§ 27-1-12-41 — Group life insurance; required provisions

Indiana § 27-1-12-41

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 1: DEPARTMENT OF INSURANCE
• Ch. 12: Life Insurance Company Powers and Policy

Text

(a) A policy of group life insurance may not
be delivered in Indiana unless it contains in substance:
(1) the provisions described in subsection (b); or
(2) provisions that, in the opinion of the commissioner, are:
(A) more favorable to the persons insured; or
(B) at least as favorable to the persons insured and more
favorable to the policyholder;
than the provisions set forth in subsection (b).
(b) The provisions referred to in subsection (a)(1) are as follows:
(1) A provision that the policyholder is entitled to a grace period
of thirty-one (31) 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 is liable to
the insurer for the payment of a pro rata premium for the time the
policy was in force during the grace period.
(2) A provision that the validity of the policy may not be
contested, except for nonpayment of premiums, after the policy
has been in force for two (2) years after its date of issue, and that
no statement made by a person insured under the policy relating
to the person's insurability may be used in contesting the validity
of the insurance with respect to which the statement was made,
unless:
(A) the insurance has not been in force for a period of two (2)
years or longer during the person's lifetime; or
(B) the statement is contained in a written instrument signed by
the insured person.
However, a provision under this subdivision may not preclude the
assertion at any time of defenses based upon provisions in the
policy that relate to eligibility for coverage.
(3) A provision that a copy of the application, if any, of the
policyholder must be attached to the policy when issued, that all
statements made by the policyholder or by the persons insured are
to be deemed representations and not warranties, and that no
statement made by any person insured may be used in any contest
unless a copy of the instrument containing the statement is or has
been furnished to the insured person or, in the event of death or
incapacity of the insured person, to the insured person's
beneficiary or personal representative.
(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,
benefits, or both to be made in the event the age of a person
insured has been misstated. A provision under this subdivision
must contain a clear statement of the method of adjustment to be
made.
(6) A provision that any sum becoming due by reason of the death
of the person insured must be payable to the beneficiary
designated by the person insured. However, if a policy contains
conditions pertaining to family status, the beneficiary may be the
family member specified by the policy terms, subject to the
provisions of the policy in the event there is no designated
beneficiary, as to all or any part of the 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 the sum not exceeding two thousand dollars
($2,000) to any person appearing to the insurer to be equitably
entitled to that payment 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, a certificate setting forth a
statement that:
(A) explains the insurance protection to which the person
insured is entitled;
(B) indicates to whom the insurance benefits are payable;
(C) explains any dependent's coverage included in the
certificate; and
(D) sets forth the rights and conditions that apply to the person
under subdivisions (8), (9), (10), and (11).
(8) A provision that if the insurance, or any portion of it, on a
person covered under the policy, or on the dependent of a person
covered, ceases because of termination of employment or
termination of membership in the class or classes eligible for
coverage under the policy, the person or dependent is entitled,
without evidence of insurability, to an individual policy of life
insurance issued to the person or dependent by the insurer without
disability or other supplementary benefits, provided that an
application for the individual policy is made and that the first
premium is paid to the insurer within thirty-one (31) days after the
termination, and provided further that:
(A) the individual policy must, at the option of the person or
dependent, be on any one (1) of the forms then customarily
issued by the insurer at the age and for the amount applied for,
except that the group policy may exclude the option to elect
term insurance;
(B) the individual policy must be in an amount not in excess of
the amount of life insurance that ceases because of the
termination, less the amount of any life insurance for which the
person or dependent becomes eligible under the same policy or
any other group policy within thirty-one (31) days after the
termination (however, any amount of insurance that has
matured on or before the date of the termination as an
endowment payable to the person insured, whether in one (1)
sum, in installments, or in the form of an annuity, may not, for
the purposes of this clause, be included in the amount of
insurance that is considered to cease because of the
termination); and
(C) the premium on the individual policy must 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 person
or dependent then belongs, and to the individual age attained by
the person or dependent on the effective date of the individual
policy.
Subject to the conditions set forth in this subdivision, the
conversion privilege created by this subdivision must be available
to a surviving dependent of a person covered under a group
policy, with respect to the coverage under the group policy that
terminates by reason of the death of the person covered, and to the
dependent of an employee or member after termination of the
coverage of the dependent because the dependent ceases to be a
qualified family member under the group policy, while the
employee or member remains insured under the group policy.
(9) A provision that if the group policy terminates or is amended
so as to terminate the insurance of any class of insured persons,
every person insured under the policy at the date of the
termination whose insurance terminates, including the insured
dependent of a covered person, and who has been so insured for
at least five (5) years before the termination date, is entitled to
have issued by the insurer an individual policy of life insurance,
subject to the same conditions and limitations as are provided in
subdivision (8), except that the group policy may provide that the
amount of the individual policy may not exceed the lesser of:
(A) the amount of the person's life insurance protection that is
ceasing because of the termination or amendment of the group
policy, less the amount of any life insurance for which the
person is eligible or becomes eligible under a group policy
issued or reinstated by the same insurer or another insurer
within thirty-one (31) days after the termination; or
(B) ten thousand dollars ($10,000).
(10) A provision that if a person insured under the group policy,
or the insured dependent of a covered person, dies during the
period within which the covered person or dependent would have
been entitled to have an individual policy issued under
subdivision (8) or (9) or before such an individual policy becomes
effective, the amount of life insurance that the covered person or
dependent would have been entitled to have issued under an
individual policy is payable as a claim under the group policy,
whether or not application for the individual policy or the
payment of the first premium for the individual policy has been
made.
(11) If active employment is a condition of insurance, a provision
that an insured may continue coverage during the insured's total
disability by timely payment to the policyholder of that portion,
if any, of the premium that would have been required for the
insured had total disability not occurred. The continuation of
coverage under this subdivision on a premium paying basis must
extend for a period of six (6) months from the date on which the
total disability started, but not beyond the earlier of:
(A) the date of approval by the insurer of continuation of the
coverage under any disability provision that the group
insurance policy may contain; or
(B) the date of discontinuance of the group insurance policy.
(12) In the case of a policy insuring the lives of debtors, a
provision that the insurer will furnish to the policyholder, for
delivery to each debtor insured under the policy, a certificate of
insurance describing the coverage and specifying that the death
benefit will first be applied to reduce or extinguish the
indebtedness.
(c) Subsections (b)(6) through (b)(11) do not apply to policies
insuring the lives of debtors. The standard provisions required under
IC 27-1-12 for individual life insurance policies do not apply to group
life insurance policies.
(d) If a group life insurance policy is on a plan of insurance other
than the group plan, it must contain a nonforfeiture provision that, in
the opinion of the commissioner, is equitable to the insured persons
and to the policyholder. However, group life insurance policies need
not contain the same nonforfeiture provisions as are required for
individual life insurance policies under IC 27-1-12.

Legislative History

As added by P.L.254-1985, SEC.5.