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304.29-191 The benefit contract.
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Every society authorized to do business in this state shall issue to each owner of a
benefit contract a certificate specifying the amount of benefits provided. The
certificate, together with any riders or endorsements attached thereto, the laws of the
society, the application for membership, the application for insurance and
declaration of insurability, if any, signed by the applicant, and all amendments to
each, shall constitute the benefit contract, as of the date of issuance, between the
society and the owner, and the certificate shall so state. A copy of the application
for insurance and declaration of insurability, if any, shall be endorsed upon or
attached to the certificate. All statements on the application shall be representations
and not warranties. Any waiver of this provision shall be void.
Any changes, additions or amendments to the laws of the society duly made or
enacted subsequent to the issuance of the certificate, shall bind the owner and the
beneficiaries, and shall govern and control the benefit contract in all respects the
same as though the changes, additions or amendments had been made prior to and
were in force at the time of the application for insurance, except that no change,
addition or amendment shall destroy or diminish benefits which the society
contracted to give the owner as of the date of issuance.
Any person upon whose life a benefit contract is issued prior to attaining the age of
majority shall be bound by the terms of the application and certificate and by all the
laws and rules of the society to the same extent as though the age of majority had
been attained at the time of application.
A society shall provide in its 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 owner to the society the amount of the owner's
equitable proportion of the deficiency as ascertained by its board, and that if the
payment is not made either:
(a) It shall stand as an indebtedness against the certificate and draw interest not to
exceed the rate specified for certificate loans under the certificates; or
(b) In lieu of or in combination with paragraph (a), the owner may accept a
proportionate reduction in benefits under the certificate.
The society may specify the manner of the election and which alternative is to be
presumed if no election is made.
Copies of any of the documents mentioned in this section, certified by the secretary
or corresponding officer of the society, shall be received as evidence of the terms
and conditions thereof.
No certificate shall be delivered or issued for delivery in this state unless a copy of
the form has been filed with and approved by the commissioner in the manner
provided for like policies issued by life insurers in this state. Every life, accident,
health, or disability insurance certificate and every annuity certificate issued on or
after one (1) year from January 1, 1989 shall meet the standard contract provision
requirements not inconsistent with this subtitle for like policies issued by life
insurers in this state, except that a society may provide for a grace period for
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payment of premiums of one (1) full month in its certificates. The certificates shall
also contain a provision stating the amount of premiums which are payable under
the certificate and a provision reciting or setting forth the substance of any sections
of the society's laws or rules in force at the time of issuance of the certificate which,
if violated, will result in the termination or reduction of benefits payable under the
certificate. If the laws of the society provide for expulsion or suspension of a
member, the certificate shall also contain a provision that any member so expelled
or suspended, except for nonpayment of a premium or within the contestable period
for material misrepresentation in the application for membership or insurance, shall
have the privilege of maintaining the certificate in force by continuing payment of
the required premium.
Benefit contracts issued on the lives of persons below the society's minimum age for
adult membership may provide for transfer of control or ownership to the insured at
an age specified in the certificate. A society may require approval of an application
for membership in order to effect this transfer, and may provide in all other respects
for the regulation, government and control of certificates and all rights, obligations,
and liabilities incident thereto and connected therewith. Ownership rights prior to
transfer shall be specified in the certificate.
A society may specify the terms and conditions on which benefit contracts may be
assigned.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1396, effective July 15, 2010. -- Created
1988 Ky. Acts ch. 310, sec. 19, effective January 1, 1989.
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