§ 36-2405 — Level or stipulated assessments – Definition - Policy to

specify amount payable - Refusal to pay - Solvency - Legal reserve life insurance - Policy to make this section part thereof - Age limits – Beneficiaries - No mutual benefit associations formed hereafter. Mutual benefit associations authorized to do business in this state, may provide for a level or stipulated weekly, monthly, quarterly, semiannual or annual assessment, and the following provisions are made specially applicable thereto: 1. Level rate assessment associations, companies or corporations are defined as those corporations granting insurance benefits on the assessment plan and which collect from their membership a level, stipulated monthly, quarterly, semiannual assessment or premium, which assessment or premium is not made contingent upon the happening of a certain event but is based upon stated periodical rates or charges estimated by the Board of directors to be sufficient for the payment of all claims and expenses. 2. Such associations shall specify in their policy or membership certificate forms the sum of money they promise to pay, which sum shall not be less than the face amount of the policy, and the number of days after satisfactory proof is filed when such payment will be made. Upon the occurrence of such contingency unless the contract shall have been void by fraud or by breach of its conditions, the corporation shall be obligated to the beneficiary for such payment at the time and in the amount specified in the policy or certificate. If such corporation shall refuse or fail to make such payment, after final judgment has been obtained upon each claim, the Insurance Commissioner shall notify the corporation not to issue any new policies or certificates until such indebtedness is fully paid; and no officer or agent of the corporation shall make, sign or issue any policy or certificate of insurance while such notice is in force. 3. Each such association or company shall be held to be legally solvent so long as its admitted assets are equal to or in excess of its matured liabilities. 4. Any association or company organized under the provisions of this article having admitted assets in its mortuary or reserve fund of at least One Hundred Thousand Dollars ($100,000.00) in excess of its matured claim liabilities may write legal reserve life insurance and the provisions of paragraphs numbered 1, 7 and 8 of Section 1204, Article 12; Section 4029, Article 40, and Section 3610, Article 36 of this title shall be applicable to all insurance written on the legal reserve basis. The reserve on such business shall be held separate and apart from all other funds of the association or company and shall be computed upon a calculation which shall show a value not less than that shown in accordance with the one-year preliminary term method based upon the American Experience Table of Mortality and three and one-half (3 1/2%) percent per annum, assuming an average risk exposure of six (6) months on all new policies issued within each calendar year shall be security for the legal reserve business only. Should such legal reserve become impaired by reason of excessive mortality or other cause, the board of directors of such association or company may levy additional assessments with which to make up such impairment. Every policy issued by reason hereof shall contain a provision making this section a part thereof. Provided, however, that any such association or company shall discontinue writing all types of new insurance in Oklahoma except legal reserve insurance within five (5) years after publishing legal reserve rates or having printed legal reserve policy forms. Any director, trustee, officer, or member of any such corporation, or any other person, may advance to the corporation any sum or sums of money necessary for the purpose of its business, or to enable it to comply with any of the requirements of the law, and such monies and such interest thereon as may have been agreed upon, not exceeding ten percent (10%) per annum, shall not be a liability or claim against the corporation or any of its assets except as to surplus earnings of such corporations and unless the obligation is in writing and duly acknowledged by the corporation, and a verified copy thereof is filed with the Insurance Commissioner. No commission or promotion expense shall be paid in connection with the advance of any such money to the corporation and the amount of such advance shall be reported in each annual statement filed with the Insurance Commissioner. 5. The provisions of this article placing the extreme limit of age of persons to whom policies may be issued at not to exceed seventy-two (72) years of age, shall not be applicable to insurance written upon the level rate plan outside the State of Oklahoma or the legal reserve plan in any state; provided that if the age of the insured has been incorrectly stated in the application for any policy issued by such association or company the face amount of said policy payable in event of a valid claim shall be such an amount as the premium paid by the insured to the association or company would have purchased at the true and correct age of the insured, at entry, on a basis of the published rates of the company applicable thereto. 6. Any individual, person, corporation, association or partnership with an insurable interest in the life of the insured may be a beneficiary of insurance written on either the level rate or legal reserve plan by an association or company operating under this article. 7. No mutual benefit association shall be formed after June 4, 1953, nor shall the Insurance Commissioner, after said effective date issue a permit to organize such an association to or approve any articles of incorporation of, any group of individuals desiring to organize an association or company under the provisions of this article.

Legislative History

Added by Laws 1957, p. 317, § 2405, operative July 1, 1957. Amended by Laws 2010, c. 215, § 3, eff. Nov. 1, 2010.