10200-10214
INSURANCE CODE
SECTION 10200-10214
10200. Any life insurer may issue life, disability, term, and
endowment insurance on the group plan, with or without annuities, and
with premium rates less than the usual rates for such insurance.
Such insurance under a franchise agreement or upon a wholesale basis
may be written under rates more or less than the usual rates for such
insurance.
10200.2. An insurer may, in the discretion of the contracting
parties, enter into a contract with a group policyholder or other
contracting entity under any group, selected group, or franchise
policy issued by the insurer to determine the amount the insurer may
retain from premiums paid or to provide for the establishment of
reserves or deposits to meet future contingencies of any nature under
such insurance policy. Under this section, "contracting entity"
means any of the following:
(a) The employer, association, trustee, union, or other entity to
whom a group policy is issued.
(b) The organization to which an individual policyholder must
belong or be associated with to be insured under a franchise or a
selected group policy.
(c) Any entity formed and operating for purposes other than the
procuring of insurance to which two or more contracting entities
defined in subdivision (a) or (b) of this section belong.
10200.5. The term "franchise" or "wholesale" insurance shall mean a
life insurance plan under which a number of individual life
insurance policies are issued at special rates to a selected group. A
special rate is any rate lower than the rate shown in the issuing
insurance company's manual for individually issued policies of the
same type and to insureds of the same class.
After the effective date of this section no franchise or wholesale
life insurance plan shall be entered into in this State unless the
individuals to whom such insurance is made available are members of a
professional association, employees of a common employer or
affiliated employers, or unless the insurance is made available in
connection with an indebtedness or a contract of sale. The word
"employees" as used in this section shall be deemed to include the
individual proprietors or partners who constitute the employer or
affiliated employers.
In the case of any plan existing on or before the effective date
of this section, any individual plan or policy then in effect shall
not be changed or affected by this section, but no individual may
thereafter become insured for more than twenty-five thousand dollars
($25,000), under any such plan except those written in connection
with a professional association, an indebtedness, a contract of sale,
or a pension plan. Nothing herein contained shall prevent any such
plan so existing at the effective date hereof from being changed or
modified (a) to change the insurer or insurers underwriting said plan
and, to the extent necessary without affecting benefits payable, to
make the plan conform to the underwriting rules and procedures of the
new insurer or insurers; (b) to change rates applicable to insurance
written under said plan; or (c) to add to said plan incidental
benefits providing coverage on the lives of dependents of the insured
individual, accidental death benefits or waiver of premiums during
periods of total disability on the insured.
For purposes of this section a professional association means an
association whose membership is restricted to one or more of the
licensed professions such as medicine, dentistry, pharmacy, law and
accountancy.
10201. The only forms of group life insurance are those set forth
in this chapter.
10202. Life insurance conforming to all the following conditions is
one form of group life insurance:
(a) Written under a policy covering when issued not less than two
public or private employees.
(b) Written under a policy issued to the employer, the premium on
which is to be paid by the employer, by the employee, or by the
employer and employees jointly, and insuring either all of the
employees or all of any class or classes thereof, determined by
conditions pertaining to the employment.
(c) For amounts of insurance based upon some plan which will
preclude individual selection.
(d) For the benefit of persons other than the employer. That group
insurance may be for the benefit of a trustee of a pension, welfare
benefit plan, or trust established by an employer providing life,
health, disability, retirement, or similar benefits to employees of
the employer or its affiliates, and acting in a fiduciary capacity
with respect to those employees, retired employees, or their
dependents or beneficiaries, where the trustee has an insurable
interest in the lives of the employees for whom those benefits are to
be provided and where the employee has consented in writing to the
coverage.
(e) When the premium is to be paid by the employer and employee
jointly and the benefits of the policy are offered to all eligible
employees.
(f) Terminating if, subsequent to issue, (1) the number of
employees insured falls below two lives, and (2) the employee
contributions, if the premiums for the insurance are on a renewable
term insurance basis, exceed one dollar ($1) per month per one
thousand dollars ($1,000) of insurance coverage plus an amount equal
to any additional premium per one thousand dollars ($1,000) of
insurance coverage charged to cover one or more hazardous
occupations.
That insurance may be issued either with or without medical
examinations.
10202.5. (a) The term "employees" as used in Section 10202 may
include the officers, managers and employees of subsidiary or
affiliated corporations, and the individual proprietors, partners and
employees of affiliated individuals and firms, when the business of
such subsidiary or affiliated corporations, firms or individuals is
controlled by the policyholder through stock ownership, contract or
otherwise, or when the policyholder is controlled by affiliated
corporations, firms or individuals through stock ownership, contract
or otherwise. The term "employees" as used in Section 10202 may also
include the individual proprietors or partners who constitute the
policyholder, but limited to such individual proprietors and partners
who are actively engaged in the business the employees of which are
covered by the group insurance.
(b) Nothing contained herein shall permit any person other than an
officer, manager, or employee for compensation of the policyholder
or of one or more of the individuals, firms, or corporations or of
the individual proprietors or partners specified in subdivision (a)
to become insured under a group policy.
10202.8. A group life policy conforming to all the following
conditions may be issued to the trustees of a fund established by
employer members of a trade association, or by a trade association
maintained by contributions of such members for the sole benefit of
their employees or, by one employer, or by two or more employers in
the same industry, or by an association of employers in the same
industry, or by one or more labor unions, or by one or more employers
and one or more labor unions, or by an association of employers and
one or more labor unions, to insure employees of the employers or
members of the unions for the benefit of persons other than the
employers or the unions:
(a) The persons eligible for insurance shall be all of the
employees of the employers or all of the members of the unions, or
all of any class or classes thereof determined by conditions
pertaining to their employment, or to membership in the unions, or to
both. The policy may provide that the term "employees" shall include
retired employees, and the individual proprietor or partners if any
employer is an individual proprietor or a partnership. No director of
a corporate employer shall be eligible for insurance under the
policy unless such person is otherwise eligible as a bona fide
employee of the corporation by performing services other than the
usual duties of a director. No individual proprietor or partner shall
be eligible for insurance under the policy unless he is actively
engaged in and devotes a substantial part of his time to the conduct
of the business of the proprietor or partnership. The policy may
provide that the term "employees" shall include the trustees or their
employees, or both, if their duties are principally connected with
such trusteeship.
(b) The premium for the policy shall be paid by the trustees
either: (a) wholly from funds contributed by the employer or
employers of the insured persons, or by the union or unions, or by
both; or (b) partly from such funds and partly from funds contributed
by either all of the insured persons or by one or more classes
thereof, or (c) wholly derived funds contributed by the insured
persons.
(c) The policy must cover at the date of issue at least 50
persons.
(d) The amounts of insurance under the policy must be based upon
some plan precluding individual selection by the insured persons or
by the trustees, employers or unions.
That insurance shall be issued with or without medical
examination. For the purpose of this section the word "industry"
shall include licensed professions, such as medicine, dentistry,
pharmacy, law and accountancy.
10202.81. The State and any political subdivisions thereof and any
municipality, may provide for the type of insurance set forth in
Section 10202.8 of this code the same as any private employer and may
contribute to a fund established under such section the same as any
private employer.
10202.82. The term "employees" as used in subdivision (a) of
Section 10202.8 includes individual proprietors and partners of an
employer which is an individual proprietor or partnership. The term
"employer" as used in Section 10202.8 includes any self-employed
member of a labor union whether or not there are persons employed by
him.
10202.85. A policy conforming to Section 10202.8 issued to a county
may include as persons eligible, employees of a district located,
wholly or partly, within such county. Such inclusion is subject to
Section 53200.4 of the Government Code.
10203. Life insurance conforming to all of the following conditions
is another form of group life insurance:
(a) Written under a policy covering, when issued, not less than 25
members of any of the following:
(1) Any labor union or unions.
(2) The National Guard.
(3) Any association or governmental or public employees.
(4) Any credit union organized and operating under the Federal
Credit Union Act of 1934 or Chapter 36 of the California Statutes of
1927 as amended.
(5) Any association of private employees of a common employer,
formed for purposes other than obtaining insurance and having been in
existence for two years or longer prior to issuance of the policy,
and having a membership not less than 75 percent of the number of
employees eligible for membership in such association.
(b) Written under a policy issued to one or more such unions,
credit union or association.
(c) The premium on the policy to be paid by the union, credit
union, or association or by the union or association and the members
thereof jointly or by the insured members alone. Payment of such
premium by a third party on behalf of the union member shall be
considered payment by the union member.
(d) Insuring only members of such union or unions or members of
such credit union or association.
(e) Insuring for amounts of insurance based upon some plan which
will preclude individual selection.
(f) Insuring for the benefit of persons other than the union,
credit union or association or its officials.
(g) Written under a policy insuring, when issued, not less than 75
percent of all members eligible for insurance under the policy, or
75 percent of such members of any class thereof reasonably determined
by conditions pertaining to employment or of any established unit
thereof not formed for the purpose of procuring insurance; provided,
that if a group policy is intended to insure several such classes or
units it may be issued as respects any such class or unit of which 75
percent are covered and extended to other such units or classes as
75 percent thereof express the desire to be covered. In such case,
when members apply and pay for additional amounts of insurance, a
smaller percentage of members may be insured for such additional
amounts of insurance. If any member fails to become insured under an
existing policy when he becomes eligible and later wishes to become
insured thereunder, the insurer may require satisfactory evidence of
insurability before insurance is granted on such member.
(h) No policy of group life insurance shall be issued to an
association of private employees of a common employer unless the
employer consents in writing to deduct premiums from wages or salary
of insured members.
(i) Written under a policy covering any association having a
constitution and bylaws and formed and continuously maintained in
good faith for purposes other than that of obtaining insurance,
offering insurance to all the eligible members of such association
and covering not less than 25 such members or such members together
with their dependents or spouses and not less than 75 percent of all
eligible members for amounts of insurance based upon some plan which
will preclude individual selection by the member as to the amount of
his or her insurance coverage thereunder. If the master policy is to
be issued to cover members of labor unions, it may be issued to more
than one such union.
10203.1. Life insurance conforming to all the following conditions
is another form of group life insurance:
(a) Written under a policy covering, when issued, not less than 25
employees of the Trustees of the California State University in
eligible classes as designated by the trustees pursuant to Section
89506 of the Education Code.
(b) Written under a policy issued to the Trustees of the
California State University pursuant to Section 89506 of the
Education Code.
(c) The premium on the policy is to be paid by the employees
alone, or in part by the State of California, with the remainder to
be paid by the employees. Payment of the premium by a third party on
behalf of the employees shall be considered payment by the employees.
(d) Insuring only the employees of the Trustees of the California
State University.
(e) Insuring for amounts of insurance based upon some plan which
will preclude individual selection.
(f) Insuring for the benefit of persons other than the Trustees of
the California State University.
(g) Written under a policy insuring, when issued, not less than 75
percent of all such employees eligible for insurance under the
policy, or 75 percent of the employees of any class thereof
reasonably determined by conditions pertaining to employment or of
any established unit thereof not formed for the purpose of procuring
insurance. However, if a group policy is intended to insure several
classes or units, it may be issued as respects any class or unit, of
which 75 percent are covered and extended to other units or classes
as 75 percent thereof express the desire to be covered. In such case,
when the employees apply and pay for additional amounts of
insurance, a smaller percentage of employees may be insured for
additional amounts of insurance. If any employee fails to become
insured under an existing policy when he or she becomes eligible and
later wishes to become insured thereunder, the insurer may require
satisfactory evidence of insurability before insurance is granted on
the employee.
10203.2. Life insurance conforming to all the following conditions
is another form of group life insurance:
(a) Written under a policy covering, when issued, not less than 25
employees in eligible classes or positions as designated by the
Department of Personnel Administration pursuant to Section 19849.11
of the Government Code.
(b) Written under a policy issued to the State of California
through the Department of Personnel Administration or its designee
pursuant to Sections 19849.10 to 19849.12, inclusive, of the
Government Code.
(c) The premium on the policy is to be paid by the employees
alone, by the state alone, or in part by the state with the remainder
to be paid by the employees.
(d) Insuring only managerial and confidential employees as defined
by subdivisions (e) and (f) of Section 3513 of the Government Code,
and employees excluded from the definition of state employees in
subdivision (c) of Section 3513 of the Government Code.
(e) Insuring for amounts of insurance based upon some plan which
will preclude individual selection.
(f) Insuring for the benefit of persons other than the Department
of Personnel Administration or its designee.
(g) Written under a policy insuring, when issued, not less than 75
percent of all employees eligible for insurance under the policy, or
75 percent of the employees of any class or position thereof
reasonably determined by conditions pertaining to employment or of
any established unit thereof not formed for the purpose of procuring
insurance. If a group policy is intended to insure several classes,
positions, or units, it may be issued as respects the classes,
positions, or units of which 75 percent are covered and extended to
those other units, classes, or positions of which 75 percent express
the desire to be covered. In this case, when the employees apply and
pay for additional amounts of insurance, a smaller percentage of
employees may be insured for the additional amounts of insurance. If
any employee fails to become insured under an existing policy when he
or she becomes eligible and later wishes to become insured
thereunder, the insurer may require satisfactory evidence of
insurability before insurance is granted on the employee.
10203.4. (a) Insurance under any group life insurance policy issued
pursuant to Sections 10202, 10202.8, 10203, 10203.1, and 10203.7 may
be extended to insure the dependents, or any class or classes
thereof, of each insured employee who so elects, in amounts in
accordance with some plan that precludes individual selection and
that shall not be in excess of 100 percent of the insurance on the
life of the insured employee.
(b) "Dependent" includes the member's spouse and all unmarried
children from birth through 20 years of age, or through 24 years of
age if the dependent child is attending an educational institution,
or a child 21 years of age or older who is both incapable of
self-sustaining employment by reason of mental retardation or
physical handicap and chiefly dependent upon the employee for support
and maintenance if proof of the incapacity and dependency is
furnished to the insurer by the employee within 31 days of the child'
s attainment of the limiting age and subsequently as may be required
by the insurer, but not more frequently than annually after the
two-year period following the child's attainment of the limiting age.
(c) The premiums for the insurance on the dependents may be paid
by the employer, the employee, or the employer and the employee
jointly.
10203.5. (a) Life insurance conforming to all the following
conditions is another form of group life insurance:
(1) Covering one of the following groups:
(A) All members are or become borrowers from one financial
institution, including subsidiary or affiliated persons, under an
agreement to repay the sum borrowed.
(B) All members are or become purchasers of merchandise or other
property, exclusive of securities, investment certificates, and bank
deposits, under an agreement to pay the balance of the purchase
price.
(2) The group numbers not less than 100 new entrants yearly or, in
the case of a credit union, not less than 50 borrowers yearly.
(3) The amount insured on any one borrower or purchaser does not
exceed:
(A) The amount of the loan commitment in the case of an
agricultural or horticultural loan commitment, as defined in Section
10203.55, repayable in one sum or in irregular installments within a
period not in excess of 18 months from the initial date of the loan
commitment.
(B) In all other cases, the balance of the indebtedness to the
financial institution or vendor.
(4) The repayment or payment of purchase price is to be made under
the agreement of loan or purchase in substantially equal
installments over a period not exceeding 40 years, in installments
that may vary according to the terms of a signed agreement, in
payments or installments in accordance with the usual terms of the
creditor in the case of an open-ended agreement to extend credit, a
revolving loan, or revolving charge account, or in one sum or
irregular installments within a period not in excess of 18 months
from the initial date of the commitment on an agricultural or
horticultural loan.
(5) The policy is issued upon application of and made payable to
the financial institution, vendor, or a creditor to whom the vendor
may transfer title to the indebtedness, as beneficiary, and the
premiums are paid by or through the financial institution, vendor, or
creditor.
(b) A policy of insurance conforming to this section is not
subject to Section 10209 of this code or Section 704.100 of the Code
of Civil Procedure.
10203.55. An agricultural or horticultural loan commitment as used
in Section 10203.5 and in Article 5.9 (commencing with Section
779.1), Chapter 1, Part 2, Division 1 means a binding agreement to
loan money up to a fixed amount as needed for agricultural or
horticultural purposes, which commitment is issued by:
(1) A national or state commercial bank; or
(2) A federal intermediate credit bank or a production credit
association organized under the Farm Credit Act of 1933, as amended;
lawfully operating in this State.
10203.7. Life insurance conforming to all the following conditions
is another form of group life insurance:
(a) Written under a policy covering when issued, not less than 10
agents.
(b) Written under a policy issued to a principal, or if such
principal be a life or life and disability insurer, by or to such
principal, and with whom, or with an agent of whom, each of such
agents is under contract to render personal services for a commission
or other fixed or ascertainable compensation, the premium on which
is to be paid by the principal or by the principal and the agents
jointly, and insuring either all of the agents or all of any class or
classes thereof, determined by conditions pertaining to the services
to be rendered by such agents, provided that if a policy is intended
to insure several such classes it may be issued to insure any such
class of which 75 percent are covered and extended to other classes
as 75 percent thereof express the desire to be covered.
(c) For amounts of insurance based upon some plan which will
preclude individual selection.
(d) For the benefit of persons other than the principal.
(e) When the premium is to be paid by the principal and agents
jointly, and the benefits of the policy are offered to all eligible
agents, written under a policy insuring, when issued, not less than
75 percent of such agents.
(f) Terminating, if, subsequent to issue (1) the number of agents
insured falls below 10 lives or 75 percent of the number eligible,
and (2) the contribution of the agents, if the premiums for the
insurance are on a renewable term insurance basis, exceed one dollar
($1) per month per one thousand dollars ($1,000) of insurance
coverage plus an amount equal to any additional premium per one
thousand dollars ($1,000) of insurance coverage charged to cover one
or more hazardous occupations.
Such insurance may be issued with or without medical examination.
For the purpose of this section the term agents shall be deemed to
include agents, solicitors and salesmen.
10203.8. Life insurance conforming to all of the following
conditions is another form of group life insurance:
(a) Covering the lives of every eligible member of a group of
persons who become or are named depositors under a savings account
plan, established by a financial institution including subsidiary or
affiliated persons, which plan provides for periodic deposits of like
amounts.
(b) The period during which the deposits may be made under the
plan does not exceed 60 consecutive months, and the total amount of
insurance under the policy on any one depositor does not exceed the
difference between the amounts deposited and the maximum amount that
may be deposited under the plan and does not exceed one thousand five
hundred dollars ($1,500) on any one life.
(c) The group numbers 100 new entrants yearly.
(d) The policy is issued upon application of and made payable to
the financial institution as beneficiary, and the premiums are paid
by or through the financial institution.
(e) The policy of insurance conforming to this section is not
subject to Section 10209 or of this code or Section 704.100 of the
Code of Civil Procedure.
10203.9. In addition to the other specific circumstances under
which a group life policy may be issued under this chapter a group
life policy may be issued to an existing insured to replace an
existing valid group life policy if: (1) it provides the same
benefits at the same or a lesser rate as the policy to be replaced:
(2) it offers such benefits to all persons covered by the policy to
be replaced; and (3) 90 percent of all persons covered by the policy
to be replaced become insured under the new policy.
10203.10. (a) Life insurance conforming to all of the following
conditions is another form of group life insurance:
(1) Written under a policy issued and delivered in connection with
the payment of benefits against the risk of loss in the value of
redeemable securities of the insured investor issued by an investment
company or companies operating under the Investment Company Act of
1940, as amended, and whose redeemable securities are registered
under the Securities Act of 1933, as amended. For the purposes of
this section, such benefits shall be referred to as group investment
return assurance.
(2) Covering the lives of every eligible member of a group of
persons who are or become investors in an investment company or
companies.
(3) The group numbers not less than 100 investors yearly.
(4) The amount of insurance on any one investor does not exceed
the amount of his investment, and does not exceed twenty thousand
dollars ($20,000) on any one life.
(5) The period of assurance for each investor shall not extend
over a period exceeding the life of such investor.
(6) The policy is issued upon the application of the investment
company or companies, and the premiums are paid by the investment
company, the investor, or jointly by the investment company and the
investor.
Such insurnce may be issued with or without medical examination.
(7) The policy provides a benefit equal to the difference between
the amount paid for such redeemable securities and the value of such
redeemable securities at the earlier of either (A) the end of the
certificate period, or (B) the date of death of the insured.
(8) To protect the public and policyholders located in this state
from hazardous operation by domestic, foreign, or alien companies,
and to further the purpose and provision of this part, no domestic,
foreign, or alien insurance company shall undertake the issuance of
any policy providing for group investment return assurance until such
company has satisfied the commissioner that its condition or method
of operation in connection with the issuance of such policies shall
not be such as to render its operation hazardous to the public, or
its policyholders in this state, and, whether domestic, foreign, or
alien, that it meets the conditions prescribed in Section 717 for the
issuance of a certificate of authority. In the determination of the
qualification of a company requesting authority to issue policies
providing for group investment return assurance within this state,
the commissioner shall consider, in addition to the requirements of
Section 717, all of the following: (A) the history of the company,
(B) the character, responsibility, and general fitness of the
officers and directors of the company, (C) the regulation of a
foreign company by its state of domicile, (D) the adequacy of the
investment management which the company is providing, and (E) the
company's arrangements for the supervision of the marketing of such
policies. No company may provide group investment return assurance in
its policies unless it is an admitted insurer having and maintaining
a combined capital and surplus of at least two million dollars
($2,000,000).
(9) In addition to the requirements of paragraph (8), no admitted
insurer may provide group investment return assurance in its policies
unless it establishes a special contingency fund of not less than
one million dollars ($1,000,000). This fund shall be deemed to
constitute a reserve liability in addition to other reserves of such
insurer. In the event an insurer issues both group and individual
investment return assurance, such special contingency fund shall not
be less than one million dollars ($1,000,000) for both group and
individual assurance.
(b) The commissioner shall require the payment of two hundred
fifty dollars ($250) as a fee for the determination of qualification
required by this section. Upon completion of the determination of
qualification, and whether authorization to issue policies providing
group investment return benefits is granted or denied, the
commissioner shall require the payment of such additional amounts
from the requesting insurer as may be necessary to defray all
administrative costs in excess of two hundred fifty dollars ($250)
incurred by the commissioner in making such determination.
(c) On and after the effective date of this section, a group
investment return assurance policy, or certificate evidencing such
insurance, shall not be issued or delivered in this state until a
copy of the form thereof is filed with the commissioner, the fees
required by Section 12973.9 are paid, and the commissioner has given
written approval of such form.
(d) No certificate of group investment return assurance shall be
delivered or issued for delivery to any person in this state unless
each such certificate does all of the following:
(1) Includes a statement on the first page thereof, in boldface
type, that in the event that the value of the redeemble securities
covered by the contract exceeds the amount paid for such securities,
there shall be no benefit.
(2) Provides that the reserves for all group investment return
assurance policies shall be computed and maintained on a basis which
shall place an actuarially sound value on the liabilities under such
policies. To provide a basis for the determination of such
actuarially sound values, the commissioner, from time to time, shall
adopt rules requiring the use of appropriate tables of morbidity,
mortality, interest rates, and valuation methods for such reserves.
(e) In furtherance of the purpose of this section, the
commissioner may make reasonable rules and regulations therefor. Such
rules and regulations shall be adopted, amended or repealed in
accordance with the procedure provided in Chapter 4.5 (commencing
with Section 11371) of Part 1 of Division 3 of Title 2 of the
Government Code.
10204. For the purpose of this chapter, the term "employer"
includes the association or union designated by Section 10203, and
the institution, vendor, credit union, or creditor designated by
Sections 10203.5 and 10203.6, and the principal designated by Section
10203.7, and the trustees designated by Section 10202. 8, and the
term "employee" includes the members of such union, credit union or
association and the debtors of or purchasers from such institution,
credit union, vendor or creditor, the agents referred to in Section
10203.7, and the employees and members referred to in Section
10202.8.
10204.5. (a) In addition to the issuance of group life insurance to
groups in this state as permitted elsewhere in this chapter, the
commissioner may approve the issuance of group life insurance if the
insurer or applicant proves to the satisfaction of the commissioner
each of the following:
(1) The policy, when issued, covers no fewer than 10 eligible
group members.
(2) There is a common enterprise or economic or social affinity or
relationship among members of the group.
(3) The premiums charged are reasonable in relation to the
benefits provided under the group insurance policy.
(4) The issuance of the policy would result in economies of
acquisition or administration, would be actuarially sound, and would
not be contrary to the best interests of the public.
(5) The group was formed in good faith for purposes other than
obtaining insurance.
(6) If the group policyholder is an association, the association
has a constitution and bylaws and has been in existence for more than
two years.
(7) The insurer has been actively engaged in the business of
writing the types of coverage offered in the group insurance policy
for insureds other than the type of group covered by the policy, and
is not organized solely or principally for the purpose of furnishing
coverage to groups of this type.
(b) An insurer under a policy covered by this section may exclude
or limit the coverage on any person as to whom evidence of individual
insurability is not satisfactory to the insurer.
(c) A fee of five hundred dollars ($500) shall be charged to each
insurer or applicant for each filing made pursuant to this section.
10205. A policy of group life insurance shall not be issued or
delivered in this State nor, except as otherwise provided in Section
10205.5, shall an insurer provide or agree to provide group life
coverage until a copy of the form of the policy is filed with the
commissioner and approved by him. Except as provided in Section
10211, such policy shall not be so issued or delivered unless it
contains in substance the provisions set forth in Sections 10206 to
10210 hereof.
10205.5. An insurer is permitted to provide group life coverage
prior to the approval of the form of the policy if all of the
conditions of (a) are met prior thereto and if thereafter it acts as
required by (b).
(a) The conditions precedent are:
(1) The group is one eligible for coverage pursuant to the
provisions of this article; and
(2) An executed memorandum of insurance has been or is
concurrently delivered to the entity which is to become the
policyholder containing a provision that unless a policy the form of
which has been approved by the commissioner and embodying the
coverage has been issued and delivered to the policyholder within 90
days after the date on which the coverage is provided or agreed to be
provided, the coverage provided pursuant to such memorandum
terminates 120 days after such date, and containing a specification
in either complete or summary form of:
(i) The class or classes of employees eligible for coverage;
(ii) The benefits to be provided; and
(iii) The exceptions and reductions to such benefits, if any.
(b) An insurer providing coverage pursuant to this section shall:
(1) Within 60 days after the date on which the coverage is
provided or agreed to be provided submit to the commissioner for
approval a policy form drafted to provide the coverage provided by
such memorandum and in a good faith attempt to meet all requirements
of law;
(2) Make such revisions in the policy submitted as the
commissioner may lawfully require; and
(3) Terminate such coverage in accordance with the provisions of
(a) (2) above if approval of such policy is not secured within the
time specified therein.
Upon written request from the insurer filed within 50 days after
the date on which the coverage is provided or agreed to be provided
and upon proof satisfactory to him that the insurer is acting with
due diligence and that hardship will result unless an extension is
granted, the commissioner may extend the time set forth in (b) (1)
hereof for a period of not to exceed 30 days. Upon such extension,
the insurer with the consent of the policyholder may amend the
memorandum of insurance referred to in (a) (2) hereof to extend the
time within which the policy must be issued and delivered to the
policyholder to 30 days after the date to which the commissioner has
extended the time within which a policy form must be submitted to him
for approval and to extend the date for termination of coverage to
30 days thereafter.
Any policy submitted to the commissioner with a letter from the
insurer stating that coverage has been provided in accordance with
this section shall be automatically approved unless the commissioner
disapproves the same within 30 days of the date of its submission to
him.
10205.6. The commissioner may suspend or revoke the permission
granted any insurer in Section 10205.5 if, after notice and hearing
in accordance with Chapter 5 of Part 1 of Division 3 of Title 2 of
the Government Code, he finds that the insurer has:
(a) Misrepresented the conditional nature of the coverage;
(b) Neglected or refused either to cancel or otherwise terminate
such coverage within the time required by such section;
(c) Delivered any such memorandum which did not comply with
subsection (a) (2) of Section 10205.5;
(d) Shown a lack of diligence in making revisions in the policy
necessary to obtain its approval by the commissioner;
(e) Failed so often in so many important respects in drafting any
such policy to conform to the applicable requirements of the
Insurance Code that a conclusion of lack of good faith or competency
in drafting is reasonably justified;
(f) Circulated announcements of coverage to individuals insured
which failed to advise them of the conditional nature of the
coverage; or
(g) In any other manner so negligently or carelessly handled the
effecting of insurance under Section 10205.5 or the administration
thereof that the policyholder or the persons insured have been misled
or exposed to the danger of loss.
10206. (a) The policy shall provide that the validity of the policy
shall not be contested, except for nonpayment of premiums, after it
has been in force for two years from its date of issue; and that no
statement made by any employee insured under the policy relating to
his or her insurability shall be used in contesting the validity of
the insurance with respect to which the statement was made after the
insurance has been in force prior to the contest for a period of two
years during the employee's lifetime nor unless it is contained in a
written application signed by the employee.
(b) (1) Notwithstanding subdivision (a), if photographic
identification is presented during the application or enrollment
process, and if an impostor is substituted for a named insured in any
part of the application or enrollment process, with or without the
knowledge of the named insured, then no contract between the insurer
and the named insured is formed, and any purported insurance contract
is void from its inception.
(2) As used in this subdivision:
(A) "Application or enrollment process" means any or all of the
steps required of a named insured in applying for a certificate under
a group policy of life insurance, including, but not limited to,
executing any part of the application or enrollment form, submitting
to medical or physical examination or testing, or providing a sample
or specimen of blood, urine, or other bodily substance.
(B) "Impostor" means a person other than the named insured who
participates in any manner in the application or enrollment process
for a certificate under a group life insurance policy and represents
himself or herself to be the named insured or represents that a
sample or specimen of blood, urine, or other bodily substance is that
of the named insured.
(C) "Named insured" means the individual named in an application
or enrollment form for a certificate under a group life insurance
policy as the person whose life is to be insured.
10206.5. The policy may provide that the insurer is not liable, or
is liable only in a reduced amount, for losses arising from
conditions:
(a) Relating to war or act of war;
(b) Relating to military or naval service;
(c) Relating to aviation.
The commissioner may after notice and hearing prescribe reasonable
rules and regulations relative to the use of provisions permitted by
this section in respect to policies outstanding or hereafter issued.
10207. The policy shall contain a provision that:
(a) The policy, the application of the employer and the individual
applications, if any, of the employees constitute the entire
contract of insurance.
(b) All statements made by the employer or by the individual
employees are, in the absence of fraud, representations and not
warranties.
(c) Such statements will not be used in defense to a claim under
the policy, unless contained in a written application.
10208. The policy shall contain a provision for the equitable
adjustment of the premium or the amount of insurance payable in the
event of a misstatement of the age of an employee.
10209. (a) Except as provided by Sections 10203.5 and 10203.8, the
policy shall contain a provision that the insurer will issue to the
employer for delivery to the insured employee an individual
certificate setting forth:
(1) A statement as to the insurance protection to which the
employee is entitled and to whom payable.
(2) A provision that if the employment terminates for any reason
whatsoever and the employee applies to the insurer within 31 days
after the termination, paying the premium applicable to the class of
risk to which he or she belongs and to the form and amount of the
policy at his or her then attained age, he or she is entitled,
without producing evidence of insurability, to the issue by the
insurer of any individual life policy in any one of the forms, other
than term insurance, customarily issued by the insurer.
(3) A statement that the policy in lieu of group insurance will be
in an amount equal to the amount of his or her protection under the
group insurance at the time of the termination.
(4) A provision that if the employee dies during the 31-day period
within which he or she is entitled to have an individual policy
issued to him or her in accordance with this section and before the
policy shall have become effective, the amount of life insurance that
the employee is entitled to have issued to him or her under the
individual policy shall be payable as a claim under the group policy,
whether or not application for the individual policy or the payment
of the first premium therefor has been made.
(b) If any employee insured under a group life insurance policy
delivered in this state becomes entitled under the terms of the
policy to have an individual policy of life insurance issued to him
or her without evidence of insurability, subject to making of
application and payment of the first premium within the period
specified in the policy, and if the employee is not given notice of
the existence of the right at least 15 days prior to the expiration
date of the period, the employee shall have an additional period
within which to exercise the right, but nothing in this section shall
be construed to continue any insurance beyond the period provided in
the policy. This additional period shall expire 25 days next after
the employee is given the notice but in no event shall the additional
period extend beyond 60 days next after the expiration date of the
period provided in the policy. Written notice presented to the
employee or mailed by the policyholder to the last-known address of
the employee or mailed by the insurer to the last-known address of
the employee as furnished by the policyholder shall constitute notice
for the purpose of this section.
(c) Paragraphs (2) and (4) of subdivision (a), and subdivision
(b), shall apply to any insurance issued pursuant to Section 10203.4
on the life of a spouse of an employee.
(d) The contract of insurance and individual certificate may
contain provisions defining the extent to which the employer acts as
the agent of the employee or may act as the agent of the insurer.
10209.1. An individual certificate shall be individualized, except
that in the case of an individual certificate issued under a group
policy which requires no regular contribution toward the payment of
the premium to be made by the employees covered thereunder, such
individual certificate need not be individualized if it is in a form
setting forth a clear statement of the conditions of eligibility from
which the employee can determine the circumstances under which he is
insured under the master policy.
An individual certificate shall be deemed to be "individualized,"
within the meaning of this section, if it contains either the name of
the employee covered or some other means of identifying to the
employee covered that it is his individual certificate.
10209.3. (a) Subject to the terms of the policy, or pursuant to an
agreement between the insured, the group policyholder, and the
insurer, any person insured under a group life insurance policy may
make to any person, other than the policyholder, an assignment of all
or any part of the incidents of ownership conferred on him or her by
the policy or by law, including specifically, but not by way of
limitation, the right to exercise the conversion privilege and the
right to name a beneficiary.
The enactment of this section made at the 1969 Regular Session of
the Legislature does not constitute a change in, but is declaratory
of, the existing law.
(b) Notwithstanding subdivision (a), any person who has been
diagnosed with a terminal illness shall have the right to make an
absolute assignment for value of his or her interest in a policy or
certificate of life insurance.
(c) The right of assignment in subdivision (b) shall not extend to
situations in which the benefits of the policy or certificate of
life insurance are used as collateral for a loan.
(d) The viatical broker shall notify the spouse of a terminally
ill viator of the viatication.
10210. The policy shall contain a provision that to the groups or
classes originally insured there will be added from time to time all
new employees of the employer eligible for insurance in such groups
or classes, except that the policy may provide that if the premium is
paid by the employer and employees jointly any employee who fails to
request insurance during the period of eligibility following his
employment as prescribed by the policy shall not be insured until he
has furnished evidence of insurability satisfactory to the insurer.
10210.5. Whenever any provision of this chapter requires the
payment of a premium by any person, such requirement relates to the
responsibility for the payment of the premium and not to the
transmission or collection of the premium or premium contributions.
Such transmission or collection shall be performed by the
policyholder, except where the policy specifies the persons other
than the policyholder by whom such transmission or collection shall
be made, and in one of the following situations:
(a) If such policy covers the employees of more than one employer,
the insurer may collect premium contributions from individual
employers whose employees are insured or may assist the policyholder
in making such collections. If the employees of more than 100 such
employers are covered under such policy, it shall state as a separate
part of the premium to be charged for the policy the amount to be
charged by the insurer for such collection.
(b) If the policy covers a group of governmental employees and the
governmental unit paying such employees will not transmit their
premium contribution after pay roll deduction, the insurer may
collect from the individual employees. If more than 100 such
employees are covered under such policy, it shall state as a separate
part of the premium to be charged for the policy the amount to be
charged by the insurer for such collection.
(c) If individual members of the group make payment of their share
of the premium contribution to the insurer without billing or
solicitation by the insurer during a period of temporary absence from
active work of not exceeding 90 days, such payment may be received
without the necessity of any separately stated charge by the insurer.
10211. Policies of group life insurance may conform to the
following conditions, any other provisions of this chapter
notwithstanding:
(a) When issued in this State by any foreign insurer, they may
contain any provision required by the law of the State under which
the insurer is organized.
(b) When issued in other States or countries by domestic insurers,
they may contain any provision required by the laws of the State, or
country, in which they are issued.
(c) They may contain provisions on any of the requirements set
forth in sections 10205 to 10210, which, in the opinion of the
commissioner, are more favorable to the employer or to the employee
than the required provisions.
10212. Except as provided in this chapter, in every group policy
issued by a domestic life insurer, the employer is the policyholder
for all purposes within the meaning of this code. If entitled to vote
at meetings of the insurer, he shall be entitled to one vote.
10214. If hereafter any dividend is paid or any premium refunded
under any policy of group life insurance heretofore or hereafter
issued, the excess, if any, of the aggregate dividends or premium
refunds under such policy over the aggregate expenditures for
insurance under such policy made from funds contributed by the
policyholder, or by an employer of insured persons or by union or
association to which such insured persons belong, including
expenditures made in connection with the administration of such
policy, shall be applied by the policyholder for the benefit of such
insured employees generally or their dependents or insured members
generally or their dependents. For the purpose of this section and at
the option of the policyholder, "policy" may include all group life
and disability insurance policies of the policyholder.