Title 27
Insurance

Chapter 4.8
Group Life Insurance

§ 27-4.8-1. Group life insurance definitions.

Except as provided in § 27-4.8-2, no policy of group life insurance shall be delivered in this state unless it conforms to one of the following descriptions:

(1) A policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer, subject to the following requirements:

(i) The employees eligible for insurance under the policy shall be all of the employees of the employer, or all of any class or classes thereof. The policy may provide that the term “employees” shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships, or partnerships if the business of the employer and of the affiliated corporations, proprietorships, or partnerships is under common control. The policy may provide that the term “employees” shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term “employees” may include retired employees, former employees, and directors of a corporate employer. A policy issued to insure the employees of a public body may provide that the term “employees” shall include elected or appointed officials.

(ii) The premium for the policy shall be paid either from the employer’s funds or from funds contributed by the insured employees, or from both. Except as provided in subsection (1)(iii), a policy on which no part of the premium is to be derived from funds contributed by the insured employees shall insure all eligible employees, except those who reject the coverage in writing.

(iii) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion or limitation shall not be based solely on the fact that the person has a prescription to carry or possess an opioid antagonist as defined in § 16-21-35(a).

(2) A policy issued to a creditor or its parent holding company or to a trustee or trustees or agent designated by two (2) or more creditors, which creditor, holding company, affiliate, trustee, trustees, or agent shall be deemed the policyholder, to insure debtors of the creditor or creditors subject to the following requirements:

(i) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor or creditors, or all of any class or classes thereof. The policy may provide that the term “debtors” shall include:

(A) Borrowers of money or purchasers or lessees of goods, services, or property for which payment is arranged through a credit transaction;

(B) The debtors of one or more subsidiary corporations; and

(C) The debtors of one or more affiliated corporations, proprietorships, or partnerships if the business of the policyholder and of the affiliated corporations, proprietorships, or partnerships is under common control.

(ii) The premium for the policy shall be paid either from the creditor’s funds, or from charges collected from the insured debtors, or from both. Except as provided in subsection (2)(iii), a policy on which no part of the premium is to be derived from the funds contributed by insured debtors specifically for their insurance shall insure all eligible debtors.

(iii) An insurer may exclude any debtors as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion shall not be based solely on the fact that the person has a prescription to carry or possess an opioid antagonist as defined in § 16-21-35(a).

(iv) The amount of the insurance on the life of any debtor shall at no time exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor, except that insurance written in connection with open-end credit having a credit limit exceeding ten thousand dollars ($10,000) may be in an amount not exceeding the credit limit.

(v) The insurance may be payable to the creditor or any successor to the right, title, and interest of the creditor. The payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of the payment and any excess of the insurance shall be payable to the estate of the insured.

(vi) Notwithstanding the provisions of the above subsections, insurance on agricultural credit transaction commitments may be written up to the amount of the loan commitment on a non-decreasing or level term plan. Insurance on educational credit transaction commitments may be written up to the amount of the loan commitment less the amount of any repayments made on the loan.

(3) A policy issued to a labor union, or similar employee organization, which shall be deemed to be the policyholder, to insure members of the union or organization for the benefit of persons other than the union or organization or any of its officials, representatives, or agents, subject to the following requirements:

(i) The members eligible for insurance under the policy shall be all of the members of the union or organization, or all of any class or classes thereof.

(ii) The premium for the policy shall be paid either from funds of the union or organization, or from funds contributed by the insured members specifically for their insurance, or from both. Except as provided in subsection (3)(iii), a policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance shall insure all eligible members, except those who reject the coverage in writing.

(iii) An insurer may exclude or limit the coverage on any persons as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion or limitation shall not be based solely on the fact that the person has a prescription to carry or possess an opioid antagonist as defined in § 16-21-35(a).

(4) A policy issued to a trust or to the trustees of a fund established or adopted by two (2) or more employers, or by one or more labor unions or similar employee organizations, or by one or more employers and one or more labor unions or similar employee organizations, which trust or trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions or organizations for the benefit of person other than the employers or the unions or organizations, subject to the following requirements:

(i) The persons eligible for insurance shall be all of the employees of the employers or all of the members of the unions or organizations, or all of any class or classes thereof. The policy may provide that the term “employees” shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships, or partnerships if the business of the employer and of the affiliated corporations, proprietorships, or partnerships is under common control. The policy may provide that the term “employees” shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term “employees” shall include retired employees, former employees, and directors of a corporate employer. The policy may provide that the term “employees” shall include the trustees or their employees, or both, if their duties are principally connected with the trusteeship.

(ii) The premium for the policy shall be paid from funds contributed by the employer or employers of the insured persons, or by the union or unions or similar employee organizations, or by both, or from funds contributed by the insured persons or from both the insured persons and the employers or unions or similar employee organizations. Except as provided in subsection (4)(iii), a policy on which no part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance shall insure all eligible persons, except those who reject the coverage in writing.

(iii) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion or limitation shall not be based solely on the fact that the person has a prescription to carry or possess an opioid antagonist as defined in § 16-21-35(a).

(5) A policy issued to an association or to a trust or to the trustees of a fund established, created, or maintained for the benefit of members of one or more associations. The association or associations shall have at the outset a minimum of one hundred (100) persons; shall have been organized and maintained in good faith for purposes other than obtaining insurance; shall have been in active existence for at least two (2) years; and shall have a constitution and bylaws that provide that:

(i) The association or associations hold regular meetings not less than annually to further purposes of the members;

(ii) Except for credit unions, the association or associations, collect dues or solicit contributions from members; and

(iii) The members have voting privileges and representation on the governing board and committees. The policy shall be subject to the following requirements:

(A) The policy may insure members of the association or associations, employees thereof, or employees of members, or one or more of the preceding or all of any class or classes thereof for the benefit of persons other than the employee’s employer.

(B) The premium for the policy shall be paid from funds contributed by the association or associations, or by employer members, or by both, or from funds contributed by the covered persons or from both the covered persons and the association, associations, or employer members.

(C) Except as provided in subsection (5)(iii)(D), a policy on which no part of the premium is to be derived from funds contributed by the covered persons specifically for the insurance shall insure all eligible persons, except those who reject the coverage in writing.

(D) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion or limitation shall not be based solely on the fact that the person has a prescription to carry or possess an opioid antagonist as defined in § 16-21-35(a).

(6) A policy issued to a credit union or to a trustee or trustees or agent designated by two (2) or more credit unions, which credit union, trustee, trustees, or agent shall be deemed policyholder, to insure members of the credit union or credit unions for the benefit of persons other than the credit union or credit unions, trustee or trustees, or agent or any of their officials, subject to the following requirements:

(i) The members eligible for insurance shall be all of the members of the credit union or credit unions, or all of any class or classes thereof.

(ii) The premium for the policy shall be paid by the policyholder from the credit union’s funds and, except as provided in subsection (6)(iii), shall insure all eligible members.

(iii) An insurer may exclude or limit the coverage on any member as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion or limitation shall not be based solely on the fact that the person has a prescription to carry or possess an opioid antagonist as defined in § 16-21-35(a).