§ 27-4.8-5 - Group life insurance standard provision.
SECTION 27-4.8-5
§ 27-4.8-5 Group life insurance standardprovision. – (a) No policy of group life insurance shall be delivered in this state unlessit contains in substance the following provisions, or provisions which in theopinion of the commissioner are more favorable to the persons insured, or atleast as favorable to the persons insured and more favorable to thepolicyholder, however:
(1) Subsections (f) to (k) inclusive shall not apply topolicies insuring the lives of debtors;
(2) The standard provisions required for individual lifeinsurance policies shall not apply to group life insurance policies; and
(3) If the group life insurance policy is on a plan ofinsurance other than the term plan, it shall contain a nonforfeiture provisionor provisions which, in the opinion of the commissioner, is or are equitable tothe insured persons and to the policyholder. Nothing herein shall be construedto require that group life insurance policies contain the same nonforfeitureprovisions as are required for individual life insurance policies.
(b) The policy shall contain a provision that thepolicyholder is entitled to a grace period of thirty-one (31) days for thepayment of any premium due except the first, during which grace period thedeath benefit coverage shall continue in force, unless the policyholder givesthe insurer written notice of discontinuance in advance of the date ofdiscontinuous and in accordance with the terms of the policy. The policy mayprovide that the policyholder shall be liable to the insurer for the payment ofa pro rata premium for the time the policy was in force during the grace period.
(c) The policy shall contain a provision that the validity ofthe policy shall not be contested except for nonpayment of premiums after ithas been in force for two (2) years from its date of issue; and that nostatement made by any person insured under the policy relating to his or herinsurability shall be used in contesting the validity of the insurance withrespect to which the statement was made after the insurance has been in forceprior to the contest for a period of two (2) years during the person's lifetimenor unless it is contained in a written instrument signed by him or her. Thisprovision shall not preclude the assertion at any time of defenses based uponprovisions in the policy that relate to eligibility for coverage.
(d) The policy shall contain a provision that a copy of theapplication, if any, of the policy holder shall be attached to the policy whenissued, that all statements made by the policyholder or by the persons insuredshall be deemed representations and not warranties and that no statement madeby any person insured shall be used in any contest unless a copy of theinstrument containing the statement is or has been furnished to the person or,in the event of death or incapacity of the insured person, to his or herbeneficiary or personal representative.
(e) The policy shall contain a provision setting forth theconditions, if any, under which the insurer reserves the right to require aperson eligible for insurance to furnish evidence of individual insurabilitysatisfactory to the insurer as a condition to part or all of his coverage.
(f) The policy shall contain a provision specifying anequitable adjustment of premiums or benefits, or both, to be made in the eventthe age of a person insured has been misstated. The provision to contain aclear statement of the method of adjustment to be made.
(g) The policy shall contain a provision that any sumbecoming due by reason of the death of the person insured shall be payable tothe beneficiary designated by the person insured, except that, where the policycontains conditions pertaining to family status, the beneficiary may be thefamily member specified by the policy terms, subject to the provisions of thepolicy in the event there is no designated beneficiary, as to all or any partof the sum, living at the death of the person insured, and subject to any rightreserved by the insurer in the policy and set forth in the certificate to payat its option a part of the sum not exceeding two thousand dollars ($2000) toany person appearing to the insurer to be equitably entitled to it by reason ofhaving incurred funeral or other expenses incident to the last illness or deathof the person insured.
(h) The policy shall contain a provision that the insurerwill issue to the policyholder for delivery to each person insured acertificate setting forth a statement as to the insurance protection to whichhe or she is entitled, to whom the insurance benefits are payable, a statementas to any dependent's coverage included in the certificate, and the rights andconditions set forth in subsections (h), (i), (j) and (k) following.
(i) The policy shall contain a provision that, if theinsurance, or any portion of it, on a person covered under the policy or on thedependent of a person covered, ceases because of termination of employment orof membership in the class or classes eligible for coverage under the policy,the person shall be entitled to have issued to him or her by the insurer,without evidence of insurability, an individual policy of life insurancewithout disability or other supplementary benefits, provided application forthe individual policy shall be made, and the first premium paid to the insurer,within thirty-one (31) days after termination and provided further that:
(1) The individual policy shall, at the option of the person,be on any one of the forms then customarily issued by the insurer at the ageand for the amount applied for, except that the group policy may exclude theoption to elect term insurance;
(2) The individual policy shall be in an amount not in excessof the amount of life insurance that ceases because of termination, less theamount of any life insurance for which the person becomes eligible under thesame or any other group policy within thirty-one (31) days after termination,provided that any amount of insurance that shall have matured on or before thedate of termination as an endowment payable to the person insured, whether inone sum or in installments or in the form of an annuity, shall not, for thepurposes of this provision, be included in the amount that is considered tocease because of termination; and
(3) The premium on the individual policy shall be at theinsurer's then customary rate applicable to the form and amount of theindividual policy, to the class of risk to which the person then belongs, andto the individual age attained on the effective date of the individual policy.Subject to the same conditions set forth above, the conversion privilege shallbe available:
(i) To a surviving dependent, if any, at the death of anemployee or member, with respect to the coverage under the group policy thatterminates by reason of the death; and
(ii) To the dependent of the employee or member upontermination of coverage of the dependent, while the employee or member remainsinsured under the group policy, by reason of the dependent ceasing to be aqualified family member under the group policy.
(j) The policy shall contain a provision that if the grouppolicy terminates or is amended so as to terminate the insurance of any classof insured persons, every person insured thereunder at the date of terminationwhose insurance terminates, including the insured dependent of a coveredperson, and who has been so insured for at least five (5) years prior to thetermination date shall be entitled to have issued by the insurer an individualpolicy of life insurance, subject to the same conditions and limitations as areprovided by subsection (h) above, except that the group policy may provide thatthe amount of the individual policy shall not exceed the smaller of:
(i) The amount of the person's life insurance protectionceasing because of the termination or amendment of the group policy, less theamount of any life insurance for which the person is or becomes eligible undera group policy issued or reinstated by the same or another insurer withinthirty-one (31) days after termination; or
(ii) Ten-thousand dollars ($10,000).
(k) The policy shall contain a provision that, if a personinsured under the group policy, or the insured dependent of a covered person,dies during the period within which the individual would have been entitled tohave an individual policy issued in accordance with subsection (h) or (i) aboveand before the individual policy shall have become effective, the amount oflife insurance which he or she would have been entitled to have issued underthe individual policy shall be payable as a claim under the group policy,whether or not application for the individual policy or the payment of thefirst premium therefore has been made.
(l) Where active employment is a condition of insurance, thepolicy shall contain a provision that an insured may continue coverage duringthe insured's total disability by timely payment to the policyholder of thatportion, if any, of the premium that would have been required from the insuredhad total disability not occurred. The continuation shall be on a premiumpaying basis for a period of six (6) months from the date on which the totaldisability started, but not beyond the earlier of:
(i) Approval by the insurer of continuation of the coverageunder any disability provision which the group insurance policy may contain; or
(ii) The discontinuance of the group insurance policy.
(m) In the case of a policy insuring the lives of debtors,the policy shall contain a provision that the insurer will furnish to thepolicyholder for delivery to each debtor insured under the policy a certificateof insurance describing the coverage and specifying that the death benefitshall first be applied to reduce or extinguish the indebtedness.