376.697. Required provisions for group life policies.
Required provisions for group life policies.
376.697. No policy of group life insurance shall be delivered in thisstate unless it contains in substance the following provisions, or similarprovisions which, in the opinion of the director of the department ofinsurance, financial institutions and professional registration, are morefavorable to the persons insured or are at least as favorable to the personsinsured and more favorable to the policyholder; provided, however, that theprovisions in subdivisions (6) to (11) of this section shall not apply topolicies insuring the lives of debtors, that the standard provisions requiredfor individual life insurance policies shall not apply to group life insurancepolicies, and that if the group life insurance policy is on a plan ofinsurance other than the term plan, it shall contain a nonforfeiture provisionwhich, in the opinion of the director of the department of insurance,financial institutions and professional registration, is equitable to theinsured persons and to the policyholder. Nothing contained herein shall beconstrued to require that group life insurance policies contain the samenonforfeiture provisions as are required for individual life insurancepolicies:
(1) A provision stating that the policyholder is entitled to a graceperiod of thirty-one days for the payment of any premium due except the first,during which grace period the death benefit coverage shall continue in force,unless the policyholder shall have given the insurer written notice ofdiscontinuance in advance of the date of discontinuance and in accordance withthe terms of the policy. The policy may provide that the policyholder shallbe liable to the insurer for the payment of a pro rata premium for the timethe policy was in force during such a grace period;
(2) A provision stating that the validity of the policy shall not becontested except for nonpayment of premiums and fraudulent misstatements madeby the applicant in the application for such policy after the policy has beenin force for two years from its date of issue, and that no statement made byany person insured under the policy relating to his insurability shall be usedin contesting the validity of the insurance with respect to which suchstatement was made after such insurance has been in force during such person'slifetime for a period of two years prior to the contest unless it is containedin a * written instrument signed by such person. Nothing in this subdivisionshall preclude the assertion at any time of defenses based upon provisions inthe policy which relate to eligibility for coverage;
(3) A provision stating that a copy of the application, if any, of thepolicyholder shall be attached to the policy when issued, that all statementsmade by the policyholder or by the persons insured shall be deemedrepresentations and not warranties, and that no statement made by any personinsured shall be used in any contest unless a copy of the instrumentcontaining the statement is or has been furnished to such person or, in theevent of death or incapacity of the insured person, to his beneficiary orpersonal representative;
(4) A provision setting forth the conditions, if any, under which theinsurer reserves the right to require a person eligible for insurance tofurnish evidence of individual insurability satisfactory to the insurer as acondition to part or all of his coverage;
(5) A provision specifying an equitable adjustment of premiums or ofbenefits, or both, to be made in the event that the age of a person insuredhas been misstated, which provision shall contain a clear statement of themethod of adjustment to be made;
(6) A provision stating that any sum becoming due by reason of the deathof the person insured shall be payable to the beneficiary designated by theperson insured; except, that where the policy contains conditions pertainingto family status, if there is no designated beneficiary, the beneficiary as toall or any part of the benefit sum may, subject to the provisions of thepolicy, be the family member specified under the policy who is living at thedeath of the person insured. The rights of such family member shall besubject to any right reserved by the insurer in the policy and set forth inthe certificate to pay, at its option, a part of such sum, not exceeding twothousand dollars, to any person appearing to the insurer to be equitablyentitled thereto by reason of having incurred funeral or other expensesincident to the last illness or death of the person insured;
(7) A provision stating that the insurer will issue to the policyholderfor delivery to each person insured a certificate specifying the insuranceprotection to which he is entitled, to whom the insurance benefits arepayable, any dependent's coverage included in such certificate, and the rightsand conditions set forth in subdivisions (8), (9), (10), and (11), of thissection;
(8) A provision stating that if the insurance, or any portion of it, ona person covered under the policy, or on any dependent of such person, ceasesbecause of termination of employment or of membership in any class eligiblefor coverage under the policy, such person shall be entitled to have issued tohim by the insurer, without evidence of insurability, an individual policy oflife insurance, without disability or other supplementary benefits; provided,that application for the individual policy shall be made, and the firstpremium paid to the insurer, within thirty-one days after such termination;and, provided further, that:
(a) The individual policy shall, at the option of such person, be on anyone of the forms then customarily issued by the insurer at the age and for theamount applied for, except that the group policy may exclude the option toelect term insurance;
(b) The individual policy shall be in an amount which does not exceedthe life insurance which ceases because of such termination, less the amountof any life insurance for which such person becomes eligible under the same orany other group policy within thirty-one days after such termination;provided, that any amount of insurance which shall have matured on or beforethe date of such termination as an endowment payable to the person insured,whether in one sum, in installments, or in the form of an annuity, shall not,for the purposes of this paragraph, be included in the amount which isconsidered to cease because of such termination; and
(c) The premium on the individual policy shall be at the insurer's thencustomary rate applicable to the form and amount of the individual policy, tothe class of risk to which such person then belongs, and to the individual ageattained on the effective date of the individual policy; Subject to the same conditions set forth in paragraphs (a), (b), and (c) ofthis subdivision the conversion privilege shall be available to a survivingdependent, if any, at the death of the employee or member, with respect to thecoverage under the group policy which terminates by reason of such death; andto the dependent of the employee or member upon termination of coverage of thedependent, while the employee or member remains under the group policy, byreason of the dependent ceasing to be a qualified family member under thegroup policy;
(9) A provision stating that if the group policy terminates or isamended so as to terminate the insurance of any class of insured persons,every person insured thereunder at the date of such termination whoseinsurance terminates, including the insured dependent of a covered person, andwho has been so insured for at least five years prior to such termination dateshall be entitled to have issued by the insurer an individual policy of lifeinsurance, subject to the same conditions and limitations as are providedunder subdivision (8) of this section; except, that the group policy mayprovide that the amount of such individual policy shall not exceed the amountof the person's life insurance protection ceasing because of the terminationor amendment of the group policy, less the amount of any life insurance forwhich he is or becomes eligible under a group policy issued or reinstated bythe same or another insurer within thirty-one days after such termination, orten thousand dollars, whichever is smaller;
(10) A provision specifying that if a person insured under the grouppolicy, or the insured dependent of a covered person, dies during the periodwithin which the individual would have been entitled to have an individualpolicy issued in accordance with subdivision (8) or (9) of this section andbefore such an individual policy shall have become effective, the amount oflife insurance which he would have been entitled to have issued under suchindividual policy shall be payable as a claim under the group policy, whetheror not application for the individual policy or the payment of the firstpremium therefor has been made;
(11) Where active employment is a condition of insurance, a provisionstating that an insured may continue coverage during the insured's totaldisability by timely payment to the policyholder of that portion, if any, ofthe premium that would have been required from the insured had totaldisability not incurred. The continuation shall be on a premium paying basisfor a period of six months from the date on which the total disabilitystarted, but shall not extend beyond the approval by the insurer ofcontinuation of the coverage under any disability provision which the groupinsurance policy may contain or the discontinuance of the group insurancepolicy, whichever occurs earlier;
(12) In the case of a policy insuring the lives of debtors, a provisionstating that the insurer will furnish to the policyholder for delivery to eachdebtor insured under the policy a certificate of insurance describing thecoverage and specifying that the death benefit shall first be applied toreduce or extinguish the indebtedness.
(L. 1982 H.B. 1546 § 4)*Word "a" does not appear in original rolls.