Barbara E. Seaman - Page 3




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                                 DIVIDEND PROVISIONS                                  
                    Annual Dividends.--While this policy is in force                  
               other than as extended or reduced paid-up insurance,                   
               the portion, if any, of the divisible surplus of the                   
               Company accruing upon the policy at each policy anni-                  
               versary will be determined annually by the Board of                    
               Directors, and will be credited to the policy as a                     
               dividend on such anniversary provided all premiums due                 
               hereunder have been paid in full to such anniversary                   
               and the Insured is living at that time.                                
                    (Notice.--There probably will not be any divisible                
               surplus from which to credit any dividend to this                      
               policy before the third policy anniversary.)                           
                    Upon proper written request to the Home Office,                   
               any such dividend may be (1) paid in cash, or                          
               (2) applied to the reduction of any premium then due,                  
               or (3) applied at the net single premium rate at the                   
               Insured’s attained age to provide a paid-up life insur-                
               ance addition, or (4) left to accumulate with compound                 
               interest at the rate authorized from time to time by                   
               the Board of Directors, but not less than 2½% per                      
               annum.  If no other option has been elected within 31                  
               days after the policy anniversary, any such dividend                   
               will be paid in cash * * *.  Upon proper written re-                   
               quest to the Home Office, * * * any dividend accumula-                 
               tions may be withdrawn unless * * * they have been                     
               applied to modify any non-forfeiture value as provided                 
               in the policy or are required as security for a loan on                
               the policy. * * *                                                      
          In the application for the Prudential policy, petitioner elected            
          to have dividends accumulate with interest.                                 
               During 1969, Mr. Seaman purchased a life insurance policy              
          (USAA policy) on his life from USAA Life Insurance Company (USAA)           
          that was in force at least throughout 2003.  The USAA policy                
          provides in pertinent part:                                                 
               DIVIDENDS.  At the end of the second Policy year and                   
               annually thereafter, while in force except as extended                 
               term insurance, this Policy shall be credited with such                






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Last modified: November 10, 2007