§431:10D-213 - Standard provisions required.

§431:10D-213 Standard provisions required. (a) No policy of group life insurance shall be delivered or issued fordelivery in this State unless it contains in substance the standard provisionsset forth below, or provisions that in the opinion of the commissioner are morefavorable to the individuals insured. The policy shall provide that:

(1) Grace period. The policyholder is entitled to agrace period of not fewer than thirty days, for the payment of any premium dueexcept the first, during which grace period the death benefit coverage shallcontinue in force, unless the policyholder has given the insurer written noticeof discontinuance in advance of the date of discontinuance and in accordancewith the terms of the policy. The policy may provide that the policyholdershall be liable to the insurer for the payment of a pro rata premium for thetime the policy was in force during the grace period.

(2) Incontestability. The validity of the policyshall not be contested, except for nonpayment of premiums, after it has been inforce for two years from its date of issue; and that no statement made by anindividual insured under the policy relating to the individual's insurabilityshall be used in contesting the validity of the insurance with respect to whichthe statement was made, after the insurance has been in force prior to thecontest for a period of two years during the individual's lifetime, nor unlessit is contained in a written instrument signed by the individual.

(3) The contract, representations. A copy of theapplication, if any, of the policyholder shall be attached to the policy whenissued and become a part of the contract; all statements made by thepolicyholder or by the persons insured shall be deemed representations and notwarranties, and no statement made by any person insured shall be used in anycontest unless a copy of the instrument containing the statement is or has beenfurnished to such persons, or, in the event of death or incapacity of theinsured person, to the person's beneficiary or personal representative.

(4) Insurability. The conditions, if any, underwhich the insurer reserves the right to require a person eligible for insuranceto furnish evidence of individual insurability satisfactory to the insurer as acondition to part or all of the individual's coverage.

(5) Misstatement of age. An equitable adjustment ofpremiums or of benefits or of both shall be made in the event the age of aperson insured has been misstated, containing a clear statement of the method ofadjustment to be used.

(6) Beneficiary. Any sum becoming due by reason ofthe death of the individual insured shall be payable to the beneficiarydesignated by the individual subject to the provisions of the policy in theevent there is no designated beneficiary, as to all or any part of the sum,living at the death of the individual 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 $2,000 to any person appearing tothe insurer to be equitably entitled thereto by reason of having incurredfuneral or other expenses incident to the last illness or death of theindividual insured.

(7) Certificates. The insurer will issue to thepolicyholder for delivery to each individual insured an individual certificatesetting forth a statement as to the insurance protection to which theindividual is entitled, to whom the insurance benefits are payable, and therights and conditions set forth in paragraphs (8), (9), and (10).

(8) Conversion on termination of eligibility. If theinsurance, or any portion of it, on an individual covered under the policyceases because of termination of employment or of membership in the class orclasses eligible for coverage under the policy, the individual shall beentitled to have issued to the individual by the insurer, without evidence ofinsurability, an individual policy of life insurance without disability orother supplementary benefits; provided that:

(A) Application for the individual policyshall be made, and the first premium paid to the insurer, within not fewer thanthirty days, after such termination;

(B) The individual policy shall, at the optionof the individual, be on any one of the forms then customarily issued by theinsurer at the age and for the amount applied for, except that the group policymay exclude the option to elect term insurance;

(C) The individual policy shall be in anamount not in excess of the amount of life insurance that ceases because ofsuch termination nor less than $1,000 unless a smaller amount of coverage wasprovided for the individual under the group policy less the amount of any lifeinsurance for which such person becomes eligible under the same or any othergroup policy within not fewer than thirty days after such termination; providedthat any amount of insurance that shall have matured on or before the date ofsuch termination as an endowment payable to the individual 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 such termination; and

(D) The premium on the individual policy shallbe at the insurer's then customary rate applicable to the form and amount ofthe individual policy, to the class of risk to which the individual thenbelongs, and to the individual's age attained on the effective date of theindividual policy.

(9) Conversion on termination of policy. If thegroup policy terminates or is amended so as to terminate the insurance of anyclass of insured individuals, every individual insured thereunder at the dateof such termination whose insurance terminates, including the insured dependentof a covered person, and who has been so insured for at least five years priorto the termination date shall be entitled to have issued to the individual bythe insurer an individual policy of life insurance, subject to the sameconditions and limitations as are provided by paragraph (8), except that thegroup policy may provide that the amount of such individual policy shall notexceed the smaller of:

(A) The amount of the individual's lifeinsurance protection ceasing because of the termination or amendment of thegroup policy, less the amount of any life insurance for which the individual isor becomes eligible under any group policy issued or reinstated by the same oranother insurer within not fewer than thirty days of such termination; or

(B) $10,000.

(10) Death pending conversion. If an individualinsured 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 to the individual in accordance withparagraphs (8) and (9), and before such an individual policy shall have becomeeffective, the amount of life insurance that the individual would have beenentitled to have issued to the individual under such individual policy shall bepayable as a claim under the group policy, regardless of whether the individualpolicy or the payment of the first premium therefor has been made.

(b) Subsection (a)(6) through (a)(10) shallnot apply to policies issued to a credit union to insure its members.

(d) If the group life insurance policy is on aplan of insurance other than the term plan, it shall contain a nonforfeitureprovision or provisions that in the opinion of the commissioner is or areequitable to the insured persons and to the policyholder, but suchnonforfeiture benefits are not required to be the same as those required forindividual life insurance policies. [L 1987, c 347, pt of §2; gen ch 1993; am L2004, c 122, §54]