§ 509.1 — Form of policy

Iowa § 509.1

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 509: GROUP INSURANCE

Text

No policy of group life, accident or health insurance shall be delivered in this state unless
it conforms to one of the following descriptions:
1. A policy issued to an employer, or to the trustees of a fund established by an employer,
which employer or trustee shall be deemed the policyholder, to insure employees of the
employer for the benefit of persons other than the employer, subject to the following
requirements:
a. 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
the employees of one or more subsidiary corporations, and the employees, individual
proprietors, andpartnersofoneormoreaffiliatedcorporations, proprietorsorpartnershipsif
the business of the employer and of such affiliated corporations, proprietors or partnerships
is under common control through stock ownership, contract, or otherwise. The policy may
provide that the term “employees” shall include the individual proprietor or partners if the
employer is an individual proprietor or a partnership. The policy may provide that the term
“employees” shall include retired employees. The policy may also provide that the term
“employees” shall include the board of directors if the employer is a corporation.
b. The premium for the group policy shall be paid by the policyholder, either from the
employer’s funds or funds contributed by the insured employees, or from both. A policy
of group accident and health insurance on which part of the premium is to be derived
from funds contributed by the insured employees may be placed in force only if at least
seventy-five percent of the then eligible employees, excluding any as to whom evidence
of individual insurability is not satisfactory to the insurer, elect to make the required
contributions. A policy on which no part of the premium is to be derived from funds
contributed by the insured employees must insure all eligible employees, or all except any as
to whom evidence of individual insurability is not satisfactory to the insurer. As used in this
paragraph, “accident and health insurance” does not include disability income insurance.
c. The amounts of insurance under the policy must be based upon some plan precluding
individual selection either by the employees or by the employer or trustees.
d. Group policies may include dependents of the employee, including the spouse.
e. The policy shall not exclude from coverage an employee or an employee’s spouse
or dependents on the basis of the eligibility of the employee or the employee’s spouse or
dependents for medical assistance under chapter 249A.
2. a. A policy issued to any one of the following to be considered the policyholder:
(1) An advisory, supervisory, or governing body or bodies of a regularly organized
religious denomination to insure its clergy, priests, or ministers of the gospel.
(2) A teachers’ association, to insure its members.

(3) A lawyers’ association, to insure its members.
(4) A volunteer fire company, to insure all of its members.
(5) Afraternalsocietyorassociation,oranysubordinatelodgeorbranchthereof,toinsure
its members.
(6) A common principal of any group of persons similarly engaged between whom there
exists a contractual relationship, to insure the members of such group.
(7) An association, the members of which are students, teachers, administrators or
officials of any elementary or secondary school or of any college, to insure the members
thereof. For the purpose of this subparagraph, the students, teachers, administrators or
officials of or for any such school or college shall constitute an association.
b. The provisions and requirements of subsection 1 shall apply to the policy and the
policyholder and insured in the same manner as subsection 1 applies to employers and
employees, except that if a policy is issued to a volunteer fire company or an association,
the members of which are students, teachers, administrators or officials of any elementary
or secondary school or of any college, the requirement for twenty-five members shall not
apply, and, if issued to a teachers’ association or lawyers’ association, not less than sixty-five
percent of the members thereof may be insured.
3. A policy issued to a creditor, who shall be deemed the policyholder, to insure debtors
of the creditor, subject to the following requirements:
a. The debtors eligible for insurance under the policy shall be all of the debtors of the
creditor, or all of any class or classes thereof determined by conditions pertaining to the
indebtedness or to the purchase giving rise to the indebtedness. The policy may provide that
the term “debtors” shall include the debtors of one or more subsidiary corporations, and the
debtors of one or more affiliated corporations, proprietors or partnerships if the business
of the policyholder and of such affiliated corporations, proprietors or partnerships is under
common control through stock ownership, contract, or otherwise.
b. The premium for the policy shall be paid by the policyholder, either from the creditor’s
funds, or from charges collected from the insured debtors, or from both. A policy on which
part or all of the premium is to be derived from the collection from the insured debtors of
identifiablechargesnotrequiredofuninsureddebtorsshallnotinclude, intheclassorclasses
of debtors eligible for insurance, debtors under obligations outstanding at its date of issue
without evidence of individual insurability unless at least seventy-five percent of the then
eligibledebtorselecttopaytherequiredcharges. Apolicyonwhichnopartofthepremiumis
to be derived from the collection of such identifiable charges must insure all eligible debtors,
or all except any as to whom evidence of individual insurability is not satisfactory to the
insurer.
c. The policy may be issued only if the group of eligible debtors is then receiving new
entrants at the rate of at least one hundred persons yearly, or may reasonably be expected to
receive at least one hundred new entrants during the first policy year, and only if the policy
reserves to the insurer the right to require evidence of individual insurability if less than
seventy-five percent of the new entrants become insured.
d. The amount of insurance on the life of a debtor shall not exceed the amount owed
by the debtor to the creditor, or the face amount of a totally or partially executed loan or
loan commitment creating personal liability and made in good faith for general agricultural
or horticultural purposes to a debtor with seasonal income. However, in no event shall the
amount of insurance exceed two hundred thousand dollars.
e. The insurance shall be payable to the policyholder. Such payment shall reduce or
extinguish the unpaid indebtedness of the debtor to the extent of such payment. Provided
that in the case of a debtor for agricultural or horticultural purposes of the type described
in paragraph “d”, the insurance in excess of indebtedness to the creditor, if any, shall be
payable to a named beneficiary, to the estate of the debtor or under the provision of a facility
of payment clause.
4. A policy issued to a labor union, which shall be deemed the policyholder, to insure
members of such union for the benefit of persons other than the union or any of its officials,
representatives, or agents, subject to the following requirements:
a. The members eligible for insurance under the policy shall be all of the members of

the union or all of any class or classes thereof determined by conditions pertaining to their
employment, or to membership in the union, or both.
b. The premium for the group life policy shall be paid by the policyholder, either wholly
from the union’s funds, or partly from such funds and partly from funds contributed by the
insured members specifically for their insurance. No policy, except accident and health, may
be issued on which the entire premium is to be derived from funds contributed by the insured
members specifically for their insurance. A policy on which part of the premium is to be
derived from funds contributed by the insured members specifically for their insurance may
be placed in force only if at least sixty-five percent of the then eligible members, excluding
any as to whom evidence of individual insurability is not satisfactory to the insurer, elect to
make the required contributions. A policy on which no part of the premium is to be derived
from funds contributed by the insured members specifically for their insurance must insure
all eligible members, or all except any as to whom evidence of individual insurability is not
satisfactory to the insurer.
c. The policy must cover at least ten members at date of issue.
d. The amounts of insurance under the policy must be based upon some plan precluding
individual selection either by the members or by the union.
e. Policies may include dependents of the insured, including the spouse.
f. The policy shall not exclude from coverage a member or a member’s spouse or
dependents on the basis of the eligibility of the member or the member’s spouse or
dependents for medical assistance under chapter 249A.
5. A policy issued to the trustees of a fund established by two or more employers in the
same industry or by two or more labor unions or by one or more employers and by one or
more labor unions which trustees shall be deemed the policyholder, to insure employees of
the employers or members of the unions for the benefit of persons other than the employers
or the unions, subject to the following requirements:
a. The persons eligible for insurance shall be all of the employees of the employers
or all of the members of the unions, or all of any class or classes thereof determined by
conditions pertaining to their employment, or to membership in the unions, or both. The
policy may provide that the term “employees” shall include the individual proprietor or
partners if an employer is an individual proprietor or a partnership. The policy may provide
that the term “employees” shall include the trustees or their employees, or both, if their
duties are principally connected with such trusteeship. The policy may provide that the term
“employees” shall include retired employees. The policy may also provide that the term
“employees” shall include the board of directors if the employer is a corporation.
b. The premium for the policy shall be paid by the trustees wholly from funds established
by the employers of the insured persons. The policy must insure all eligible persons, or all
except any as to whom evidence of individual insurability is not satisfactory to the insurer, if
the funds are contributed wholly by the employer or unions.
c. The policy must cover at least one hundred persons at date of issue.
d. The amounts of insurance under the policy must be based upon some plan precluding
individual selection either by the insured persons or by the policyholder, employers, or
unions.
e. Policies may include dependents of the insured, including the spouse.
f. The policy shall not exclude from coverage an employee or member or an employee’s or
member’s spouse or dependents on the basis of the eligibility of the employee or member or
employee’s or member’s spouse or dependents for medical assistance under chapter 249A.
6. A policy issued to any nonprofit industrial association, which shall be deemed the
policyholder, incorporated for a period of at least ten years and organized for purposes other
than obtaining insurance, subject to the following requirements:
a. If two or more members of the association, or any class or classes of members thereof
determinedbyconditionspertainingtoinsurance, electtoinsuretheiremployeesoranyclass
or classes of employees determined by conditions pertaining to employment; and
b. Thetotalnumberofinsuredemployeesmustnotbelessthanonethousand,andofthese
notlessthanseventy-fivepercentmustbeemployeesofmemberswithatleasttwentyinsured

employees each, and further, not more than ten percent may be employees of members with
less than ten insured employees each; and
c. The insurance premiums are paid by such members to the association; each member,
insofar as applicable to the member’s own employees, may collect part of the premium from
insured employees, and the method of apportionment of the premium payment between the
member and the member’s employees may be varied as among individual members; and
d. Not less than seventy-five percent of the eligible employees of each participating
member may be insured where the employees pay a part of the premium. The word
“employees” as used in this subsection shall also include the individual members and
employees of such association.
e. Policies may include dependents of the employees, including the spouse.
f. The policy shall not exclude from coverage an employee or an employee’s spouse
or dependents on the basis of the eligibility of the employee or the employee’s spouse or
dependents for medical assistance under chapter 249A. This paragraph shall also apply to
corporations operating within the state who provide insurance coverage for their employees
directly, and the commissioner shall have the authority to enforce the provisions of this
paragraph.
7. A policy issued to the department of health and human services, which shall be deemed
the policyholder, to insure eligible persons for medical assistance, or for both mandatory
medical assistance and optional medical assistance, as defined by chapter 249A as hereafter
amended.
8. A policy of group health insurance coverage, as defined in section 513B.2, issued by a
small employer carrier, as defined in section 513B.2, to a bona fide association, subject to the
following requirements:
a. The policy provides group health insurance coverage to eligible employees of members
of a bona fide association that are small employers as defined in section 513B.2, and to the
spouses and dependents of such employees.
b. The policy is issued to a bona fide association. For the purposes of this subsection, a
bona fide association is an association which meets all of the following requirements:
(1) The association is a trade, industry, or professional association which is organized in
good faith as a nonprofit corporation under chapter 504 for purposes other than obtaining
insurance and has been in existence and actively maintained for at least five continuous years
at the time the policy is issued.
(2) The association does not condition membership in the association on the health status
of employees of its members or the health status of the spouses and dependents of such
employees.
(3) Group health insurance coverage offered by the association is available to all eligible
employees of its members that are small employers as defined in section 513B.2 who choose
to participate in the health insurance coverage offered, and to the spouses and dependents
of such employees, regardless of the health status of such employees or their spouses and
dependents.
(4) Grouphealthinsurancecoverageofferedbytheassociationisavailableonlytopersons
who are eligible employees of a small employer as defined in section 513B.2 that is a member
of the association, or to the spouses or dependents of such employees.
9. A policy of group health insurance coverage issued to a multiple employer welfare
arrangement pursuant to chapter 513D that is subject to regulation by the commissioner.
10. A policy issued to a resident of this state under a group life, accident, or health
insurance policy issued to a group other than one described in subsections 1 through 9,
subject to the following requirements:
a. The commissioner determines that all of the following apply:
(1) The issuance of the group policy is not contrary to the best interest of the public.
(2) The issuance of the group policy will result in economies of acquisition or
administration.
(3) Thebenefitsunderthegrouppolicyarereasonableinrelationtothepremiumcharged.
b. The commissioner need not make a determination under paragraph “a” if the
commissioner determines that the group insurance coverage offered in this state by an

insurer or other person is offered under a policy issued in another state and that state or
another state in which the policy is offered, having requirements substantially similar to
those in paragraph “a”, has determined that the policy meets those requirements.
c. The premium for the policy shall be paid either from the policyholder’s funds, or from
funds contributed by the covered person, or both.
d. The insurer may exclude or limit the coverage on any person as to whom evidence of
individual insurability is not satisfactory to the insurer.
e. If compensation of any kind will or may be paid to the policyholder in connection
with the group policy, the insurer shall provide to the prospective insured written notice that
compensation will or may be paid. Notice shall be provided whether the compensation is
direct or indirect, and whether the compensation is paid to or retained by the policyholder,
or paid to or retained by a third party at the direction of the policyholder or any entity
affiliated with the policyholder by ownership, contract, or employment. The notice shall be
placed on or accompany any document designed for the enrollment of prospective insureds.

Legislative History

[C24, 27, 31, §8675, 8676; C35, §8684-e1 – 8684-e3; C39, §8684.01 – 8684.03; C46, §509.1 – 509.3; C50, 54, 58, 62, 66, 71, 73, 75, 77, 79, 81, §509.1]