For the purposes of this chapter, the following terms shall have the meanings respectively ascribed to them by this section:
(1) FRATERNAL BENEFIT SOCIETY. Any incorporated society, order or supreme lodge without capital stock, including one exempted under the provisions of subdivision (a) (2) of Section 27-34-5, whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with ritualistic form of work, having a representative form of government and which makes provision for the payment of benefits in accordance with this chapter is hereby declared to be a fraternal benefit society.
(2) SOCIETY. Such term, unless otherwise indicated, means a fraternal benefit society.
(3) PREMIUMS. Premiums, rates or other required contributions by whatever name known.
Such articles of incorporation, duly certified copies of the constitution, laws and rules, copies of all proposed forms of certificates, applications therefor, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments, if the organization is not completed within one year, shall be filed with the commissioner, who may require such further information as he deems necessary. The bond, with sureties, approved by the commissioner shall be in such amount, not less than $5,000.00 nor more than $25,000.00, as required by the commissioner. All documents filed are to be in the English language. If the purposes of the society conform to the requirements of this chapter and all provisions of the law have been complied with, the commissioner shall so certify, retain and file the articles of incorporation and furnish the incorporators a preliminary certificate authorizing the society to solicit members as provided in this chapter.
No preliminary certificate granted under the provisions of this section shall be valid after one year from its date or after such further period, not exceeding one year, as may be authorized by the commissioner upon cause shown, unless the 500 applicants required in this chapter have been secured and the organization has been completed as provided in this chapter. The articles of incorporation and all other proceedings thereunder shall become null and void in one year from the date of the preliminary certificate, or at the expiration of the extended period, unless the society shall have completed its organization and received a certificate of authority to do business as provided in this chapter.
Upon receipt of a preliminary certificate from the commissioner, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates as provided by its constitution and laws and shall issue to each such applicant a receipt for the amount so collected. No society shall incur any liability other than for the return of such advance premium, nor issue any certificate, nor pay, allow or offer or promise to pay or allow any death or disability benefit to any person until:
(1) Actual bona fide applications for death benefits have been secured aggregating at least $500,000.00 on not less than 500 lives;
(2) All such applicants for death benefits shall have furnished evidence of insurability satisfactory to the society;
(3) Certificates of examinations or acceptable declarations of insurability have been duly filed and approved by the chief medical examiner of the society;
(4) Ten subordinate lodges or branches have been established into which the 500 applicants have been admitted;
(5) There has been submitted to the commissioner, under oath of the president or secretary, or corresponding officer of the society, a list of such applicants, giving their names, addresses, date each was admitted, name and number of the subordinate branch of which each applicant is a member, amount of benefits to be granted and premiums therefor; and
(6) It shall have been shown to the commissioner, by sworn statement of the treasurer, or corresponding officer of such society, that at least 500 applicants have each paid in cash at least one regular monthly premium as provided in this chapter, which premiums in the aggregate shall amount to at least $2,500.00, all of which shall be credited to the fund, or funds, from which benefits are to be paid and no part of which may be used for expenses. Such advance premiums shall be held in trust during the period of organization, and if the society has not qualified for a certificate of authority within one year, as provided in this chapter, the premiums shall be returned to the applicants.
The commissioner may make such examination and require such further information as he deems advisable. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, he shall issue to the society a certificate to that effect and that the society is authorized to transact business pursuant to the provisions of this chapter. The certificate shall be prima facie evidence of the existence of the society at the date of such certificate. The commissioner shall cause a record of such certificate to be made. A certified copy of such record may be given in evidence with like effect as the original certificate.
(a) Every society shall have the power to adopt a constitution and laws for the government of the society, the admission of its members, the management of its affairs and the fixing and readjusting of the rates of its members from time to time. It shall have the power to change, alter, add to or amend such constitution and laws.
(b) A society shall have such other powers as are necessary and incidental to carrying into effect the objects and purposes of the society.
Any incorporated society authorized to transact business in this state on January 1, 1973, may thereafter exercise all the rights, powers and privileges prescribed in this chapter and in its charter or articles of incorporation as far as consistent with this chapter. A domestic society shall not be required to reincorporate.
(a) After January 1, 1973, no unincorporated or voluntary association shall be permitted to transact business in this state as a fraternal benefit society.
(b) Any domestic voluntary association now authorized to transact business in this state may incorporate and shall receive from the commissioner a permanent certificate of incorporation as a fraternal benefit society when:
(1) It has completed its conversion to an incorporated society not later than January 1, 1974;
(2) It has filed its articles of incorporation and has satisfied the other requirements described in Sections 27-34-9 through 27-34-13; and
(3) The commissioner has made such examination and procured whatever additional information he deems advisable.
(c) Every voluntary association so incorporated shall incur the obligations and enjoy the benefits thereof the same as though originally incorporated, and such corporation shall be deemed a continuation of the original voluntary association. The officers thereof shall serve through their respective terms as provided in its original articles of association, but their successors shall be elected and serve as provided in its articles of incorporation. Incorporation of a voluntary association shall not affect existing actions, claims or contracts.
(a) A domestic society may amend its articles of incorporation, constitution or laws in accordance with the provisions thereof by action of its supreme legislative or governing body at any regular or special meeting thereof or, if its articles of incorporation, constitution or laws so provide, by referendum. Such referendum may be held in accordance with the provisions of its articles of incorporation, constitution or laws by the vote of the voting members of the society, by the vote of delegates or representatives of voting members or by the vote of local lodges or branches. No amendment submitted for adoption by referendum shall be adopted unless, within six months from the date of submission thereof, a majority of all of the voting members of the society shall have signified their consent to such amendment by one of the methods specified in this subsection.
(b) No amendment to the articles of incorporation, constitution or laws of any domestic society shall take effect unless approved by the commissioner, who shall approve such amendment if he finds that it has been duly adopted and is not inconsistent with any requirement of the laws of this state or with the character, objects and purposes of the society. Unless the commissioner disapproves any such amendment within 60 days after the filing of same, such amendment shall be considered approved. The approval or disapproval of the commissioner shall be in writing and mailed to the secretary or corresponding officer of the society at its principal office. In case he disapproves the amendment, the reasons therefor shall be stated in the written notice.
(c) Within 90 days from the approval thereof by the commissioner, all such amendments, or a synopsis thereof, shall be furnished by the society to all members either by mail or by publication in full in the official organ of the society. The affidavit of any officer of the society, or of anyone authorized by it to mail any amendments, or synopsis thereof, stating facts which show that same have been duly addressed and mailed, shall be prima facie evidence that such amendments, or synopsis thereof, have been furnished the addressee.
(d) Every foreign or alien society authorized to do business in this state shall file with the commissioner a duly certified copy of all amendments of, or additions to, its articles of incorporation, constitution or laws within 90 days after the enactment of same.
(e) Printed copies of the constitution or laws as amended, certified by the secretary or corresponding officer of the society, shall be prima facie evidence of the legal adoption thereof.
The constitution and laws of the society may provide that no subordinate body, nor any of its subordinate officers or members, shall have the power or authority to waive any of the provisions of the laws and constitution of the society. Such provision shall be binding on the society and every member and beneficiary of a member.
(a) The principal office of any domestic society shall be located in this state. The meetings of its supreme legislative or governing body may be held in any state, district, province or territory wherein such society has at least five subordinate branches, and all business transacted at such meetings shall be as valid in all respects as if such meetings were held in this state.
(b) The minutes of the proceedings of the supreme or governing body and of the board of directors, or corresponding body of a society, shall be in the English language.
A society having a supreme legislative or governing body and subordinate lodges or branches, by whatever name known, into which members are elected, initiated or admitted in accordance with its constitution, laws, ritual and rules, which subordinate lodges or branches are required by the laws of the society to hold regular meetings at least once in each month shall be deemed to be operating on the lodge system.
(a) It shall be lawful for a society to create, maintain and operate charitable, benevolent or educational institutions for the benefit of its members and their families and dependents and for the benefit of children insured by the society. For such purpose, it may own, hold or lease personal property or real property located within or without this state, with necessary buildings thereon. Such property shall be reported in every annual statement, but shall not be allowed as an admitted asset of such society.
(b) Maintenance, treatment and proper attendance in any such institution may be furnished free or a reasonable charge may be made therefor, but no such institution shall be operated for profit. The society shall maintain a separate accounting of any income and disbursements under this section and report them in its annual statement.
(c) No society shall own or operate funeral homes or undertaking establishments.
(a) A society may admit to benefit membership any person not less than 15 years of age, nearest birthday, who has furnished evidence of insurability acceptable to the society. Any such member who shall apply for additional benefits more than six months after becoming a benefit member shall furnish additional evidence of insurability acceptable to the society.
(b) Any person admitted prior to attaining the full age of 19 years shall be bound by the terms of the application and certificate and by all the laws and rules of the society and shall be entitled to all the rights and privileges of membership therein to the same extent as though the age of majority had been attained at the time of application. A society may also admit general or social members who shall have no voice or vote in the management of its insurance affairs.
A society shall provide in its constitution or laws that if its reserves as to all or any class of certificates become impaired, its board of directors, or corresponding body, may require that there shall be paid by the member of the society the amount of the member's equitable proportion of such deficiency as ascertained by its board and that, if the payment is not made, it shall stand as an indebtedness against the member's certificate and draw interest not to exceed five percent per annum, compounded annually.
(a) A society authorized to do business in this state may provide for the payment of:
(1) Death benefits in any form;
(2) Endowment benefits;
(3) Annuity benefits;
(4) Temporary or permanent disability benefits as a result of disease or accident;
(5) Hospital, medical or nursing benefits due to sickness or bodily infirmity or accident; and
(6) Monument or tombstone benefits to the memory of deceased members not exceeding in any case the sum of $300.00.
(b) Such benefits may be provided on the lives of members or, upon application of a member, on the lives of a member's family, including the member, the member's spouse and minor children, in the same or separate certificates.
(a) A society may provide for benefits on the lives of children under the minimum age for adult membership but not greater than 19 years of age at time of application therefor, upon the application of some adult person, as its laws or rules may provide, which benefits shall be in accordance with the provisions of Section 27-34-23. A society may, at its option, organize and operate branches for such children. Membership and initiation in local lodges shall not be required of such children, nor shall they have a voice in the management of the society.
(b) A society shall have power to provide for the designation and changing of designation of beneficiaries in the certificates providing for such benefits and to provide in all other respects for the regulation, government and control of such certificates and all rights, obligations and liabilities incident thereto and connected therewith.
(a) A society may grant paid-up nonforfeiture benefits, cash surrender values, certificate loans and such other options as its laws may permit. As to certificates issued on and after January 1, 1972, a society shall grant at least one paid-up nonforfeiture benefit, except in the case of pure endowment, annuity or reversionary annuity contracts reducing term insurance contracts or contracts of term insurance of uniform amount of 15 years or less expiring before age 66.
(b) In the case of certificates other than those for which reserves are computed on the commissioners 1958 Standard Ordinary Mortality Table or the 1961 Standard Industrial Table, the value of every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan or other option granted shall not be less than the excess, if any, of subdivision (1) over subdivision (2) of this subsection, as follows:
(1) The reserve under the certificate determined on the basis specified in the certificate; and
(2) The sum of any indebtedness to the society on the certificate, including interest due and accrued, and a surrender charge equal to two and one-half percent of the face amount of the certificate, which, in the case of insurance on the lives of children, shall be the ultimate face amount of the certificate if death benefits provided therein are graded.
(c) However, in the case of certificates issued on a substandard basis or in the case of certificates, the reserves for which are computed upon the American men ultimate table of mortality, the term of any extended insurance benefit granted including accompanying pure endowment, if any, may be computed upon the rates of mortality not greater than 130 percent of those shown by the mortality table specified in the certificate for the computation of the reserve.
(d) In the case of certificates for which reserves are computed on the commissioners 1958 Standard Ordinary Mortality Table or the 1961 Standard Industrial Table, every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan or other option granted shall not be less than the corresponding amount ascertained in accordance with the provisions of the laws of this state applicable to life insurers issuing policies containing like insurance benefits based upon such tables.
(a) The member shall have the right at all times to change the beneficiary, or beneficiaries, in accordance with the constitution, laws or rules of the society. Every society by its constitution, laws or rules may limit the scope of beneficiaries and shall provide that no beneficiary shall have or obtain any vested interest in the proceeds of any certificate until the certificate has become due and payable in conformity with the provisions of the insurance contract.
(b) A society may make provision for the payment of funeral benefits to the extent of such portion of any payment under a certificate as might reasonably appear to be due to any person equitably entitled thereto by reason of having incurred expense occasioned by the burial of the member, but the portion so paid shall not exceed the sum of $500.00.
(c) If, at the death of any member, there is no lawful beneficiary to whom the insurance benefits are payable, the amount of such benefits, except to the extent that funeral benefits may be paid as provided in this chapter, shall be payable to the personal representative of the deceased member.
No money or other benefit, charity, relief or aid to be paid, provided or rendered by any society shall be liable to attachment, garnishment or other process or to be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary, or any other person who may have a right thereunder, either before or after payment by the society.
The officers and members of the supreme, grand or any subordinate body of a society shall not be personally liable for payment of any benefits provided by a society.
(a) Every society authorized to do business in this state shall issue to each benefit member a certificate specifying the amount of benefits provided thereby. The certificate, together with any riders or endorsements attached thereto, the charter or articles of incorporation, the constitution and laws of the society, the application for membership, and declaration of insurability, if any, signed by the applicant and all amendments to each thereof shall constitute the agreement, as of the date of issuance, between the society and the member, and the certificate shall so state. A copy of the application for membership and of the declaration of insurability, if any, shall be endorsed upon or attached to the certificate.
(b) All statements purporting to be made by the member shall be representations and not warranties. Any waiver of this subsection shall be void.
(c) Any changes, additions or amendments to the charter or articles of incorporation, constitution or laws duly made or enacted subsequent to the issuance of the certificate shall bind the member and the beneficiaries and shall govern and control the agreement in all respects the same as though such changes, additions or amendments had been made prior to, and were in force at the time of, the application for membership; except, that no change, addition or amendment shall destroy or diminish benefits which the society contracted to give the member as of the date of issuance.
(d) Copies of any of the documents mentioned in this section, certified by the secretary or corresponding officer of the society, shall be received in evidence of the terms and conditions thereof.
A society shall be deemed to have a representative form of government when:
(1) It provides in its constitution or laws for a supreme legislative or governing body, composed of representatives elected either by the members or by delegates elected, directly or indirectly, by the members, together with such other members of such body as may be prescribed by the society's constitution and laws;
(2) The representatives elected constitute a majority in number and have not less than two thirds of the votes nor less than the votes required to amend its constitution and laws;
(3) The meetings of the supreme legislative or governing body and the election of officers, representatives or delegates are held as often as once in four calendar years;
(4) Each insured member shall be eligible for election to act or serve as a delegate to such meeting;
(5) The society has a board of directors charged with the responsibility for managing its affairs in the interim between meetings of its supreme legislative or governing body, subject to control by such body, and having powers and duties delegated to it in the constitution or laws of the society;
(6) Such board of directors is elected by the supreme legislative or governing body, except in case of filling a vacancy in the interim between meetings of such body;
(7) The officers are elected either by the supreme legislative or governing body or by the board of directors; and
(8) The members, officers, representatives or delegates shall not vote by proxy.
(a) After January 1, 1973, no life benefit certificate shall be delivered, or issued for delivery, in this state unless a copy of the form has been filed with the commissioner.
(b) The certificate shall contain in substance the following standard provisions or, in lieu thereof, provisions which are more favorable to the member:
(1) Title on the face and filing page of the certificate clearly and correctly describing its form;
(2) A provision stating the amount of rates, premiums or other required contributions, by whatever name known, which are payable by the insured under the certificate;
(3) A provision that the member is entitled to a grace period of not less than a full month, or 30 days at the option of the society, in which the payment of any premium after the first may be made. During such grace period the certificate shall continue in full force, but in case the certificate becomes a claim during the grace period before the overdue payment is made, the amount of such overdue payment, or payments, may be deducted in any settlement under the certificate;
(4) A provision that the member shall be entitled to have the certificate reinstated at any time within three years from the due date of the premium in default, unless the certificate has been completely terminated through the application of a nonforfeiture benefit, cash surrender value or certificate loan, upon the production of evidence of insurability satisfactory to the society and the payment of all overdue premiums and any other indebtedness to the society upon the certificate, together with interest on such premiums and such indebtedness, if any, at a rate not exceeding six percent per annum, compounded annually;
(5) Except in the case of pure endowment, annuity or reversionary annuity contracts reducing term insurance contracts or contracts of term insurance of uniform amount of 15 years or less expiring before age 66, a provision that, in the event of default in payment of any premium after three full years' premiums have been paid or after premiums for a lesser period have been paid if the contract so provided, the society will grant, upon proper request, not later than 60 days after the due date of the premium in default, a paid-up nonforfeiture benefit on the plan stipulated in the certificate, effective as of such due date, of such value as specified in this chapter. The certificate may provide, if the society's laws so specify or if the member shall so elect prior to the expiration of the grace period of any overdue premium, that default shall not occur so long as premiums can be paid under the provisions of an arrangement for automatic premium loan as may be set forth in the certificate;
(6) A provision that one paid-up nonforfeiture benefit as specified in the certificate shall become effective automatically unless the member elects another available paid-up nonforfeiture benefit, not later than 60 days after the due date of the premium in default;
(7) A statement of the mortality table and rate of interest used in determining all paid-up nonforfeiture benefits and cash surrender options available under the certificate, and a brief general statement of the method used in calculating such benefits;
(8) A table showing in figures the value of every paid-up nonforfeiture benefit and cash surrender option available under the certificate for each certificate anniversary either during the first 20 certificate years or during the term of the certificate, whichever is shorter;
(9) A provision that the certificate shall be incontestable after it has been in force during the lifetime of the member for a period of two years from its date of issue except for nonpayment of premiums, violation of the provisions of the certificate relating to military, aviation or naval service and violation of the provisions relating to suspension or expulsion as substantially set forth in the certificate. At the option of the society, supplemental provisions relating to benefits in the event of temporary or permanent disability or hospitalization and provisions which grant additional insurance specifically against death by accident or accidental means may also be excepted. The certificate shall be incontestable on the ground of suicide after it has been in force during the lifetime of the member for a period of two years from date of issue. The certificate may provide, as to statements made to procure reinstatement, that the society shall have the right to contest a reinstated certificate within a period of two years from the date of reinstatement with the same exceptions as provided in this subdivision;
(10) A provision that in case the age of the member or of any other person is considered in determining the premium and it is found at any time before final settlement under the certificate that the age has been misstated and the discrepancy and premium involved have not been adjusted, the amount payable shall be such as the premium would have purchased at the correct age; but if the correct age was not an insurable age under the society's charter or laws, only the premiums paid to the society, less any payments previously made to the member, shall be returned or, at the option of the society, the amount payable under the certificate shall be such as the premium would have purchased at the correct age according to the society's promulgated rates and any extension thereof based on actuarial principles;
(11) A provision, or provisions, which recite fully, or which set forth the substance of, all sections of the charter, constitution, laws, rules or regulations of the society in force at the time of issuance of the certificate, the violation of which will result in the termination of, or in the reduction of, the benefit, or benefits, payable under the certificate; and
(12) If the constitution or laws of the society provide for expulsion or suspension of a member, any member so expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentations in such member's application for membership, shall have the privilege of maintaining his insurance in force by continuing payment of the required premium.
(c) Any of the provisions, or portions thereof, prescribed in subsection (b) of this section not applicable by reason of the plan of insurance or because the certificate is an annuity certificate may, to the extent inapplicable, be omitted from the certificate.
After January 1, 1973, no life benefit certificate shall be delivered or issued for delivery in this state containing, in substance, any of the following provisions:
(1) Any provision limiting the time with which any action may be commenced to less than two years after the cause of action accrues;
(2) Any provision by which the certificate purports to be issued or to take effect more than six months before the original application for the certificate was made, except in case of transfer from one form of certificate to another in connection with which the member is to receive credit for any reserve accumulation under the form of certificate from which the transfer is made; or
(3) Any provision for forfeiture of the certificate for failure to repay any loan thereon or to pay interest on such loan which the total indebtedness, including interest, is less than the loan value of the certificate.
(a) No domestic, foreign or alien society authorized to do business in this state shall issue or deliver in this state any certificate or other evidence of any contract of accident insurance or health insurance or of any total and permanent disability insurance contract unless and until the form thereof, together with the form of application and all riders or endorsements for use in connection therewith, shall have been filed with the commissioner.
(b) The commissioner shall have power, from time to time, to make, alter and supersede reasonable regulations prescribing the required, optional and prohibited provisions in such contracts, and such regulations shall conform, as far as practicable, to the provisions of Chapter 19 of this title. Where the commissioner deems inapplicable, either in part or in their entirety, the provisions of Chapter 19 of this title, he may prescribe the portions, or summary thereof, of the contract to be printed on the certificate issued to the member.
(c) Any filing made under this section shall be deemed approved unless disapproved within 60 days from the date of such filing.
A domestic society may, by a reinsurance agreement, cede any individual risk or risks, in whole or in part, to an insurer, other than another fraternal benefit society, having the power to make such reinsurance and authorized to do business in this state or, if not so authorized, one which is approved by the commissioner; but no such society may reinsure substantially all of its insurance in force without the written permission of the commissioner. It may take credit for the reserves on such ceded risks to the extent reinsured, but no credit shall be allowed as an admitted asset or as a deduction from liability to a ceding society for reinsurance made, ceded, renewed or otherwise becoming effective after January 1, 1972, unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding society under the contract, or contracts, reinsured without diminution because of the insolvency of the ceding society.
(a) All assets shall be held, invested and disbursed for the use and benefit of the society, and no member or beneficiary shall have or acquire individual rights therein or become entitled to any apportionment or the surrender of any part thereof except as provided in the contract.
(b) A society may create, maintain, invest, disburse and apply any special fund or funds necessary to carry out any purpose permitted by the laws of such society.
(c) Every society, the admitted assets of which are less than the sum of its accrued liabilities and reserves under all of its certificates when valued according to standards required for certificates issued after January 1, 1973, shall, in every provision of the laws of the society for payments by members of such society, in whatever form made, distinctly state the purpose of the same and the proportion thereof which may be used for expenses, and no part of the money collected for mortuary or disability purposes, or the net accretions thereto, shall be used for expenses.
A society shall invest its funds only in such investments as are authorized by the laws of this state for the investment of assets of life insurers and subject to the limitations thereon. Any foreign or alien society permitted or seeking to do business in this state which invests its funds in accordance with the laws of the state, district, territory, country or province in which it is incorporated shall be held to meet the requirements of this section for the investment of funds.
(a) Report shall be filed and synopses of annual statements shall be published in accordance with the provisions of this section.
(b) Every society transacting business in this state shall annually, on or before March 1, unless for cause shown such time has been extended by the commissioner, file with the commissioner a true statement of its financial condition, transactions and affairs for the preceding calendar year and pay a fee of $10.00 for filing same. The statement shall be in general form and context as approved by the National Association of Insurance Commissioners for fraternal benefit societies and as supplemented by additional information required by the commissioner.
(c) A synopsis of its annual statement providing an explanation of the facts concerning the condition of the society thereby disclosed shall be printed and mailed to each benefit member of the society not later than June 1 of each year, or, in lieu thereof, such synopsis may be published in the society's official publication.
(a) As a part of the annual statement required under Section 27-34-36, each society shall, on or before March 1, file with the commissioner a valuation of its certificates in force on December 31 last preceding; provided, however, that the commissioner may, in his discretion for cause shown, extend the time for filing such valuation for not more than two calendar months. Such report of valuation shall show, as reserve liabilities, the difference between the present midyear value of the promised benefits provided in the certificates of such society in force and the present midyear value of the future net premiums as the same are in practice actually collected, not including therein any value for the right to make extra assessments and not including any amount by which the present midyear value of future net premiums exceeds the present midyear value of promised benefits on individual certificates. At the option of any society, in lieu of the above, the valuation may show the net tabular value. Such net tabular value as to certificates issued prior to one year after January 1, 1972, shall be determined in accordance with the provisions of law applicable prior to January 1, 1972, and, as to certificates issued on or after January 1, 1973, shall not be less than the reserves determined according to the commissioners' reserve valuation method as defined in this section. If the premium charged is less than the tabular net premium according to the basis of valuation used, an additional reserve equal to the present value of the deficiency in such premiums shall be set up and maintained as a liability. The reserve liabilities shall be properly adjusted in the event that the midyear or tabular values are not appropriate.
(b) Reserves, according to the commissioners' reserve valuation method, for the life insurance and endowment benefits of certificates providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such certificates over the then present value of any future modified net premiums therefor. The modified net premiums for any such certificate shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the certificate, of all such modified net premiums shall be equal to the sum of the then present value of such benefits provided for by the certificate and the excess of subdivision (1) over subdivision (2) of this subsection, as follows:
(1) A net level premium equal to the present value, at the date of issue, of such benefits provided for after the first certificate year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such certificate on which a premium falls due; provided, however, that such net level annual premium shall not exceed the net level annual premium on the 19 year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of such certificate; and
(2) A net one-year term premium for such benefits provided for in the first certificate year.
(c) Reserves according to the commissioners' reserve valuation method for:
(1) Life insurance benefits for varying amounts of benefits or requiring the payment of varying premiums;
(2) Annuity and pure endowment benefits;
(3) Disability and accidental death benefits in all certificates and contracts; and
(4) All other benefits, except life insurance and endowment benefits, shall be calculated by a method consistent with the principles of subsection (b) of this section.
(d) The present value of deferred payments due under incurred claims or matured certificates shall be deemed a liability of the society and shall be computed upon mortality and interest standards prescribed in subsections (e) and (f) of this section.
(e) Such valuation and underlying data shall be certified by a competent actuary or, at the expense of the society, verified by the actuary of the Department of Insurance of the state of domicile of the society.
(f) The minimum standards of valuation for certificates issued prior to one year from January 1, 1972, shall be those provided by the law applicable immediately prior to January 1, 1972, but not lower than the standards used in the calculating of rates for such certificates.
(g) The minimum standard of valuation for certificates issued after January 1, 1973, shall be three and one-half percent interest and the following tables:
(1) FOR CERTIFICATES OF LIFE INSURANCE. - American Men Ultimate Table of Mortality, with Bowerman's or Davis' extension thereof or, with the consent of the commissioner, the commissioner's 1958 Standard Ordinary Mortality Table, the commissioner's 1941 Standard Industrial Table of Mortality or the commissioner's 1961 Standard Industrial Table of Mortality;
(2) FOR ANNUITY CERTIFICATES, INCLUDING LIFE ANNUITIES PROVIDED OR AVAILABLE UNDER OPTIONAL MODES OF SETTLEMENT IN SUCH CERTIFICATES. - The 1937 Standard Annuity Table;
(3) FOR DISABILITY BENEFITS ISSUED IN CONNECTION WITH LIFE BENEFIT CERTIFICATES. - Hunter's Disability Table, which, for active lives, shall be combined with a mortality table permitted for calculating the reserves on life insurance certificates, except that the table known as Class 3 Disability Table (1926) modified to conform to the contractual waiting period, shall be used in computing reserves for disability benefits under a contract which presumes that total disability shall be considered to be permanent after a specified period;
(4) FOR ACCIDENTAL DEATH BENEFITS ISSUED IN CONNECTION WITH LIFE BENEFIT CERTIFICATES. - The Intercompany Double Indemnity Mortality Table combined with a mortality table permitted for calculating the reserves for life insurance certificates; and
(5) FOR NONCANCELLABLE ACCIDENT AND HEALTH BENEFITS. - The Class 3 Disability Table (1926) with conference modifications or, with the consent of the commissioner, tables based upon the society's own experience.
(h) The commissioner may, in his discretion, accept other standards for valuation if he finds that the reserves produced thereby will not be less in the aggregate than reserves computed in accordance with the minimum valuation standard prescribed in this section. The commissioner may, in his discretion, vary the standards of mortality applicable to all certificates of insurance on substandard lives or other extra hazardous lives by any society authorized to do business in this state. Whenever the mortality experience under all certificates valued on the same mortality table is in excess of the expected mortality according to such table for a period of three consecutive years, the commissioner may require additional reserves when deemed necessary in his judgment on account of such certificates.
(i) Any society, with the consent of the insurance supervisory official of the state of domicile of the society and under such conditions, if any, which he may impose, may establish and maintain reserves on its certificates in excess of the reserves required under this section, but the contractual rights of any insured member shall not be affected thereby.
A society neglecting to file the annual statement in the form and within the time provided by this chapter shall forfeit $100.00 for each day during which such neglect continues; and, upon notice by the commissioner to that effect, its authority to do business in this state shall cease while such default continues.
(a) The commissioner, or any person he may appoint, shall have the power of visitation and examination into the affairs of any domestic society, and he shall make such examination at least once in every three years. He may employ assistants for the purpose of such examination, and he, or any person he may appoint, shall have free access to all books, papers and documents that relate to the business of the society.
(b) In making any such examination, the commissioner may summon and qualify as witnesses under oath and examine its officers, agents and employees or other persons in relation to the affairs, transactions and condition of the society.
(c) A summary of the report of the commissioner, and such recommendations or statements of the commissioner as may accompany such report, shall be read at the first meeting of the board of directors, or corresponding body of the society, following the receipt thereof and, if directed so to do by the commissioner, shall also be read at the first meeting of the supreme legislative or governing body of the society following the receipt thereof. A copy of the report, recommendations and statements of the commissioner shall be furnished by the society to each member of such board of directors or other governing body.
(d) The expense of each examination and of each valuation, including compensation and actual expense of examiners, shall be paid by the society examined or whose certificates are valued, upon statements furnished by the commissioner.
Except as provided in this chapter, societies shall be governed by this chapter and shall be exempt from all other provisions of the insurance laws of this state, not only in governmental relations with the state, but for every other purpose. No law hereafter enacted shall apply to them unless they are expressly designated therein.
The commissioner, or any person whom he may appoint, may examine any foreign or alien society transacting, or applying for admission to transact, business in this state. He may employ assistants and he, or any person he may appoint, shall have free access to all books, papers and documents that relate to the business of the society. He may, in his discretion, accept, in lieu of such examination, the examination of the insurance department of the state, territory, district, province or country where such society is organized. The compensation and actual expenses of the examiners making any examination or general or special valuation shall be paid by the society examined or by the society whose certificate obligations have been valued, upon statements furnished by the commissioner.
Pending, during or after an examination or investigation of a society, either domestic, foreign or alien, the commissioner shall make public no financial statement, report or finding nor shall he permit to become public any financial statement, report or finding affecting the status, standing or rights of any society until a copy thereof shall have been served upon the society at its principal office and the society shall have been afforded a reasonable opportunity to answer any such financial statement, report or finding and to make such showing in connection therewith as it may desire.
Every society organized or licensed under this chapter is hereby declared to be a charitable and benevolent institution, and all of its funds shall be exempt from all and every state, county, district, municipal and school tax other than taxes on real estate and office equipment.
Persons representing a fraternal benefit society in the solicitation of applications for insurance or annuities and the fraternal benefit society with respect thereto shall be subject to the provisions of Chapters 7 and 8A of this title.
Repealed by Act 2001-702, p. 1509, &sect; 16, effective January 1, 2002.
No person shall cause or permit to be made, issued or circulated in any form:
(1) Any misrepresentation or false or misleading statement concerning the terms, benefits or advantages of any fraternal insurance contract now issued, or to be issued, in this state or the financial condition of any society;
(2) Any false or misleading estimate or statement concerning the dividends or shares of surplus paid, or to be paid, by any society on any insurance contract; or
(3) Any incomplete comparison of an insurance contract of one society with an insurance contract of another society or insurer for the purpose of inducing the lapse, forfeiture or surrender of any insurance contract. A comparison of insurance contracts is incomplete:
a. If it does not compare in detail:
1. The gross rates and the gross rates less any dividend or other reduction allowed at the date of the comparison; and
2. Any increase in cash values and all the benefits provided by each contract for the possible duration thereof as determined by the life expectancy of the insured; or
b. If it omits from consideration:
1. Any benefit or value provided in the contract;
2. Any differences as to amount or period of rates; or
3. Any differences in limitations or conditions or provisions which directly or indirectly affect the benefits.
In any determination of the incompleteness or misleading character of any comparison or statement, it shall be presumed that the insured had no knowledge of any of the contents of the contract involved.
(4) Any person who violates any provision of this section or knowingly receives any compensation or commission by or in consequence of such violation shall, upon conviction, be punished by a fine not less than $100.00 nor more than $1,000.00 or by imprisonment in the county jail not less than 30 days nor more than 90 days, or by both fine and imprisonment, and shall, in addition, be liable for a civil penalty in the amount of three times the sum received by such violator as compensation or commission, which penalty an action may be maintained for and recovered by any person or society aggrieved for his, or its, own use and benefit in accordance with the provisions of civil practice.
(a) No society doing business in this state shall make or permit any unfair discrimination between insured members of the same class and equal expectation of life in the premiums charged for certificates of insurance in the dividends or other benefits payable thereon or in any other of the terms and conditions of the contracts it makes.
(b) No society, by itself, or any other party and no agent or solicitor, personally or by any other party shall offer, promise, allow, give, set off or pay, directly or indirectly, any valuable consideration or inducement to or for insurance on any risk authorized to be taken by such society which is not specified in the certificate. No member shall receive or accept, directly or indirectly, any rebate of premium, or part thereof, or agent's or solicitor's commission thereon payable on any certificate or receive or accept any favor or advantage or share in the dividends or other benefits to accrue on, or any valuable consideration or inducement not specified in, the contract of insurance.
(a) Every society authorized to do business in this state shall appoint, in writing, the commissioner and each successor in office to be its true and lawful attorney upon whom all lawful process in any action or proceeding against it shall be served and shall agree, in such writing, that any lawful process against it which is served on said attorney shall be of the same legal force and validity as if served upon the society and that the authority shall continue in force so long as any liability remains outstanding in this state. Copies of such appointment, certified by the commissioner, shall be deemed sufficient evidence thereof and shall be admitted in evidence with the same force and effect as the original thereof might be admitted.
(b) Service shall only be made upon the commissioner or, if absent, upon the person in charge of his office. It shall be made in duplicate and shall constitute sufficient service upon the society. When legal process against a society is served upon the commissioner, he shall forthwith forward one of the duplicate copies by registered or certified mail, prepaid, directed to the secretary or corresponding officer. No such service shall require a society to file its answer, pleading or defense in less than 30 days from the date of mailing the copy of the service to a society. Legal process shall not be served upon a society except in the manner provided in this section. At the time of serving any process upon the commissioner, the plaintiff or complainant in the action shall pay to the commissioner a fee of $2.00.
(a) A domestic society may consolidate or merge with any other society by complying with the provisions of this section. It shall file with the commissioner:
(1) A certified copy of the written contract containing, in full, the terms and conditions of the consolidation or merger;
(2) A sworn statement by the president and secretary, or corresponding officers, of each society showing the financial condition thereof on a date fixed by the commissioner, but not earlier than December 31 next preceding the date of the contract;
(3) A certificate of such officers, duly verified by their respective oaths, that the consolidation or merger has been approved by a two-thirds vote of the supreme legislative or governing body of each society; and
(4) Evidence that at least 60 days prior to the action of the supreme legislative or governing body of each society, the text of the contract has been furnished to all members of each society, either by mail or by publication in full in the official organ of each society.
(b) The affidavit of any officer of the society, or of anyone authorized by it to mail any notice or document, stating that such notice or document has been duly addressed and mailed, shall be prima facie evidence that such notice or document has been furnished the addressees.
(c) If the commission finds that the contract is in conformity with the provisions of this section, that the financial statements are correct and that the consolidation or merger is just and equitable to the members of each society, he shall approve the contract and issue his certificate to such effect. Upon such approval, the contract shall be in full force and effect unless any society which is a party to the contract is incorporated under the laws of any other state. In such event, the consolidation or merger shall not become effective unless, and until, it has been approved as provided by the laws of such state and a certificate of such approval filed with the commissioner or, if the laws of such state contain no such provision, then the consolidation or merger shall not become effective unless, and until, it has been approved by the insurance supervisory official of such state and a certificate of such approval filed with the commissioner.
Upon the consolidation or merger effective as provided in Section 27-34-48, all the rights, franchises and interests of the consolidated or merged societies in, and to, every species of property, real, personal or mixed, and things in action thereunto belonging shall be vested in the society resulting from, or remaining after, the consolidation or merger without any other instrument; except, that conveyances of real property may be evidenced by proper deeds, and the title to any real estate, or interest therein, vested under the laws of this state in any of the societies consolidated or merged shall not revert, or be in any way impaired, by reason of the consolidation or merger, but shall vest absolutely in the society resulting from, or remaining after, such consolidation or merger.
(a) Nothing contained in this chapter shall be so construed as to affect or apply to:
(1) Grand or subordinate lodges of societies, orders or associations now doing business in this state which provide benefits exclusively through local or subordinate lodges;
(2) Grand or subordinate lodges of societies, orders, or associations now doing business in this state which provide for a death benefit of not more than one thousand dollars ($1,000) to any one person, provided that no commission or other direct compensation is paid with respect to the sale of such death benefit contracts;
(3) Orders, societies or associations which admit to membership only persons engaged in one or more crafts or hazardous occupations, in the same or similar lines of business, and the ladies' societies or ladies' auxiliaries to such orders, societies or associations;
(4) Domestic societies which limit their membership to employees of a particular city or town, designated firm, business house or corporation which provide for a death benefit of not more than $400.00 or disability benefits of not more than $350.00 to any person in any one year, or both; or
(5) Domestic societies or associations of a purely religious, charitable or benevolent description which provide for a death benefit of not more than $400.00 or for disability benefits of not more than $350.00 to any one person in any one year, or both.
(b) Any such society or association described in subdivision (a)(4) or (a)(5) of this section which provides for death or disability benefits for which benefit certificates are issued and any such society or association included in subdivision (a)(5) of this section which has more than 1,000 members shall not be exempted from the provisions of this chapter, but shall comply with all requirements thereof.
(c) No society which, by the provisions of this section, is exempt from the requirements of this chapter, except any society described in subdivision (a)(3) of this section, shall give or allow, or promise to give or allow, to any person any compensation for procuring new members.
(d) Every society which provides for benefits in case of death or disability resulting solely from accident and which does not obligate itself to pay natural death or sick benefits shall have all of the privileges, and be subject to all the applicable provisions and regulations of this chapter; except, that the provisions thereof relating to medical examination, valuations of benefit certificates and incontestability shall not apply to such society.
(e) The commissioner may require from any society or association, by examination or otherwise, such information as will enable him to determine whether such society or association is exempt from the provisions of this chapter.
Societies, exempted under the provisions of this section, shall also be exempt from all other provisions of the insurance laws of this state.
(a) When the commissioner upon investigation finds that a domestic society:
(1) Has exceeded its powers; or
(2) Has failed to comply with any provision of this chapter; or
(3) Is not fulfilling its contracts in good faith; or
(4) Has a membership of less than 400 after an existence of one year or more; or
(5) Is conducting business fraudulently or in a manner hazardous to its members, creditors, the public or the business, he shall notify the society of his findings, state in writing the reasons for his dissatisfaction and require the society to show cause on a date named why it should not be enjoined from carrying on any business until the violation complained of shall have been corrected or why an action in quo warranto should not be commenced against the society.
(b) If on such date the society does not present good and sufficient reasons why it should not be so enjoined or why such action should not be commenced, the commissioner may present the facts relating thereto to the Attorney General who shall, if he deems the circumstances warrant, commence an action to enjoin the society from transacting business or in quo warranto. The court shall thereupon notify the officers of the society of a hearing. If after a full hearing it appears that the society should be so enjoined or liquidated or a receiver appointed, the court shall enter the necessary order.
(c) No society so enjoined shall have the authority to do business until:
(1) The commissioner finds that the violation complained of has been corrected;
(2) The costs of such action have been paid by the society if the court finds that the society was in default as charged;
(3) The court has dissolved its injunction; and
(4) The commissioner has reinstated the society's license.
(d) If the court orders the society liquidated, it shall be enjoined from carrying on any further business, whereupon the receiver of the society shall proceed at once to take possession of the books, papers, money and other assets of the society and, under the direction of the court, proceed forthwith to close the affairs of the society and to distribute its funds to those entitled thereto.
(e) No action under this section shall be recognized in any court of this state unless brought by the Attorney General upon request of the commissioner. Whenever a receiver is to be appointed for a domestic society, the court shall appoint the commissioner as such receiver.
(f) The provisions of this section relating to hearing by the commissioner, action by the Attorney General at the request of the commissioner, hearing by the court, injunction and receivership shall be applicable to a society which voluntarily determines to discontinue business.
No application or petition for injunction against any domestic, foreign or alien society, or branch thereof, shall be recognized in any court of this state unless made by the Attorney General upon request of the commissioner.
All decisions and findings of the commissioner made under the provisions of this chapter shall be subject to review by the court in accordance with the provisions of Section 27-2-32.
Any person who willfully makes a false statement of any material fact or thing in a sworn statement as to the death or disability of a certificate holder in any fraternal benefit society, for the purpose of procuring payment of a benefit named in the certificate of such holder, and any person who willfully makes any false statement in any verified report or declaration under oath required or authorized by law as to fraternal benefit societies shall be guilty of perjury and shall be proceeded against and punished as provided by the statutes of this state in relation to the crime of perjury.
In addition to the provisions heretofore contained or referred to in this chapter, other chapters and provisions of this title shall apply to fraternal benefit societies, to the extent applicable and not in conflict with the express provisions of this chapter, and the reasonable implications thereof, as follows:
(1) Chapter 1;
(2) Chapter 2;
(3) The following sections of Chapter 3:
a. Section 27-3-4; and
b. Section 27-3-5;
(4) The following sections of Chapter 10:
a. Section 27-10-1;
b. Section 27-10-2; and
c. Section 27-10-3;
(5) Chapter 12;
(6) Section 27-15-29;
(7) The following sections of Chapter 27:
a. Section 27-27-26;
b. Section 27-27-27;
c. Section 27-27-29; and
d. Section 27-27-50; and
(8) Chapter 32.
(a) No fraternal benefit society shall transact business in this state unless authorized therefor under a subsisting license issued to the society by the commissioner.
(b) Societies authorized to transact business in this state as of immediately prior to January 1, 1972, may continue such business until the April 1 next succeeding January 1, 1972. The authority of such societies, and of all societies hereafter licensed, may thereafter be renewed annually, but in all cases to terminate on the succeeding April 1; however, a license so issued shall continue in full force and effect until the new license is issued or specifically refused.
(c) For each such license or renewal, the society shall pay the commissioner $50.00.
(d) A duly certified copy or duplicate of the license shall be prima facie evidence that the licensee is a fraternal benefit society within the meaning of this chapter.
(e) Any person who in this state solicits membership for, or in any manner assists in procuring membership in, any fraternal benefit society not currently licensed to do business in this state shall be guilty of a misdemeanor and, upon conviction thereof, shall be subject to the penalties prescribed by Section 27-1-12.
(a) No foreign or alien society shall transact business in this state without a license issued by the commissioner. Any such society may be licensed to transact business in this state upon filing with the commissioner:
(1) A duly certified copy of its charter or articles of incorporation;
(2) A copy of its constitution and laws, certified by its secretary or corresponding officer;
(3) A power of attorney to the commissioner as prescribed in Section 27-34-47;
(4) A statement of its business under oath of its president and secretary, or corresponding officers, in a form prescribed by the commissioner, duly verified by an examination made by the supervising insurance official of its home state or other state, territory, province or country satisfactory to the commissioner;
(5) A certificate from the proper official of its home state, territory, province or country that the society is legally incorporated and licensed to transact business therein;
(6) Copies of its certificate forms; and
(7) Such other information as he may deem necessary, and upon a showing that its assets are invested in accordance with the provisions of this chapter.
(b) Any foreign or alien society desiring admission to this state shall have the qualifications required of domestic societies organized under this chapter.
(a) When the commissioner upon investigation finds that a foreign or alien society transacting or applying to transact business in this state:
he shall notify the society of his findings, state in writing the reasons for his dissatisfaction and require the society to show cause on a date named why its license should not be suspended, revoked or refused. If on such date the society does not show good and sufficient cause why its authority to do business in this state should not be suspended, revoked or refused, he may suspend or refuse the license of the society to do business in this state, until satisfactory evidence is furnished to him that such suspension or refusal should be withdrawn, or he may revoke the authority of the society to do business in this state.
(b) Nothing contained in this section shall be taken or construed as preventing any such society from continuing in good faith all contracts made in this state during the time such society was legally authorized to transact business herein.
Seven or more citizens of the United States, a majority of whom are citizens of this state, who desire to form a fraternal benefit society, may make, sign and acknowledge before some officer, competent to take acknowledgment of deeds, articles of incorporation, in which shall be stated:
(1) The proposed corporate name of the society, which shall not so closely resemble the name of any society or insurance company as to be misleading or confusing;
(2) The purposes for which it is being formed and the mode in which its corporate powers are to be exercised. Such purposes shall not include more liberal powers than are granted by this chapter; provided, however, that any lawful, social, intellectual, educational, charitable, benevolent, moral, fraternal or religious advantages may be set forth among the purposes of the society; and
(3) The names and residences of the incorporators and the names, residences and official titles of all the officers, trustees, directors or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which all such officers shall be elected by the supreme legislative or governing body, which election shall be held not later than one year from the date of the issuance of the permanent certificate.