§ 10-7-202 — Policy provisions

Colorado § 10-7-202

• Jurisdiction: Colorado
• Title 10: Insurance
• Art.: Life Insurance

Text

(1) No policy of group life insurance shall be
delivered in this state unless it contains in substance the following provisions, or
provisions which in the opinion of the commissioner are more favorable to the
certificate owners, or at least as favorable to the certificate owners and more
favorable to the policyholder; except that paragraphs (f) to (j) of this subsection (1)
shall not apply to policies issued to a creditor to insure debtors of such creditor;
that the standard provisions required for individual life insurance policies shall not
apply to group life insurance policies; and that, if the group life insurance policy is
on a plan of insurance other than the term plan, it shall contain a nonforfeiture
provision which in the opinion of the commissioner is equitable to the certificate
owners and to the policyholder, but nothing in this section shall be construed to
require that group life insurance policies contain the same nonforfeiture provisions
as are required for individual life insurance policies:

(a) A provision that the policyholder is entitled to a grace period of thirty-one
days for the payment of any premium due except the first, during which grace
period the death benefit coverage shall continue in force unless the policyholder
has given the insurer written notice of discontinuance in advance of the date of
discontinuance and in accordance with the terms of the policy. The policy may
provide that the policyholder shall be liable to the insurer for the payment of a pro
rata premium for the time the policy was in force during such grace period.

(b) A provision 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 person insured under the policy
relating to his insurability shall be used in contesting the validity of the insurance
with respect to which such statement was made after such insurance has been in
force prior to the contest for a period of two years during such person's lifetime nor
unless it is contained in a written instrument signed by him;

(c) A provision that a copy of the application, if any, of the policyholder shall
be attached to the policy when issued, that all statements made by the policyholder
or by the persons insured shall be deemed representations and not warranties, and
that no statement made by any person insured shall be used in any contest unless a
copy of the instrument containing the statement is or has been furnished to the
certificate owner, to his assignee, or to his beneficiary;

(d) A provision setting forth the conditions, if any, under which the insurer
reserves the right to require a person eligible for insurance to furnish evidence of
individual insurability satisfactory to the insurer as a condition to part or all of his
coverage;

(e) A provision specifying an equitable adjustment of premiums or of
benefits or of both to be made in the event the age of a person insured is misstated,
such provision to contain a clear statement of the method of adjustment to be used;

(f) A provision that any sum becoming due by reason of the death of the
person insured shall be payable to the beneficiary designated by the certificate
owner, subject to the provisions of the policy and in the event there is no designated
beneficiary as to all or any part of such sum living at the death of the person
insured, and subject to any right reserved by the insurer in the policy and set forth
in the certificate to pay at its option a part of such sum not exceeding five thousand
dollars to any person appearing to the insurer to be equitably entitled thereto by
reason of having incurred verifiable funeral expenses or other verifiable expenses
when such expenses are incident to the last illness or death of the person insured;

(g) A provision that the insurer will issue to the policyholder for delivery to
the certificate owner an individual certificate setting forth a statement as to the
insurance protection provided, to whom the insurance benefits are payable, and the
rights and conditions set forth in paragraphs (h), (i), and (j) of this subsection (1);

(h) A provision that, if the insurance, or any portion of it, on a person covered
under the policy ceases because of termination of employment or of membership in
the class eligible for coverage under the policy, the certificate owner shall be
entitled to have issued to him by the insurer, without evidence of insurability, an
individual policy of life insurance without disability or other supplementary
benefits; except that application for the individual policy shall be made, and the
first premium paid to the insurer, within thirty-one days after such termination, and
except that:

(I) The individual policy, at the option of the certificate owner, shall be on any
one of the forms, except term insurance, then customarily issued by the insurer at
the age and for the amount applied for;

(II) The individual policy shall be in an amount not in excess of the amount of
life insurance which ceases because of such termination; except that any amount of
insurance which has matured as an endowment, whether in one sum or in
installments or in the form of an annuity, shall not, for the purposes of this
provision, be included in the amount which is considered to cease because of such
termination; and

(III) The premium on the individual policy shall be at the insurer's then
customary rate applicable to the form and amount of the individual policy, to the
class of risk to which the insured person then belongs, and to his age attained on
the effective date of the individual policy;

(i) A provision that, if the group policy terminates or is amended so as to
terminate the insurance of any class of insured persons, the owner of each
certificate with respect to a person insured thereunder whose insurance terminates
and who has been so insured for at least five years prior to such termination date
shall be entitled to have issued to him by the insurer an individual policy of life
insurance, subject to the same conditions and limitations as are provided by
paragraph (h) of this subsection (1); except that the group policy may provide that
the amount of such individual policy shall not exceed the smaller of the amount of
the person's life insurance protection ceasing because of the termination or
amendment of the group policy, less the amount of any life insurance for which he
is or becomes eligible under any group policy issued or reinstated by the same or
another insurer within thirty-one days after such termination, and two thousand
dollars;

(j) A provision that, if a person insured under the group policy dies during the
period within which the certificate owner would have been entitled to have an
individual policy issued to him in accordance with paragraph (h) or (i) of this
subsection (1) and before such an individual policy has become effective, the
amount of life insurance which the certificate owner would have been entitled to
have issued to him under such 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.

(2) The provisions of paragraphs (h) to (j) of subsection (1) of this section
shall apply to any insurance issued pursuant to section 10-7-201 on the life of a
spouse of an employee or member.

Legislative History

Source: L. 19: p. 441, � 2. C.L. � 2595. CSA: C. 87, � 165. L. 47: p. 584, � 2. CRS 53: � 72-6-2. C.R.S. 1963: � 72-6-2. L. 67: p. 174, � 2. L. 77: (2) amended, p. 522, � 2, effective July 1. L. 83: IP(1), (1)(c), and (1)(f) to (1)(j) amended, p. 461, � 1, effective July 1. L. 85: (1)(f) amended, p. 386, � 1, effective July 1.