the third policy year. This ensures participating policyholders start sharing in the insurer's divisible surplus no later than that point, rather than waiting through additional years without receiving dividend distributions.
Why the other options are wrong
- A) A first-year start is not the statutory deadline; A.R.S. 20-1207 allows the insurer to begin no later than the end of the third policy year.
- B) The second year is not the statutory outer limit; the statute permits a start up to the end of the third policy year.
- C) Waiting until the fifth year would violate A.R.S. 20-1207, which requires annual apportionment to begin by the end of the third policy year.
Memory hook
Dividends must start by year three — divisible surplus can't wait longer.