26.1-16 Benevolent Societies - North Dakota Statutes

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CHAPTER 26.1-16BENEVOLENT SOCIETIES26.1-16-01.Benevolent society defined.A "benevolent society" is a domesticcorporation, association, or society which operates on the voluntary assessment or contribution
plan for the sole purpose of providing, through assessments of its members, for the payment of a
death benefit to the beneficiary of a deceased member.26.1-16-02. Chapter not applicable to fraternal benefit society. This chapter does notapply to a fraternal benefit society as defined in chapter 26.1-15.1 nor to a benefit society
organized within and limited to members of a fraternal benefit society.26.1-16-03.Jurisdiction of commissioner.A benevolent society is under thejurisdiction of the commissioner and is subject to all the laws and rules applicable to insurance
companies transacting business within this state, except as specifically provided.26.1-16-04. Organization of society - Minimum number of members. Any number ofpersons, not less than five, all of whom are residents of this state, may form a benevolent society
by complying with the applicable provisions of this chapter.26.1-16-05.Articles of incorporation - Contents.Persons proposing to form abenevolent society under this chapter shall subscribe and acknowledge articles of incorporation
specifying:1.The name of the society, which must include the words "benevolent society".2.The purpose for which the society is to be formed.3.A full and clear definition of the plan under which the society proposes to do
business.4.The time and place of holding meetings of the members of the society.5.The location of the society's principal office, which must be within this state.6.The date for the commencement and for the termination of the fiscal year of the
society.7.The term for which the society is to be incorporated, which term may not exceed
thirty years.8.The number of directors, not less than five nor more than nine, all of whom must be
residents of this state.9.The names and addresses of the directors selected to serve until the first meeting of
the members of the society.26.1-16-06.Society doing business on July 1, 1937, need not change name -Requirements. Any benevolent society organized and doing business on July 1, 1937, which
has a name which does not include the words "benevolent society" is not required to change its
name to comply with section 26.1-16-05, but its membership certificate, stationery, and literature
must state clearly that it is a benevolent society.26.1-16-07.Articles of incorporation - Filing - Approval - Deposit required -Authority to solicit. The articles of incorporation must be submitted to the commissioner who
shall examine the articles to ascertain whether they comply with all applicable requirements of
the law. After the articles have been approved by the commissioner, they must be filed in the
office of the secretary of state, and a certified copy must be filed with the commissioner. ThePage No. 1society shall deposit with the commissioner United States government bonds, United States
treasury certificates, bonds of the state of North Dakota, or certificates of deposit of the Bank of
North Dakota in the amount of at least two hundred fifty dollars. Upon filing the certified copy of
its articles and making the deposit, the society may solicit and secure the necessary preliminary
members as the basis for the issuance to it of a certificate of authority. The solicitation of such
members, however, must be conducted in accordance with any applicable rules adopted by the
commissioner.26.1-16-08. Deposit maintained by society. Before the commissioner may issue acertificate of authority to a benevolent society, the commissioner shall ascertain that the deposit
required by section 26.1-16-07 has been made. The society shall maintain the deposit until the
membership of the society reaches one thousand. Thereafter, the deposit maintained with the
commissioner must be equal in amount to at least twenty-five cents per member in good
standing.26.1-16-09.Bylaws required.Each benevolent society shall adopt bylaws whichconform to its articles of incorporation or to this chapter.26.1-16-10.Amendment of articles and adoption, amendment, and repeal ofbylaws. The articles of incorporation of a benevolent society may be amended, and its bylaws
adopted, amended, or repealed, at any annual meeting or at any special meeting called for that
purpose. A two-thirds affirmative vote of the members of the society is required to take any of
the actions specified in this section.26.1-16-11.Bonds of officers and agents.After a benevolent society has beenlicensed by the commissioner, the bonding of its officers and agents is discretionary with its
board of directors. During the period between the filing of articles of incorporation and the issuing
of a certificate of authority, however, the commissioner shall set the amounts of the bonds
sufficient to guarantee return of membership fees collected in case the organization is not
completed, and the bonds must be filed with the commissioner.26.1-16-12. Territorial restrictions on society - Voluntary contribution plan benefitsregulated by chapter. Any society organized under this chapter shall confine its activities,
insofar as solicitation by insurance producers is concerned, to this state. No benefits on the
voluntary contribution plan may be provided by any society except as provided in this chapter.26.1-16-13.Licensing of insurance producers.All insurance producers of abenevolent society must be licensed in the same manner as insurance producers for insurance
companies generally are licensed.26.1-16-14. Classification of membership - Units. A benevolent society may providefor the classification of its membership by one or more units based on the age of individual
members, or by the adoption of a maximum limit of one group or unit. Before the organization of
a new group or unit, the society shall notify the commissioner of its proposal to organize the
group or unit, and the organization must be conducted in accordance with any applicable rules
adopted by the commissioner.The number of members in a unit may not be less than isrequired for the organization of a society. If the membership of any group or unit of any society
falls below two hundred, the group or unit must be consolidated with another group or unit of the
society unless within sixty days the group or unit has restored its membership to the minimum
required by this section. An age group composed of members over age sixty-five, however, may
be established and maintained at not less than one hundred members.26.1-16-15.Preliminary applications required before issuance of certificate ofauthority - Bank certificate - Issuance of certificate of authority. Before a benevolent society
may issue a certificate of membership, it must have actual applications for certificates from at
least three hundred persons upon which certificates may be issued simultaneously.Theapplications, together with a certificate from a solvent bank stating that there has been deposited
to the account of the society an amount which is determined by the preliminary applications
presented as constituting the entire proceeds of membership fees collected, must be submittedPage No. 2to the commissioner. Upon submission to the commissioner of the preliminary applications, the
bank certificate, and any evidence of compliance with this chapter which the commissioner
requires, the commissioner may issue to the society a certificate of authority to expire on the
thirtieth day of April following the date thereof.26.1-16-16. Application for and certificate of membership - Contents - Approval -Maximum benefits - Expense deductions. The certificate of membership issued by a
benevolent society must state fully the conditions on which the benefit is paid. The certificate of
membership and the application for the certificate constitute the entire contract between the
society and the member. Every certificate and application must have printed or stamped thereon
in red ink and in ten-point boldfaced type "This is not an insurance policy. The society maintains
no reserve.All benefits are dependent upon voluntary assessments from members."Theinsurance commissioner shall approve the form of the certificate and application prior to their
issuance or use. The benefits under any certificate must be confined to a death benefit to the
beneficiary of the deceased member in an amount not to exceed two thousand dollars, and the
certificate must provide for an assessment on the membership in an amount not exceeding four
dollars to be paid by the members after notice and proof of death.The proceeds of theassessment, less an amount not exceeding ten percent thereof as an allowance for expenses,
must be paid to the beneficiary of the deceased member. A death benefit may not exceed the
maximum amount stated in the certificate.26.1-16-17. Notice of annual meeting - Voting rights of members. Each member of abenevolent society organized under this chapter must be notified of the time and place of the
annual meetings of the society by a notice incorporated in the certificate of membership issued
by the society. Each member of the society is entitled to one vote and may vote in person or by
proxy.26.1-16-18. Incontestability of certificate - Responsibility upon suicide. A certificateof membership is incontestable after one year from its date of issue except for fraud,
nonpayment of assessments, or naval or military service in time of war. Death from acute or
chronic disease occurring more than one year after the date of issue of a certificate may not be a
ground for nonpayment of the benefits thereunder regardless of any provision or statement
contained in the application or certificate, and full payment may not be refused under any
certificate when the member's death occurs from an acute, subacute, or chronic disease more
than one year after the date of issue of the certificate. If a member commits suicide within one
year from the date of issue of the certificate, the liability of the society is limited to an amount
equal to all membership fees and assessments paid by the member.26.1-16-19.Expense fund and mortuary fund maintained as separate funds.Abenevolent society shall maintain and keep two separate funds:1.An expense fund.2.A mortuary fund.26.1-16-20. Expense fund - Credits - Levies. The membership fee of the society,which may be not less than one dollar nor more than five dollars, may be used for expenses.
The certificate of membership must state the percentage of death assessments, not exceeding
ten percent, that may be used for expenses, and moneys received on the assessments, within
the limitations of this section, must be credited to the expense fund. Expense fund assessments
may be levied in accordance with the applicable provisions in the membership certificate in
amounts not exceeding three dollars in any one calendar year.26.1-16-21. Mortuary fund - Credits to and use. A benevolent society shall credit to itsmortuary fund that part of any postmortem assessment in excess of the amount required to pay
the death claim for which the assessment was levied. If the society has more than one unit of
membership, the mortuary fund must be kept separately by units. The fund must be used toward
the payment of claims for deaths occurring within the unit from which the fund arose, and no
assessment levy may be made unless the balance in the fund is insufficient to pay a claim onPage No. 3which notice and proof of death has been received. No expenses may be paid from the mortuary
fund.26.1-16-22.Notice of assessment - Contents - Cancellation of certificate -Reinstatement. The notice of assessment in each case must provide that if the member to
whom the notice is directed does not make payment within the time specified therein, which may
be not less than fifteen days nor more than forty-five days after the date of the notice, the
member's certificate will be canceled.If payment is not made within that time, a notice ofcancellation must be mailed to the member informing the member that if the assessment is not
paid within ten days from the mailing of the notice of cancellation, the member's certificate will be
canceled. The notice of cancellation must be mailed to the member at the member's last-known
address immediately after the expiration of the time specified in the notice of assessment, and
proof of the mailing must be established on forms provided for that purpose by the United States
postal service. If payment is not made within the time specified in the notice of cancellation, the
certificate must be canceled. If payment of an assessment is made to the society subsequent to
the date of cancellation of the certificate, the payment may be considered as a reinstatement fee
and placed in the expense fund of the society.26.1-16-23.Secretary of society to levy assessments - Notice to members -Distribution of proceeds of assessments. Upon approval of a claim arising from the death of a
member, the secretary of the society, if the mortuary fund is insufficient to pay the claim, shall
levy an assessment upon the membership in accordance with the provisions of the membership
certificate of the deceased member. Notice of the assessment must be mailed to each member
at the member's last post-office address as given to the secretary. The notice must state:1.The name and address of the deceased member.2.The maximum benefit payable upon the member's certificate.3.The amount of the assessment.4.The date upon which the assessment shall become delinquent.Upon the expiration of the period within which payment of the assessment may be made and the
further period specified in the notice of cancellation required under section 26.1-16-22, the
secretary shall pay to the beneficiary of the deceased member the proceeds of the assessment
in the secretary's possession and available for that purpose.26.1-16-24. Annual statement required - Renewal of certificate of authority. Everybenevolent society shall transmit to the commissioner, not later than March first of each year, an
annual statement as of the previous December thirty-first. The statement must be on any forms
required by the commissioner and must show:1.All income of the society by sources.2.All disbursements of the society detailed as to nature.3.A listing of the assets of the society.4.The liabilities of the society.5.The number of members in the society.6.Any other information required by the commissioner.If it appears from the statement that the society has a membership at least equal in number to
that required as a condition precedent to authorization and that it is otherwise qualified under the
requirements of this chapter, a renewal certificate of authority must be issued on the succeedingPage No. 4April thirtieth. The fees for the filing of the statement and the issuance of the certificate are those
specified in section 26.1-01-07.26.1-16-25. Examination. The commissioner has the same power and authority as tovisitation and examination over all benevolent societies subject to this chapter as are given to the
commissioner by this title over domestic insurance companies. The society examined shall pay
the expenses of any examination. The commissioner may require a deposit in advance of an
examination to guarantee payment of the estimated necessary expense to be incurred.26.1-16-26.Transfer of membership.A benevolent society organized or operatingunder this chapter, by a two-thirds vote of its members present or voting by proxy at any annual
meeting or special meeting called for that purpose, may transfer its membership to any other
society or organization. Notice of the contemplated action must be mailed to each member in
good standing, at the member's last-known post-office address, at least fifteen days prior to the
date of the meeting, and any transfer of membership, and the conditions thereof, must have the
approval of the commissioner.26.1-16-27. Penalty. Any officer or agent of a benevolent society violating this chapter isguilty of a class A misdemeanor.Page No. 5Document Outlinechapter 26.1-16 benevolent societies