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 persons insured or at least as favorable to the persons insured,
and more favorable to the policyholder, provided, however, that provisions of subsections 6
through 10 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 or provisions
which in the opinion of the commissioner is or are equitable
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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 persons insured or at least as favorable to the persons insured,
and more favorable to the policyholder, provided, however, that provisions of subsections 6
through 10 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 or provisions
which in the opinion of the commissioner is or are equitable to the insured persons and to
the policyholder, but nothing herein shall be construed to require that group life insurance
policies contain the same nonforfeiture provisions as are required for individual life
insurance policies:
1. A provision that the policyholder is entitled to a grace period of thirty-one days for the
payment of any premium due except that first, during which grace period the death benefit
coverage shall continue in force, unless the policyholder shall have 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.
2. 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 the person’s 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 the
person.
3. 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 such person or to the person’s beneficiary.
4. 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 the person’s coverage.
5. A provision specifying an equitable adjustment of premiums or benefits or of both to be
made in the event the age of a person insured has been misstated, such provision to contain
a clear statement of the method of adjustment to be used.
6. 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 person insured, subject to the provisions
of the policy 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 hundred dollars, to any person appearing to the insurer to be equitably entitled thereto
by reason of having incurred funeral or other expenses incident to the last illness or death of
the person insured.
7. A provision that the insurer will issue to the policyholder for delivery to each person
insured an individual certificate setting forth a statement as to the insurance protection to
which the person is entitled, to whom the insurance benefits are payable, and the rights and
conditions set forth in subsections 8 through 10 if applicable.
8. 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 or classes
eligible for coverage under the policy, such person shall be entitled to have issued to the
person by the insurer, without evidence of insurability, an individual policy of life insurance
without disability or other supplementary benefits, provided application for the individual
policy shall be made, and the first premium paid to the insurer, within thirty-one days after
such termination, and provided further that,
a. The individual policy shall, at the option of such person, 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;
b. Theindividualpolicyshallbeinanamountnotinexcessoftheamountoflifeinsurance
which ceases because of such termination, provided that any amount of insurance which
matures on the date of such termination, or has matured prior thereto as an endowment
payable to the person insured, 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
c. 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 such
person then belongs, and to the person’s age attained on the effective date of the individual
policy.
9. A provision that if the group policy terminates or is amended so as to terminate the
insuranceofanyclassofinsuredpersons, everypersoninsuredthereunderatthedateofsuch
termination 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 the person by the insurer
an individual policy of life insurance, subject to the same conditions and limitations as are
provided by subsection 8, 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 the person 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.
10. A provision that if a person insured under the group policy dies during the period
within which the person would have been entitled to have an individual policy issued to the
person in accordance with subsection 8 or 9 and before such an individual policy shall have
become effective, the amount of life insurance which the person would have been entitled to
have issued to the person 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.