§ 3220 — Group life insurance policies; standard provisions

New York § 3220

• Jurisdiction: New York
• Law ISC: Insurance
• Art. 32: Insurance Contracts - Life, Accident and Health, Annuities

Text

§ 3220. Group life insurance policies; standard provisions. (a) No\npolicy of group life insurance shall be delivered or issued for delivery\nin this state unless it contains in substance the following provisions\nor provisions which in the opinion of the superintendent are more\nfavorable to certificate holders or not less favorable to certificate\nholders and more favorable to policyholders:\n (1) That the policy is incontestable after two years from its date of\nissue, except for nonpayment of premiums by the policyholder; and that\nno statement made by any person insured under the policy relating to his\ninsurability shall be used in contesting the validity of the insurance\nwith respect to which such statement was made after such insurance has\nbeen in force prior to the contest for a period of two years during such\nperson's lifetime and in no event unless it is in a written instrument\nsigned by him, a copy of which is or has been furnished to such person\nor to his beneficiary.\n (2) That the rights of the policyholder or of any insured or\nbeneficiary thereunder shall not be affected by any provision other than\none contained in the policy or the riders or endorsements thereon or in\nthe amendments thereto signed by the policyholder and the insurer, or in\nthe copy of the policyholder's application attached to the policy or in\nthe individual statements, if any, submitted in connection therewith.\n (3) For the equitable adjustment of the premium or if the amount of\ninsurance depends upon the age of the insured, for the equitable\nadjustment of the amount of insurance and the premium in the event of a\nmisstatement of the age of the person insured.\n (4) That the insurer will issue to the policyholder for delivery to\nthe person whose life is insured under such policy a certificate\ncontaining a statement of the insurance protection to which he is\nentitled including any changes in such protection depending on the age\nof the person whose life is insured and the rights to which he is\nentitled in accordance with paragraphs six and seven hereof.\n (5) That the benefits payable under any such policy shall be payable\nto the beneficiary or beneficiaries designated by the insured except,\nwhere the policy contains conditions pertaining to family status, the\nbeneficiary may be the family member specified by the policy terms, but\nif there is no such designated or specified beneficiary as to all or any\npart of the insurance payable at the death of the insured, then the\namount of insurance so payable for which there is no such designated or\nspecified beneficiary shall be payable to the estate of the insured,\nexcept that the policy may provide that the insurer may in such case, at\nits option, pay such insurance to any one or more of the following\nsurviving relatives: wife, husband, mother, father, child or children,\nbrothers or sisters; and except that the policy may provide that the\ninsurer may, in any case, deduct from the aggregate sum payable under\nsuch policy on account of the death of the insured, an amount not to\nexceed five hundred dollars to be paid to any person or persons\nappearing to the insurer to be equitably entitled to same by reason of\nhaving incurred expenses on behalf of the insured or for his or her\nburial. Payment in accordance with any of the foregoing provisions shall\ncompletely discharge the insurer's liability with respect to the amount\nof insurance so paid.\n (6) That if the insurance on an employee or member covered under the\npolicy, other than one issued in accordance with paragraph three or\neight of subsection (b) of section four thousand two hundred sixteen of\nthis chapter, (A) ceases because of termination of (i) employment or of\nmembership in the class or classes eligible for coverage under the\npolicy, or (ii) the policy, or (B) is reduced (i) in the case of a\npolicy covering an employee or union member under a plan arranged by the\ninsured person's employer or union, on or after the employee's or union\nmember's attainment of age sixty in any increment or series of\nincrements aggregating twenty percent or more of the amount of coverage\nin force before the first reduction on account of such age, (ii) in the\ncase of a policy covering any member other than as described in item (i)\nof this subparagraph, at the time of the first reduction of insurance,\n(iii) due to change in class or (iv) due to an amendment of the policy\nto take effect immediately or at any subsequent date, such employee or\nsuch member shall be entitled to have issued to him by the insurer,\nwithout evidence of insurability, upon application made to the insurer\nwithin thirty-one days after such termination or reduction of insurance\nand payment of the premium applicable to the class of risk to which he\nbelongs and to the form and amount of the policy at his then attained\nage, a policy of life insurance only, in any one of the forms\ncustomarily issued by such insurer, except term insurance, in an amount\nequal to the amount of his protection under such group insurance policy\nat the time of such termination or reduction, less any amount of life\ninsurance remaining in force, except however, in the case of a reduction\nin accordance with item (ii) of subparagraph (B) of this paragraph, in\nan amount equal to eighty percent of his insurance coverage under such\ngroup policy immediately prior to such reduction. Under a group policy\nissued pursuant to paragraph twelve, thirteen or fourteen of subsection\n(b) of section four thousand two hundred sixteen of this chapter, an\ninsured shall be entitled to convert, just as if he had terminated\nmembership in the class or classes eligible for coverage, within\nthirty-one days after notice from the insurer that, in order to continue\nhis coverage under the group policy, he must contribute more than one\nhundred thirty-three percent of the net premiums computed according to\nthe Commissioners 1960 Standard Group Mortality Table at three percent\ninterest. The group policy may contain a provision that if the\npolicyholder or insurer shall terminate the policy, the amount of life\ninsurance that may be converted shall in no event exceed the amount of\nsuch employee's or member's life insurance protection less any amount of\nlife insurance for which he may be or may become eligible under any\ngroup policy issued or reinstated by the same or another insurer within\nforty-five days after the date of such cessation. However, at the option\nof such employee or member, he shall be entitled to have issued to him\nin accordance with the conditions prescribed above, a policy of life\ninsurance only, in any one of such forms, preceded by term insurance for\na period of one year with the premium payable, at the option of the\nemployee or member, in any mode customarily offered by the insurer. In\naddition, the group policy shall contain a provision that if the\ncoverage of an employee or member ceases because of termination of\nemployment due to the employee's total and permanent disability or\ntermination of membership due to the member's total and permanent\ndisability, the employee or member, at the option of such employee or\nmember, shall be entitled to have issued to him, a policy of life\ninsurance only, in any one of such forms, preceded by term insurance for\na period of one year with the premium payable, at the option of the\nemployee or member, in any mode customarily offered by the insurer, in\nthe amount of such employee's or member's life insurance protection in\neffect immediately before termination, less the amount of any life\ninsurance which is replaced with the same or another insurer within\nforty-five days after cessation of the group life insurance protection.\nEach such group policy shall contain a further provision to the effect\nthat upon the death of any such employee or member during such\nthirty-one day period and before any such individual policy has become\neffective, the amount of insurance for which such employee or member was\nentitled to make application shall be payable as a death benefit by the\ninsurer; provided, however, each such policy may contain a provision\nobligating the policyholder to pay a premium to the insurer for coverage\nextended during such thirty-one day period in the event the extension of\ncoverage is a direct result of the policyholder's voluntary termination\nof the policy and the policyholder replaces coverage under the policy\nwithin six months of its termination either with the insurer or with\nanother insurer. The individual conversion policy may provide that any\nstatement made by the person insured under the group policy relating to\nhis insurability under such group policy may be used in contesting the\nvalidity of the insurance under the individual conversion policy to the\nsame extent that such statement could have been used in contesting the\nvalidity of his insurance under the group policy if his insurance under\nthe group policy had not ceased. An individual conversion policy shall\nnot exclude or restrict liability in the event of suicide of the insured\nafter two years from the date that the insured became covered under the\ngroup policy. Notwithstanding the foregoing, the superintendent may\nrequire conversion or continuation of insurance under conditions as set\nforth in a regulation for insureds under a policy issued in accordance\nwith paragraph three of subsection (b) of section four thousand two\nhundred sixteen of this chapter.\n (7) At the option of the employee or member, any converted policy or\npolicies shall provide coverage for the dependents or class of\ndependents of such employee or member who were insured under the group\npolicy. The effective date of the converted policy or policies shall be\nthe date of termination of the employee's or member's insurance under\nthe group policy. The conversion privilege shall be available (A) upon\ntermination or reduction of insurance as described in paragraph six of\nthis subsection, (B) upon the death of the employee or member to the\nsurviving spouse with respect to such spouse and children as are then\ninsured by the group policy, (C) to a child upon his attaining the\nlimiting age of coverage under the group policy while insured as a\ndependent thereunder, and (D) upon the divorce or annulment of the\nmarriage of the employee or member to the spouse or former spouse of\nsuch employee or member.\n (8) That in the event a group life insurance policy issued for\ndelivery in this state permits a certificate holder to convert to\nanother type of life insurance within a specified time after the\nhappening of an event, such certificate holder shall be notified of such\nprivilege and its duration within fifteen days before or after the\nhappening of the event, provided that if such notice be given more than\nfifteen days, but less than ninety days after the happening of such\nevent, the time allowed for the exercise of such privilege of conversion\nshall be extended for forty-five days after the giving of such notice.\nIf such notice be not given within ninety days after the happening of\nthe event, the time allowed for the exercise of such conversion\nprivilege shall expire at the end of such ninety days. Written notice by\nthe policyholder given to the certificate holder or mailed to the\ncertificate holder at his last known address, or written notice by the\ninsurer mailed to the certificate holder at the last address furnished\nto the insurer by the policyholder, shall be deemed full compliance with\nthe provisions of this paragraph for the giving of notice.\n (9) That all new employees of the employer or all new members of the\nlabor union or other association or group as defined in this chapter, or\nall new debtors of the vendor or creditor, as the case may be, in the\ngroups or classes eligible for such insurance must be added to such\ngroups or classes for which they are respectively eligible.\n (10) In the case of a policy covering members of a labor union, or\nother association or group as defined in this chapter (other than a\ngroup as defined in paragraph one or three of subsection (b) of section\nfour thousand two hundred sixteen of this chapter, a notice in such\npolicy to the effect that the premium for the renewable term as therein\nprovided depends upon the attained ages of the members in the group and\nincreases with advancing ages.\n (11) If the policy is in whole or in part on a plan of insurance other\nthan the term plan, it shall contain a nonforfeiture provision or\nprovisions which in the opinion of the superintendent is or are\nequitable to the insured persons and to the policyholder, but this\nparagraph does not require that such policy contain the same\nnonforfeiture provisions required for individual life insurance\npolicies.\n (12) In every group plan issued in accordance with paragraph three of\nsubsection (b) of section four thousand two hundred sixteen of this\nchapter insuring loans made by production credit associations organized\npursuant to an Act of Congress of the United States, entitled the "Farm\nCredit Act of 1933", approved June sixteenth, nineteen hundred\nthirty-three as amended, or insuring loans made by a bank, trust company\nor industrial bank to a borrower engaged in the business of farming,\ncrop production or the raising, breeding, fattening or marketing of\nlivestock for the purpose of such business and other requirements of the\nborrower, a provision that, upon renewal of the loan commitment each\nyear prior to the attainment of age fifty by the certificate-holder,\ncoverage may be renewed by the certificate-holder without additional\nrequirements each year in an amount equal to the loan commitment or the\nprevious year's coverage, whichever is less, unless coverage has been\npreviously terminated by action of the certificate-holder, and further\nprovided that the group policy is in full force and effect on the date\nof renewal.\n (b) None of the provisions of subsection (a) hereof relating to a\ncertificate issued under any group life insurance policy shall be deemed\napplicable to any such policy which is issued to a vendor or creditor,\nas defined in section four thousand two hundred sixteen of this chapter\nand under the provisions of which no individual certificates are issued\nor are issuable.\n (c) (1) Notwithstanding any provision of law, a person whose life is\ninsured under any policy of group life insurance, whether or not such\npolicy is otherwise subject to this section, is permitted to make an\nassignment of all or any part of his incidents of ownership in such\ninsurance, including, without limitation, any right to designate a\nbeneficiary or beneficiaries thereunder and any right to have an\nindividual policy issued upon termination either of employment or of\nsaid policy of group life insurance, provided that the insurer and the\ngroup policyholder may prohibit or restrict such assignment by\nappropriate policy provisions except as otherwise provided in paragraph\nthree of this subsection.\n (2) Paragraph one of this subsection shall be construed as declaring\nthe law as it existed prior to its enactment and not as modifying it.\n (3) A group policy that permits assignment of an insured person's\nrights by gift shall also allow assignment for value to the same extent\nthat it allows assignment by gift.\n (d) The provisions of paragraphs four, five, six, seven, eight, nine\nand ten of subsection (a) of this section and paragraph one of\nsubsection (c) of this section shall not apply to policies issued under\nthe authority of subsection (d) or subparagraph (B) of paragraph (1) of\nsubsection (a) of section three thousand two hundred five of this\narticle.\n