§ 4515 — Conditions for avoiding separate funds

§ 4515. Conditions for avoiding separate funds. (a) Any authorized\nsociety which maintains reserves, including deficient premium reserves,\nat least equal to those required by the minimum standards of valuation\nhereinafter specified and which does not exceed the expense limits\nhereinafter specified shall not be required, if its constitution or\nby-laws so permit, to create or maintain a separate fund or funds, for\nthe payment of insurance benefits as required by subsection (a) of\nsection four thousand five hundred fourteen of this article nor to\ncomply with the provisions of subsections (b) and (d) of such section\nand subsection (d) of section four thousand five hundred seven of this\narticle.\n (b) (1) Such minimum standards of valuation shall be:\n (A) as to all contracts for life insurance benefits issued prior to\nJanuary first, nineteen hundred forty-eight, the American Experience\nTable of Mortality or the American Men Ultimate Table of Mortality with\ninterest at three and one-half per centum,\n (B) as to all contracts for life insurance benefits issued on and\nafter January first, nineteen hundred forty-eight, and prior to January\nfirst, nineteen hundred fifty-six, the American Experience Table of\nMortality or the American Men Ultimate Table of Mortality with interest\nat three per centum, and\n (C) as to all contracts for life insurance benefits issued on and\nafter January first, nineteen hundred fifty-six, the applicable\nmortality tables as specified in subsection (c) of section four thousand\nfive hundred seventeen of this article.\n (2) The deficient premium reserve as to all such contracts issued\nprior to January first, nineteen hundred forty-eight, shall be\ndetermined in the manner prescribed in subsection (b) of section four\nthousand five hundred seventeen of this article and as to all such\ncontracts issued on and after January first, nineteen hundred\nforty-eight, shall be determined in the manner prescribed in section\nfour thousand two hundred eighteen of this chapter.\n (3) Such minimum standard of valuation as to all contracts for annuity\nbenefits issued on and after January first, nineteen hundred\nforty-eight, shall be the 1937 Standard Annuity Mortality Table with\ninterest at three per centum.\n (c) No such society shall, except as provided for in subsection (f)\nhereof, make or incur in any calendar year, or permit to be made or\nincurred on its behalf or under any agreement with it, total life\ninsurance expenses as defined in subsection (d) hereof in excess of the\ntotal life insurance expense limit as defined in subsection (e) hereof.\n (d) The total life insurance expenses of any such society within the\nmeaning of this section, shall include all expenses, made or incurred on\nits behalf with its permission or under any agreement with it, in the\nbusiness of fraternal life insurance, except:\n (1) taxes, licenses and fees,\n (2) disbursements for altruistic, educational, fraternal or\nrecreational activities which are made from funds collected solely for\nsuch purposes and in addition thereto disbursements for like purposes in\nan amount not exceeding one and one-half per centum of the premiums\nreceived for life insurance contracts during such calendar year,\n (3) that portion of its total investment expenses not exceeding\none-fourth of one per centum of the mean amount of its total invested\nassets during such calendar year,\n (4) taxes and other outlays exclusively in connection with real estate\nand commissions, or salaries and expenses in lieu of commissions, on\nmortgage loans, and\n (5) outlays representing the accrued liability for services rendered\nby the society's employees prior to coverage under employees pension\nplans.\n (e) The total life insurance expense limit, within the meaning of this\nsection, shall be the sum of the following items:\n (1) seven per centum of all life insurance premiums received by such\nsociety during such calendar year,\n (2) thirty-five per centum of all first year life insurance premiums\nreceived by such society during such calendar year,\n (3) one hundred seventy-five one thousandths of one per centum of the\naggregate amount of life insurance of such society in force at the\nbeginning of such calendar year and of the aggregate amount of such\ninsurance issued during, and in force at the end of, such calendar year,\n (4) three-tenths of one per centum of the aggregate amount of life\ninsurance of such society in force at the beginning of such calendar\nyear and of the aggregate amount of such insurance issued during, and in\nforce at the end of, such calendar year, and\n (5) thirty-five one hundredths of one per centum of the aggregate\namount of life insurance of such society issued during, and is in force\nat the end of, such calendar year, exclusive of additional insurance\npurchased by the application of certificate dividends.\n (f) The total life insurance expense limit of any such society which\nhas in force at the end of the next preceding calendar year less than\none million dollars of life insurance shall be increased by one hundred\nper centum; and for any other such society, such limits shall be\nincreased by one hundred per centum less two-tenths of one per centum\nfor each one million dollars of life insurance in excess of one million\ndollars of life insurance until the extra margin is sixty per centum of\nsaid limit, and thereafter said extra margin shall decrease by one-third\nof one per centum for each ten million dollars of life insurance in\nforce at the end of the next preceding calendar year until the extra\nmargin is fifty per centum; and thereafter said extra margin shall\ndecrease by one-half of one per centum for each ten million dollars of\nlife insurance in force at the end of the next preceding calendar year\nuntil such extra margin is reduced to zero.\n (g) The amounts of life insurance referred to in this section shall\nnot include additional benefits payable for accidental death or for\ntotal and permanent disability.\n (h) No such society, and no person, firm or corporation, on its behalf\nor under any agreement with it, shall pay or allow to any agent, broker,\nemployee or other person, for services in procuring an application for\nlife insurance, for collecting any premium thereon or for any other\nservice performed in connection therewith, any compensation greater than\nthat which has been determined by agreement made in advance of the\nrendering of such service.\n (i) The superintendent may, in his discretion, accept satisfactory\napproximations of the figures required in this section. If any such\nsociety shall in any calendar year make or incur total life insurance\nexpenses in excess of the total life insurance expense limit, the\nsuperintendent may, upon written application of such society, suspend\nsuch limit for such society for the calendar year in which such excess\nwas incurred.\n (j) Notice of intention to comply with the provisions of this section\nshall be given in writing to the superintendent by any such society,\naccompanied by a certified copy of the authorizing resolution of the\nboard of directors.\n