§ 58-58-140. Group life insurance standard provisions.
§58‑58‑140. Group life insurance standard provisions.
No policy of group lifeinsurance shall be delivered in this State unless it contains in substance thefollowing provisions, or provisions which in the Commissioner's opinion aremore favorable to the persons insured, or at least as favorable to the personsinsured and more favorable to the policyholder, provided, however, (i) thatsubdivisions (6) through (10) of this section do not apply to policies issuedto a creditor to insure the creditor's debtors; (ii) that the standardprovisions required for individual life insurance policies do not apply togroup life insurance policies; and (iii) that if the group life insurancepolicy is on a plan of insurance other than the term plan, it shall contain a nonforfeitureprovision or provisions that in the Commissioner's opinion is or are equitableto the insured persons and to the policyholder, but nothing in this sectionrequires group life insurance policies to contain the same nonforfeitureprovisions that are required for individual life insurance policies:
(1) A provision that thepolicyholder is entitled to a grace period of 31 days for the payment of anypremium due except the first, during which grace period the death benefitcoverage shall continue in force, unless the policyholder has given the insurerwritten notice of discontinuance before the date of discontinuance and inaccordance with the terms of the policy. The policy may provide that thepolicyholder shall be liable to the insurer for the payment of a pro ratapremium for the time the policy was in force during the grace period.
(2) A provision that thevalidity of the policy shall not be contested, except for nonpayment ofpremiums, after it has been in force for two years from its date of issue; andthat no statement made by any person insured under the policy relating to thatperson's insurability shall be used in contesting the validity of the insurancewith respect to which the statement was made after the insurance has been inforce before the contest for a period of two years during the person's lifetimenor unless it is contained in a written instrument signed by the person.
(3) A provision that acopy of the application, if any, of the policyholder shall be attached to thepolicy when issued, that all statements made by the policyholder or by thepersons insured shall be considered representations and not warranties; andthat no statement made by any person insured shall be used in any contestunless a copy of the instrument containing the statement is or has beenfurnished to the person or to the person's beneficiary.
(4) A provision settingforth the conditions, if any, under which the insurer reserves the right torequire a person eligible for insurance to furnish evidence of individualinsurability satisfactory to the insurer as a condition to part or all of theperson's coverage.
(5) A provisionspecifying an equitable adjustment of premiums or benefits, or both, to be madeif the age of a person insured has been misstated; the provision to contain aclear statement of the method of adjustment to be used.
(6) A provision that anysum becoming due because of the death of the person insured shall be payable tothe beneficiary designated by the person insured, subject to the provisions of thepolicy if there is no designated beneficiary as to all or any part of the sumliving at the death of the person insured, and subject to any right reserved bythe insurer in the policy and set forth in the certificate to pay at its optiona part of the sum not exceeding two hundred fifty dollars ($250.00) to anyperson appearing to the insurer to be equitably entitled thereto by havingincurred funeral or other expenses incident to the last illness or death of theperson insured.
(7) A provision that theinsurer will issue to the policyholder, for delivery to each person insured, anindividual certificate setting forth a statement as to the insurance protectionto which the person is entitled, to whom the insurance benefits are payable,and the rights and conditions set forth in subdivisions (8), (9) and (10) ofthis section.
(8) A provision that ifthe insurance, or any portion of it, on a person covered under the policyceases because of termination of employment or of membership in the classeseligible for coverage under the policy, the person shall be entitled to beissued by the insurer, without evidence of insurability, an individual policyof life insurance without disability or other supplementary benefits, providedapplication for the individual policy shall be made, and the first premium paidto the insurer, within 31 days after such termination, and provided furtherthat,
a. The individualpolicy shall, at the option of the person, be on any one of the forms, exceptterm insurance, then customarily issued by the insurer at the age and for theamount applied for;
b. The individualpolicy shall be in an amount not in excess of the amount of life insurancewhich ceases because of the termination, provided that any amount of insurancewhich shall have matured on or before the date of the termination as anendowment payable to the person insured, whether in one sum or in installmentsor in the form of an annuity, shall not, for the purposes of this provision, beincluded in the amount which is considered to cease because of the termination;and
c. The premium on theindividual policy shall be at the insurer's then customary rate applicable tothe form and amount of the individual policy, to the class of risk to which theperson then belongs, and to the person's age on the effective date of theindividual policy.
(9) A provision that ifthe group policy terminates or is amended so as to terminate the insurance ofany class of insured persons, every person insured under the policy at the dateof the termination whose insurance terminates and who has been so insured forat least five years before the termination date shall be entitled to be issuedby the insurer an individual policy of life insurance, subject to theconditions and limitations in (8) above, except that the group policy mayprovide that the amount of the individual policy shall not exceed the smallerof (i) the amount of the person's life insurance protection ceasing because ofthe termination or amendment of the group policy, less the amount of any lifeinsurance for which the person is or becomes eligible under any group policyissued or reinstated by the same or another insurer within 31 days aftertermination, and (ii) ten thousand dollars ($10,000).
(10) A provision that if aperson insured under the group policy dies during the period within which theperson would have been entitled to have been issued an individual policy inaccordance with (8) or (9) above and before such an individual policy shallhave become effective, the amount of life insurance which the person would havebeen entitled to have been issued under the individual policy shall be payableas a claim under the group policy, whether or not application for theindividual policy or the payment of the first premium therefor has been made. (1925,c. 58, s. 2; 1943, c. 597, s. 2; 1947, c. 834; 1991, c. 644, s. 9.)