§ 56-7-501 — Contingent or mortality contracts - Dividing policyholders or members into classes and paying benefits to oldest member of class prohibited - Exceptions

No life insurance company, fraternal benefit society, order or association authorized to do business in this state shall hereafter be permitted to issue policies, certificates or contracts to policyholders or members providing for the establishment of its policyholders or members into divisions and classes for the purpose of providing for the payment of benefits from special funds created for that purpose to the oldest member of the division and class or to the member of the division and class whose policy has been in force the longest period of time, upon the death of a member in the division and class; provided, that any life insurance company, fraternal benefit society, order or association heretofore issuing policies, certificates, or contracts on this plan in this state may continue so to do on condition that the life insurance company, fraternal benefit society, order or association shall not hereafter establish its policyholders or members into divisions or classes, other than the divisions or classes actually containing subsisting policies or certificates on February 23, 1939. No division of any class shall contain more than twenty-six (26) policyholders. No additional policyholder or policyholders shall ever be added to any of the divisions in this state because of vacancy or vacancies created by lapsed policies, death or otherwise, and no policyholder or policyholders shall be added in this state to any of the divisions under any circumstances.

Legislative History

Acts 1939, ch. 31, § 1; mod. C. Supp. 1950, § 6459.1; T.C.A. (orig. ed.), § 56-1125.