§431:10D-202  Employee groups.  (a)  The
lives of a group of individuals may be insured under a policy issued to an
employer, or to the trustees of a fund established by an employer, which
employer or trustee is deemed the policyholder, insuring employees of the
employer for the benefit of persons other than the employer; provided that if
the entire cost of the insurance has been borne by the employer and the
employer uses the benefits for the purpose of purchasing employer securities
distributed to employees from a pension, profit sharing, stock bonus, or
employee stock ownership plan which has been qualified under section 401 of the
Internal Revenue Code, benefits may be made payable to the employer.



(b)  Issuance of group life insurance policies
shall be subject to the following requirements:



(1)  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 determined by conditions pertaining to their employment.  The
policy may provide that the term employees shall include:



(A)  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 such affiliated corporations, proprietorships, or
partnerships is under common control;



(B)  The individual proprietor or partners, if
the employer is an individual proprietor or a partnership; and



(C)  Retired employees.



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 the individual is
actively engaged in and devotes a substantial part of the individual's time to
the conduct of the business of the proprietorship or partnership;



(2)  The premium for the policy may be paid entirely
by the employer, or by funds paid entirely by the insured employees, or by
funds contributed by both the employer and the insured employees.  Except as
provided in paragraph (3), 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 such coverage in writing;



(3)  An insurer may exclude or limit the coverage on
any person as to whom evidence of individual insurability is not satisfactory
to the insurer; and



(4)  The amounts of insurance under the policy shall
be based upon some plan precluding individual selection either by the employer
or trustees. [L 1987, c 347, pt of §2; am L 1988, c 330, §3; gen ch 1992; am L
2004, c 122, §47; am L 2008, c 155, §2]