§ 27-4.8-1 - Group life insurance definitions. - Rhode Island Statutes

SECTION 27-4.8-1

   § 27-4.8-1  Group life insurancedefinitions. – Except as provided in 27-4.8-2, no policy of group life insurance shall bedelivered in this state unless it conforms to one of the following descriptions:

   (1) A policy issued to an employer, or to the trustees of afund established by an employer, which employer or trustees shall be deemed thepolicyholder, to insure employees of the employer for the benefit of personsother than the employer, subject to the following requirements:

   (i) The employees eligible for insurance under the policyshall be all of the employees of the employer, or all of any class or classesthereof. The policy may provide that the term "employees" shall include theemployees of one or more subsidiary corporations, and the employees, individualproprietors, and partners of one or more affiliated corporations,proprietorships or partnerships if the business of the employer and of theaffiliated corporations, proprietorships or partnerships is under commoncontrol. The policy may provide that the term "employees" shall include theindividual proprietor or partners if the employer is an individualproprietorship or partnership. The policy may provide that the term "employees"may include retired employees, former employees and directors of a corporateemployer. A policy issued to insure the employees of a public body may providethat the term "employees" shall include elected or appointed officials.

   (ii) The premium for the policy shall be paid either from theemployer's funds or from funds contributed by the insured employees, or fromboth. Except as provided in paragraph (iii), a policy on which no part of thepremium is to be derived from funds contributed by the insured employees shallinsure all eligible employees, except those who reject the coverage in writing.

   (iii) An insurer may exclude or limit the coverage on anyperson as to whom evidence of individual insurability is not satisfactory tothe insurer.

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

   (i) The debtors eligible for insurance under the policy shallbe all of the debtors of the creditor or creditors, or all of any class orclasses 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 theaffiliated corporations, proprietorships or partnerships is under commoncontrol.

   (ii) The premium for the policy shall be paid either from thecreditor's finds, or from charges collected from the insured debtors, or fromboth. Except as provided in paragraph (3), a policy on which no part of thepremium is to be derived from the funds contributed by insured debtorsspecifically for their insurance shall insure all eligible debtors.

   (iii) An insurer may exclude any debtors as to whom evidenceof individual insurability is not satisfactory to the insurer.

   (iv) The amount of the insurance on the life of any debtorshall at no time exceed the greater of the scheduled or actual amount of unpaidindebtedness to the creditor, except that insurance written in connection withopen-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 anysuccessor to the right, title, and interest of the creditor. The payment shallreduce or extinguish the unpaid indebtedness of the debtor to the extent of thepayment and any excess of the insurance shall be payable to the estate of theinsured.

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

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

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

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

   (iii) An insurer may exclude or limit the coverage on anypersons to whom evidence of individual insurability is not satisfactory to theinsurer.

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

   (i) The persons eligible for insurance shall be all of theemployees of the employers or all of the members of the unions ororganizations, or all of any class or classes thereof. The policy may providethat the term "employees" shall include the employees of one or more subsidiarycorporations, and the employees, individual proprietors, and partners of one ormore affiliated corporations, proprietorships or partnerships if the businessof the employer and of the affiliated corporations, proprietorships orpartnerships is under common control. The policy may provide that the term"employees" shall include the individual proprietor or partners if the employeris an individual proprietorship or partnership. The policy may provide that theterm "employees" shall include retired employees, former employees anddirectors of a corporate employer. The policy may provide that the term"employees" shall include the trustees or their employees, or both, if theirduties are principally connected with the trusteeship.

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

   (iii) An insurer may exclude or limit the coverage on anyperson as to whom evidence of individual insurability is not satisfactory tothe insurer.

   (5) A policy issued to an association or to a trust or to thetrustees of a fund established, created, or maintained for the benefit ofmembers of one or more associations. The association or associations shall haveat the outset a minimum of one hundred (100) persons; shall have been organizedand maintained in good faith for purposes other than that obtaining insurance;shall have been in active existence for at least two (2) years; and shall havea constitution and by-laws which provides that:

   (i) The association or associations hold regular meetings notless than annually to further purposes of the members,

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

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

   (A) The policy may insure members of the association orassociations, employees thereof or employees of members, or one or more of thepreceding or all of any class or classes thereof for the benefit of personsother than the employee's employer.

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

   (C) Except as provided in paragraph (D), a policy on which nopart of the premium is to be derived from funds contributed by the coveredpersons 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 anyperson as to whom evidence of individual insurability is not satisfactory tothe insurer.

   (6) A policy issued to a credit union or to a trustee ortrustees or agent designated by two (2) or more credit unions, which creditunion, trustee, trustees, or agent shall be deemed policyholder, to insuremembers of the credit union or credit unions for the benefit of persons otherthan the credit union or credit unions, trustee or trustees, or agent or any oftheir officials, subject to the following requirements:

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

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

   (iii) An insurer may exclude or limit the coverage on anymember as to whom evidence of individual insurability is not satisfactory tothe insurer.