§ 17B:27-68 — Conditions for issuance, delivery of group life insurance.

1. Except as provided in section 2 of this act, no policy of group life insurance shall be delivered or issued for delivery in this State unless it meets one of the descriptions in subsections a. through h. of this section: a. A policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer, including the funding of employee benefit plans, subject to the following requirements: (1) The employees eligible for insurance under the policy shall be all of the employees of the employer, or all of any class thereof. The policy may provide that the term "employees" shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships or partnerships if the business of the employer and of the affiliated corporations, proprietorships or partnerships is under common control. The policy may provide that the term "employees" shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term "employees" may include retired employees, former employees and directors of a corporate employer. (2) The premium for the policy shall be remitted by the policyholder either from the employer's funds or from funds contributed by the insured employees, or from both. Except as provided in paragraph (3) of this subsection, a policy on which no part of the premium is to be derived from funds contributed by the insured employees shall insure all eligible employees, except those who reject the coverage in writing. (3) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer. b. A policy issued to a creditor or its parent holding company or to a trustee or agent designated by two or more creditors, which creditor, holding company, affiliate, trustee or agent shall be deemed the policyholder, to insure debtors of the creditor subject to the following requirements: (1) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor, or all of any class thereof. The policy may provide that the term "debtors" shall include: (a) Borrowers of money or purchasers or lessees of goods, services or property for which payment is arranged through a credit transaction; (b) The debtors of one or more subsidiary corporations; and (c) The debtors of one or more affiliated corporations, proprietorships or partnerships if the business of the policyholder and of the affiliated corporations, proprietorships or partnerships is under common control. (2) The premium for the policy shall be remitted by the policyholder either from the creditor's funds, or from charges collected from the insured debtors, or from both. Except as provided in paragraph (3) of this subsection, a policy on which no part of the premium is to be derived from the funds contributed by insured debtors specifically for their insurance shall insure all eligible debtors. (3) An insurer may exclude any debtors as to whom evidence of individual insurability is not satisfactory to the insurer. (4) The amount of the insurance on the life of any debtor shall at no time exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor, except that insurance written in connection with open-end credit having a credit limit exceeding $10,000 may be in an amount not exceeding the credit limit. (5) The insurance may be payable to the creditor or any successor to the right, title and interest of the creditor. The payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of the payment and any excess of the insurance shall be payable to the estate of the insured. (6) Notwithstanding the provisions of paragraphs (1) through (5) of this subsection, insurance on agricultural credit transaction commitments may be written up to the amount of the loan commitment on a non-decreasing or level term plan. Insurance on educational credit transactions commitments may be written up to the amount of the loan commitment less the amount of any repayments made on the loan. c. A policy issued to a labor union, or similar employee organization, which shall be deemed to be the policyholder, to insure members of the union or organization for the benefit of persons other than the union or organization or any of its officials, representatives or agents, shall be subject to the following requirements: (1) The members eligible for insurance under the policy shall be all of the members of the union or organization, or all of any class or classes thereof. (2) The premium for the policy shall be remitted by the policyholder either from funds of the union or organization, or from funds contributed by the insured members specifically for their insurance, or from both. Except as provided in paragraph (3) of this subsection, a policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance shall insure all eligible members, except those who reject the coverage in writing. (3) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer. d. A policy issued to a trust or to the trustees of a fund established or adopted by two or more employers, or by one or more labor unions or similar employee organizations, or by one or more employers and one or more labor unions or similar employee organizations, which trust or trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions or organizations for the benefit of persons other than the employers or the unions or organizations, subject to the following requirements: (1) The persons eligible for insurance shall be all of the employees of the employers or all of the members of the unions or organizations, or all of any class thereof. The policy may provide that the term "employees" shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships or partnerships if the business of the employer and of the affiliated corporations, proprietorships or partnerships is under common control. The policy may provide that the term "employees" shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term "employees" shall include retired employees, former employees and directors of a corporate employer. The policy may provide that the term "employees" shall include the trustees or their employees, or both, if their duties are principally connected with the trusteeship. (2) The premium for the policy shall be remitted by the policyholder from funds contributed by the employer of the insured persons, or by the union or similar employee organizations, or by both, or from funds contributed by the insured persons or from both the insured persons and the employers or unions or similar employee organizations. Except as provided in paragraph (3) of this subsection, a policy on which no part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance shall insure all eligible persons, except those who reject the coverage in writing. (3) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer. e. (1) A policy issued to an association or to a trust or to the trustees of a fund established, created or maintained for the benefit of members of one or more associations. The association shall have at the outset a minimum of 100 persons; shall have been organized and maintained in good faith for purposes other than that of obtaining insurance; shall have been in active existence for at least two years; and shall have a constitution and by-laws which provide that the association hold regular meetings not less than annually to further purposes of the members; except for credit unions, the association, collect dues or solicit contributions from members; and the members have voting privileges and representation on the governing board and committees. (2) The policy shall be subject to the following requirements: (a) The policy may insure members of the association, employees thereof or employees of members, or one or more of the preceding or all of any class thereof for the benefit of persons other than the employee's employer. The policy may provide that the term "employees" may include retired employees, former employees and directors of a corporate member of the association. (b) The premium for the policy shall be remitted by the policyholder from funds contributed by the association, or by employer members, or by both, or from funds contributed by the covered persons or from both the covered persons and the associations, or employer members. (c) Except as provided in subparagraph (d) of this paragraph, a policy on which no part of the premium is to be derived from funds contributed by the covered persons specifically for the insurance shall insure all eligible persons, except those who reject the coverage in writing. (d) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer. f. A policy issued to a credit union or to a trustee or agent designated by two or more credit unions, which credit union, trustee or agent shall be deemed the policyholder, to insure members of the credit union for the benefit of persons other than the credit union, trustee or agent, or any of their officials, subject to the following requirements: (1) The members eligible for insurance shall be all of the members of the credit union, or all of any class thereof. (2) The premium for the policy shall be remitted by the policyholder from the credit union's funds and, except as provided in paragraph (3) of this section, shall insure all eligible members. (3) An insurer may exclude or limit the coverage on any member as to whom evidence of individual insurability is not satisfactory to the insurer. g. A policy issued to a bank, savings and loan association, or other regulated financial institution or to a trustee or agent designated by two or more such financial institutions, or to a regulated issuer of a credit card, charge card or payment card used to buy goods or services, which shall be deemed policyholders, to insure the depositors, account holders or card holders of such policyholders. Such insurance shall be for the benefit of persons other than the policyholders or any of their officials. The insurance shall be subject to the following requirements: (1) Those eligible for insurance shall be all of the depositors, account holders or card holders of the policyholder, or all of any class or classes thereof. (2) The premium for the policy shall be remitted by the policyholder from funds contributed by the policyholder, or contributed by the insured persons, or contributed by both. Except as provided in paragraph (3) of this subsection, a policy on which no part of the premium is to be derived from funds contributed by the insured persons, shall insure all eligible persons, except those who reject the coverage in writing. (3) An insurer may exclude or limit the coverage on any member as to whom evidence of individual insurability is not satisfactory to the insurer. h. A policy issued to a duly incorporated State Policemen's Benevolent Association or Fraternal Order of Police, which association or order shall be deemed the policyholder, to insure members of the association or order for the benefit of persons other than the association, order or any of its officials, subject to the following requirements: (1) The persons eligible for insurance under the policy shall be all of the members of the association or order or all of any class thereof determined by conditions pertaining to their employment, or the membership in the association, order or both. (2) The premium for the policy shall be remitted by the policyholder wholly from the association's or order's funds. No policy may be issued on which any part of the premium is to be derived from funds contributed by the insured members specifically for their insurance. The policy must insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer. (3) The policy must cover at least 10 members at date of issue. (4) The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the members or the association or order. L.2005,c.190,s.1.