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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
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for a grace period for 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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