TITLE 27
Insurance
CHAPTER 27-4.8
Group Life Insurance
SECTION 27-4.8-1
§ 27-4.8-1 Group life insurance
definitions.
Except as provided in 27-4.8-2, no policy of group life insurance shall be
delivered in this state unless it conforms to one of the following descriptions:
(1) A policy issued to an employer, or to the trustees of a
fund established by an employer, which employer or trustees shall be deemed the
policyholder, to insure employees of the employer for the benefit of persons
other than the employer, subject to the following requirements:
(i) The employees eligible for insurance under the policy
shall be all of the employees of the employer, or all of any class or classes
thereof. The policy may provide that the term "employees" shall include the
employees of one or more subsidiary corporations, and the employees, individual
proprietors, and partners of one or more affiliated corporations,
proprietorships or partnerships if the business of the employer and of the
affiliated corporations, proprietorships or partnerships is under common
control. The policy may provide that the term "employees" shall include the
individual proprietor or partners if the employer is an individual
proprietorship or partnership. The policy may provide that the term "employees"
may include retired employees, former employees and directors of a corporate
employer. A policy issued to insure the employees of a public body may provide
that the term "employees" shall include elected or appointed officials.
(ii) The premium for the policy shall be paid either from the
employer's funds or from funds contributed by the insured employees, or from
both. Except as provided in paragraph (iii), a policy on which no part of the
premium is to be derived from funds contributed by the insured employees shall
insure all eligible employees, except those who reject the coverage in writing.
(iii) An insurer may exclude or limit the coverage on any
person as to whom evidence of individual insurability is not satisfactory to
the insurer.
(2) A policy issued to a creditor or its parent holding
company or to a trustee or trustees or agent designated by two (2) or more
creditors, which creditor, holding company, affiliate, trustee, trustees or
agent shall be deemed the policyholder, to insure debtors of the creditor or
creditors subject to the following requirements:
(i) The debtors eligible for insurance under the policy shall
be all of the debtors of the creditor or creditors, or all of any class or
classes thereof. The policy may provide that the term "debtors" shall include:
(A) Borrowers of money or purchasers or lessees of goods,
services or property for which payment is arranged through a credit transaction;
(B) The debtors of one or more subsidiary corporations; and
(C) The debtors of one or more affiliated corporations,
proprietorships or partnerships if the business of the policyholder and of the
affiliated corporations, proprietorships or partnerships is under common
control.
(ii) The premium for the policy shall be paid either from the
creditor's finds, or from charges collected from the insured debtors, or from
both. Except as provided in paragraph (3), a policy on which no part of the
premium is to be derived from the funds contributed by insured debtors
specifically for their insurance shall insure all eligible debtors.
(iii) An insurer may exclude any debtors as to whom evidence
of individual insurability is not satisfactory to the insurer.
(iv) The amount of the insurance on the life of any debtor
shall at no time exceed the greater of the scheduled or actual amount of unpaid
indebtedness to the creditor, except that insurance written in connection with
open-end credit having a credit limit exceeding ten-thousand dollars ($10,000)
may be in an amount not exceeding the credit limit.
(v) The insurance may be payable to the creditor or any
successor to the right, title, and interest of the creditor. The payment shall
reduce or extinguish the unpaid indebtedness of the debtor to the extent of the
payment and any excess of the insurance shall be payable to the estate of the
insured.
(vi) Notwithstanding the provisions of the above subsections,
insurance on agricultural credit transaction commitments may be written up to
the amount of the loan commitment on a non-decreasing or level term plan.
Insurance on educational credit transaction commitments may be written up to
the amount of the loan commitment less the amount of any repayments made on the
loan.
(3) A policy issued to a labor union, or similar employee
organization, which shall be deemed to be the policyholder, to insure members
of the union or organization for the benefit of persons other than the union or
organization or any of its officials, representatives or agents, subject to the
following requirements:
(i) The members eligible for insurance under the policy shall
be all of the members of the union or organization, or all of any class or
classes thereof.
(ii) The premium for the policy shall be paid either from
funds of the union or organization, or from funds contributed by the insured
members specifically for their insurance, or from both. Except as provided in
paragraph (iii), a policy on which no part of the premium is to be derived from
funds contributed by the insured members specifically for their insurance shall
insure all eligible members, except those who reject the coverage in writing.
(iii) An insurer may exclude or limit the coverage on any
persons to whom evidence of individual insurability is not satisfactory to the
insurer.
(4) A policy issued to a trust or to the trustees of a fund
established or adopted by two (2) or more employers, or by one or more labor
unions or similar employee organizations, or by one or more employers and one
or more labor unions or similar employee organizations, which trust or trustees
shall be deemed the policyholder, to insure employees of the employers or
members of the unions or organizations for the benefit of person other than the
employers or the unions or organizations, subject to the following requirements:
(i) The persons eligible for insurance shall be all of the
employees of the employers or all of the members of the unions or
organizations, or all of any class or classes thereof. The policy may provide
that the term "employees" shall include the employees of one or more subsidiary
corporations, and the employees, individual proprietors, and partners of one or
more affiliated corporations, proprietorships or partnerships if the business
of the employer and of the affiliated corporations, proprietorships or
partnerships is under common control. The policy may provide that the term
"employees" shall include the individual proprietor or partners if the employer
is an individual proprietorship or partnership. The policy may provide that the
term "employees" shall include retired employees, former employees and
directors of a corporate employer. The policy may provide that the term
"employees" shall include the trustees or their employees, or both, if their
duties are principally connected with the trusteeship.
(ii) The premium for the policy shall be paid from funds
contributed by the employer or employers of the insured persons, or by the
union or unions or similar employee organizations, or by both, or from funds
contributed by the insured persons or from both the insured persons and the
employers or unions or similar employee organizations. Except as provided in
paragraph (iii), a policy on which no part of the premium is to be derived from
funds contributed by the insured persons specifically for their insurance shall
insure all eligible persons, except those who reject the coverage in writing.
(iii) An insurer may exclude or limit the coverage on any
person as to whom evidence of individual insurability is not satisfactory to
the insurer.
(5) A policy issued to an association or to a trust or to the
trustees of a fund established, created, or maintained for the benefit of
members of one or more associations. The association or associations shall have
at the outset a minimum of one hundred (100) persons; shall have been organized
and maintained in good faith for purposes other than that obtaining insurance;
shall have been in active existence for at least two (2) years; and shall have
a constitution and by-laws which provides that:
(i) The association or associations hold regular meetings not
less than annually to further purposes of the members,
(ii) Except for credit unions, the association or
associations, collect dues or solicit contributions from members, and
(iii) The members have voting privileges and representation
on the governing board and committees. The policy shall be subject to the
following requirements:
(A) The policy may insure members of the association or
associations, employees thereof or employees of members, or one or more of the
preceding or all of any class or classes thereof for the benefit of persons
other than the employee's employer.
(B) The premium for the policy shall be paid from funds
contributed by the association or associations, or by employer members, or by
both, or from funds contributed by the covered persons or from both the covered
persons and the association, associations, or employer members.
(C) Except as provided in paragraph (D), a policy on which no
part of the premium is to be derived from funds contributed by the covered
persons specifically for the insurance shall insure all eligible persons,
except those who reject the coverage in writing.
(D) An insurer may exclude or limit the coverage on any
person as to whom evidence of individual insurability is not satisfactory to
the insurer.
(6) A policy issued to a credit union or to a trustee or
trustees or agent designated by two (2) or more credit unions, which credit
union, trustee, trustees, or agent shall be deemed policyholder, to insure
members of the credit union or credit unions for the benefit of persons other
than the credit union or credit unions, trustee or trustees, or agent or any of
their officials, subject to the following requirements:
(i) The members eligible for insurance shall be all of the
members of the credit union or credit unions, or all of any class or classes
thereof.
(ii) The premium for the policy shall be paid by the
policyholder from the credit union's funds and, except as provided in paragraph
(iii), shall insure all eligible members.
(iii) An insurer may exclude or limit the coverage on any
member as to whom evidence of individual insurability is not satisfactory to
the insurer.
History of Section.
(P.L. 2009, ch. 299, § 1; P.L. 2009, ch. 300, § 1.)
