2006 New York Code - Life Insurance Certificates; Required And Prohibited Provisions.

 
    §   4510.   Life   insurance  certificates;  required  and  prohibited
  provisions.  (a) No certificate or other evidence of  a  life  insurance
  contract  shall be delivered or issued for delivery in this state by any
  authorized  society  unless  it  contains  in  substance  the  following
  provisions, or provisions which in the opinion of the superintendent are
  more  favorable  to  the insured members, except that such provisions as
  are not applicable to single premium or term  life  insurance  shall  to
  that extent not be incorporated in such certificate or contract:
    (1)  A provision that the insured is entitled to a grace period of not
  less than one month or thirty days  within  which  the  payment  of  any
  premium  after  the first may be made, and that during such grace period
  the  certificate  shall  continue  in  full  force,  but  in  case   the
  certificate  becomes  a  claim,  on  account of death, maturity or other
  benefit accrued during such grace period before the overdue premiums are
  paid, the amount of such premium or premiums may be  deducted  from  any
  amount payable in any settlement under the certificate.
    (2)  A  provision that the certificate shall be incontestable after it
  has been in force during the lifetime of the insured member for a period
  of two years from its date of issue, and, if a certificate provides that
  the death benefit provided by the certificate may be increased, or other
  certificate provisions changed, upon the application of the  certificate
  holder  and the production of evidence of insurability, a provision that
  the certificate with respect to each such increase or  change  shall  be
  incontestable  after  two years from the effective date of such increase
  or change, except in each case for (i) non-payment of premiums, and (ii)
  violation of the provisions of the certificate relating to  military  or
  naval  service,  and,  at  the  option  of the society, (iii) provisions
  relating to benefits in the event of total and permanent disability, and
  (iv) provisions  which  grant  additional  insurance  against  death  by
  accident or accidental means.
    (3)  A  provision  that  if it shall be found at any time before final
  settlement under the certificate that the age of the insured (or the age
  of the beneficiary, if considered in determining the premium)  has  been
  misstated, and the discrepancy and the premium payment involved have not
  been adjusted, the amount payable under the certificate shall be such as
  the  premium would have purchased at the correct age, except that if the
  correct age was not  an  insurable  age  under  the  society's  charter,
  constitution  or  by-laws,  and such charter, constitution or by-laws so
  provide, only  the  net  mortuary  payments  made  thereunder  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.
    (4) A provision that the holder of a certificate 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 cash value has been  duly
  paid  or  the  period  of  extended  insurance  has  expired,  upon  the
  production of evidence of insurability and good health  satisfactory  to
  the  society  and  the  payment  of  all  overdue premiums and any other
  indebtedness to the society upon such certificate together with interest
  on such premiums, at a rate not exceeding six percent per annum  payable
  annually  and  interest  on  such  indebtedness  at  a rate or rates not
  exceeding the applicable loan rate or  rates  determined  in  accordance
  with the certificate's provisions. Such provision shall be required only
  if  the  certificate provides for termination or lapse in the event of a
  default in making a regularly scheduled premium. Such provision may give
  the society the right to  contest  the  reinstated  certificate,  as  to
  statements  made to procure reinstatement, within a period after date of
  reinstatement not exceeding the period of contestability  prescribed  in
  the original certificate with the same exceptions permitted by paragraph
  two hereof.
    (5)  In  the case of certificates which cause on a basis guaranteed in
  the certificate unscheduled changes in benefits or  premiums,  or  which
  provide  an  option  for  changes  in  benefits or premiums other than a
  change to a new certificate, a provision specifying the mortality table,
  interest rate and method used in calculating cash surrender  values  and
  the  paid-up  nonforfeiture benefits available under the certificate. In
  the  case  of  all  other  certificates,  a  provision  specifying   the
  nonforfeiture  options  available  under the certificate in the event of
  default in a premium  payment  after  premiums  have  been  paid  for  a
  specified period, together with a table showing, in figures, the options
  so available, and also the loan values, if any, available during each of
  the  first  twenty  years  after  the  issuance of the certificate. Such
  options shall conform with the requirements  of  section  four  thousand
  five hundred eleven of this article.
    (6)  A  provision  for certificates issued on and after January first,
  nineteen hundred seventy-five, that after  three  full  years'  premiums
  have  been  paid  or,  in the case of certificates that provide that the
  certificate holder may vary the amount and frequency of premiums  to  be
  paid   to  the  society,  after  three  years  from  the  issue  of  the
  certificate, if the certificate is in force  and  not  in  default,  the
  society will, at any time while the certificate is in force, advance, on
  proper  assignment or pledge of the certificate and on the sole security
  thereof, a sum equal to,  or  at  the  option  of  the  person  entitled
  thereto, less than, the amount of the cash surrender value calculated in
  accordance  with  the  provisions  of section four thousand five hundred
  eleven of this article; and that the society may deduct from  such  loan
  value  (in  addition  to  the  indebtedness deducted in determining such
  value) any unpaid balance of the premium  for  the  current  certificate
  year;  and  that  if the loan is made or repaid on a date other than the
  anniversary of the certificate the society may collect interest for  the
  portion  of  the  current  certificate  year  on  a  pro rata basis. The
  certificate shall provide, at the option of the society, either that (i)
  any such loan shall bear interest at a maximum rate  of  not  more  than
  seven  and four-tenths per centum per annum if payable in advance or the
  equivalent effective rate of interest if otherwise payable, or (ii)  any
  such  loan  shall bear interest at a rate not in excess of an adjustable
  maximum rate established from time to time by the society  as  permitted
  by  law.  If  the  certificate  provides  for  an  adjustable  rate, the
  certificate shall specify the regular intervals at  which  the  interest
  rate  is  to  be  determined  which  shall be at least once every twelve
  months, but not more frequently than once in any three month period. The
  certificate may further provide that if the interest on the loan is  not
  paid  when  due,  it shall be added to the existing loan, and shall bear
  interest at the applicable rate or rates payable on the loan  determined
  in  accordance  with  the  provisions of the certificate; and subject to
  subsection (e) of section three thousand two hundred six of this chapter
  may further provide that if and  when  the  total  indebtedness  on  the
  certificate,  including  interest  due or accrued, equals or exceeds the
  amount of the loan value thereof at such time, and if  at  least  thirty
  days'  prior  notice  shall  have  been  given in the manner provided in
  section three thousand two hundred eleven  of  this  chapter,  then  the
  certificate  shall  terminate  and become void. This provision shall not
  apply to term insurance.
    Any certificate which provides for the crediting of additional amounts
  pursuant to section four thousand five hundred eighteen of this  article
  may  also provide that if any indebtedness is owed to the society on any
  part of the loan value which would otherwise be credited with additional
  amounts, such additional amounts  may  be  reduced  so  that  the  total
  amounts  credited  on  such part are so credited at a rate that is up to
  two percent per annum  less  than  the  applicable  loan  interest  rate
  charged  or at such other rate as the superintendent, upon the society's
  demonstrating justification therefor, may allow.
    (7)  If  in  the  judgment  of  the   superintendent,   the   charter,
  constitution or by-laws of the society provide that the violation of any
  section or sections thereof shall result in the reduction or termination
  of  any  benefit  payable  under the certificate, then a provision which
  either:
    (A) recites fully all such sections,
    (B) sets forth the substance of all such sections, or
    (C) states in substance that no section of the  charter,  constitution
  or  by-laws  shall  be relied upon or be used to reduce or terminate any
  benefit  payable  under  the  certificate   unless   such   section   is
  specifically set forth or referred to in the certificate.
    (8)   The  provision  in  the  constitution  or  by-laws  required  by
  subsection (g) of section  four  thousand  five  hundred  four  of  this
  article.
    (9)  A  provision  that in case the by-laws of the society provide for
  expulsion or suspension of a member, any member so expelled or suspended
  except for non-payment of a  premium  or  contribution,  or  within  the
  contestable  period  for  material misrepresentations in his application
  for membership, shall have the privilege of maintaining his insurance in
  force by continuing payment of  the  required  premium  or  contribution
  payable  under  the certificates and of such other assessments as may be
  required of members holding certificates of the same class.
    (10) If issued for delivery in this state by any authorized foreign or
  alien society, a provision that the rights or obligations of the insured
  member under such certificate or other evidence of such  life  insurance
  contract  or  of  any  person  rightfully  claiming  thereunder shall be
  governed by the laws of this state.
    (11) A  provision  that  the  society  shall  annually  ascertain  and
  apportion any divisible surplus accruing on the certificate.
    (12) In any certificate under which additional amounts may be credited
  pursuant to section four thousand five hundred eighteen of this article,
  provisions stating
    (A) the guaranteed factors of mortality, expense and interest, and the
  method used by the society in calculating actual certificate values;
    (B)  that  such  additional  amount  shall be nonforfeitable after the
  effective date of their crediting except for any charges  imposed  under
  the   certificate  which  are  not  greater  than  those  allowed  under
  subsection (n-1)  or  any  market  value  adjustment  made  pursuant  to
  subsection (n-2) of section four thousand two hundred twenty-one of this
  chapter; and
    (C)  that the society shall credit any such amounts no less frequently
  than annually during such period.
    (13) Operative on January first, nineteen hundred eighty-five or  with
  respect  to  certificates  issued by any particular society operative on
  such earlier date as the society may have specified in a written  notice
  filed  with  the  superintendent as the date the society elects to begin
  compliance with the provisions of this paragraph, a provision  that  (i)
  if  the  death  of the insured shall occur within a period for which the
  premium has been paid, the society shall add to the certificate proceeds
  a refund of the pro rata portion of premium paid for any  period  beyond
  the  end of the certificate month in which death occurred, provided such
  premium was not waived under any waiver of premiums benefit included  in
  the  certificate  or  attached  thereto,  and  (ii)  if the death of the
  insured shall occur within a period for which the premium has  not  been
  paid,  but  within  the  grace  period  provided in the certificate, the
  society may deduct from the certificate proceeds that portion of overdue
  premium as applies to the  period  ending  with  the  last  day  of  the
  certificate  month  in  which death occurred; provided however, that the
  provisions of this paragraph shall not be applicable to  single  premium
  certificates and paid-up certificates.
    (b)  (1)  No  such  certificate  or other evidence of a life insurance
  contract delivered or issued for delivery in this  state  shall  contain
  any  exclusory  or  restrictive  provisions relating to liability in the
  event of death caused in a certain specified manner except the following
  provisions, or provisions which in the opinion of the superintendent are
  substantially the same or more favorable to holders of such  certificate
  or contracts, excluding or restricting coverage in the event of death:
    (A)  as a result of war or an act of war, if the cause of death occurs
  while the insured is serving in the military, naval or air forces of any
  country, international organization or combination of  countries  or  in
  any  civilian  noncombatant unit serving with such forces, provided such
  death occurs while in such forces or units or within  six  months  after
  termination of service in such forces or units;
    (B)  as  a  result  of  the special hazards incident to service in the
  military, naval or air forces of any country, international organization
  or combination of  countries  or  in  any  civilian  non-combatant  unit
  serving with such forces, if the cause of death occurs while the insured
  is  serving  in  such  forces  or  units  and  is outside the home area,
  provided such death occurs outside the home area or  within  six  months
  after  the  insured's  return  to  the home area while in such forces or
  units or within six months after the  termination  of  service  in  such
  forces or units, whichever is earlier;
    (C)  as  the result of war or an act of war, within two years from the
  date of issue of the certificate, while  the  insured  is  not  in  such
  forces  or  units,  if  the  cause  of death occurs while the insured is
  outside the home area; provided such death occurs outside the home  area
  or within six months after the insured's return to the home area;
    (D)  as a result of suicide within two years from the date of issue of
  the certificate;
    (E) as  a  result  of  aviation  under  conditions  specified  in  the
  certificate; or
    (F)  within  two  years from the date of issue of the certificate as a
  result of specified hazardous occupations, or while  the  insured  is  a
  resident of a specified foreign country or countries.
    (2) The provisions of this paragraph shall apply only to subparagraphs
  (A), (B) and (C) of paragraph one hereof.
    (A) As used in such subparagraphs, "home area" means the states of the
  United  States, the District of Columbia and Canada; "war" includes, but
  is not limited to, any war declared or undeclared, and armed  aggression
  resisted   by  the  military,  naval  or  air  forces  of  any  country,
  international organization or combination of  countries;  "act  of  war"
  means  any act peculiar to military, naval, or air operations in time of
  war; and "special hazards incident to  service"  includes,  but  is  not
  limited  to,  those  hazards  resulting  in  the  insured's  death being
  presumed by reason of being missing or  missing  in  action,  and  those
  hazards  resulting  in  death  from  disease  or  injury,  accidental or
  otherwise, to which a person serving in, or with, such forces  or  units
  is exposed in the line of duty.
    (B)  In  permitting  such  war exclusions it is the legislative intent
  that  such  exclusions  are  not  to  be  construed  or  interpreted  as
  exclusions  because  of  the  status  of the insured as a member of such
  forces or units or because of the presence of the insured as a  civilian
  in  a  combat area or area adjacent thereto. Such permissible exclusions
  shall be construed and interpreted according to the fair import of their
  terms so as not to exclude deaths due to diseases or accidents which are
  common to the civilian population and are not  attributable  to  special
  hazards  to which a person serving in such forces or units is exposed in
  the line of duty.
    (C)  The  superintendent  may,  by  regulation,  prescribe  reasonable
  conditions relative to the use of such war exclusion provisions.
    (3)  In  the  event of death as to which there is such an exclusion or
  restriction, the society shall pay the reserve on the face amount of the
  certificate, computed according to the mortality table and interest rate
  specified in the certificate, together with the reserve for any  paid-up
  additions  thereto,  and  any  dividends  standing  to the credit of the
  certificate, less any indebtedness to the society  on  the  certificate,
  including  interest  due  or  accrued;  provided that if the certificate
  shall have been in force for not more than two years the  society  shall
  pay  the  amount  of  the gross premiums charged on the certificate less
  dividends paid in cash or used in the payment of  premiums  thereon  and
  less  any  indebtedness  to  the  society  on the certificate; including
  interest due or accrued.
    (4) Nothing contained in this subsection shall apply to any  provision
  in  a life insurance certificate for additional benefits in the event of
  death by accident or by accidental means.
    (5) If a certificate provides that the death benefit may be increased,
  or other certificate provisions changed, upon  the  application  of  the
  certificate  holder  and the production of evidence of insurability, the
  certificate may also provide that  the  two  year  exclusions  permitted
  under  subparagraph  (C), (D) or (F) of paragraph one of this subsection
  shall run from the date of issue of the certificate except that it shall
  run from the effective date of each subsequent increase or  change  with
  respect to each such increase or change.
    (c) No such certificate or other evidence of a life insurance contract
  shall  be  issued  or  delivered  in  this  state  by any society if, in
  substance, any of the following provisions are in any way made a part of
  the contract:
    (1) any provision limiting the time within which any action at law  or
  in  equity may be commenced to less than eighteen months after the cause
  of action shall accrue;
    (2)  any  provision  for  forfeiture,  lapse  or  termination  of  any
  certificate  because  of failure to repay any loan on the certificate or
  to pay interest on such loan, while the total unpaid amount of any  loan
  or  loans  under  such certificate, including interest, is less than the
  loan value thereof; or
    (3) any provision whereby the suspension or expulsion of  the  insured
  member, or change of occupation, or any other violation of the terms and
  conditions  of  the  insurance  contract  shall  result  in  the loss or
  reduction of the cash surrender value or  other  withdrawal  equity,  if
  any, available by the terms of such certificate.