(1) An ordinary long-term insurance policy shall not be forfeited by reason only of non-payment of any premiums (in this section referred to as “the overdue premiums”) where the surrender value of the policy (calculated as at the day immediately preceding that on which the overdue falls due) exceeds the sum of the amount of the debts owing to the company under, or secured by, the policy and the amount of the overdue premium.
(2) The company may until payment of the overdue premium, charge compound interest on it, on terms not less favourable to the policy holder than such terms, if any, as may be specified in the policy.
(3) The overdue premium and any interest charged on it under this section which remains unpaid shall for the purposes of this Act be deemed to be a debt owing to the company under the policy.
(4) Despite subsection (1), an ordinary policy on which not less than 3 years' premiums have been paid shall not be forfeited by reason only of the non-payment of a premium unless, on or after the day on which the premium fell due—
(a) the company liable under the policy serves a notice on the policy holder stating—
(i) the amount due or payable to the company at the date of the notice,
(ii) that the policy will be forfeited at the expiration of 28 days after the date of the notice if a sufficient sum is not paid to the company within that period; and
(b) a period of at least 30 days has elapsed after the service of the notice.
(5) For the purposes of subsection (4) a notice posted to the last known address of the policy holder shall be deemed to be a service of the notice on the policy holder.