P.R. Laws tit. 26, § 1401
No life, endowment, or group or blanket annuity insurance policy shall be issued for delivery in Puerto Rico 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 trustee 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:
(a) 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 determined by conditions pertaining to their employment. 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, proprietors or partnerships if the business of the employer and of such affiliated corporations, proprietors or partnerships is under common control through stock ownership or contract. The policy may provide that the term “employees” shall include the individual proprietor or partners if the employer is an individual proprietor or a partnership. The policy may provide that the term “employees” shall include retired employees. No director of a corporate employer shall be eligible for insurance under the policy unless such person is otherwise eligible as a bona fide employee of the corporation by performing services other than the usual duties of a director. No individual proprietor or partner shall be eligible for insurance under the policy unless he is actively engaged in and devotes a substantial part of his time to the conduct of the business of the proprietor or partnership.
(b) The premium for the policy shall be paid by the policyholder, either wholly from the employer’s funds or funds contributed by him, or partly from such funds and partly from funds contributed by the insured employees, or wholly from funds contributed by the insured employees. A policy on which a part or all of the premium is to be derived from funds contributed by the insured employees may be placed in force only if at least seventy-five percent (75%) of the then eligible employees, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer, elect to make the required contributions. A policy on which no part of the premium is to be derived from funds contributed by the insured employees must insure all eligible employees, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.
(c) The policy must cover at least 10 employees at date of issue.
(d) The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the employees or by the employer or trustees.
(2) A policy issued in behalf of a creditor, who shall be deemed the policyholder, to insure debtors of the creditor, subject to the following requirements and to the provisions of Chapter 18 of this title.
(a) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor whose indebtedness is repayable either:
(i) In installments, or
(ii) in one sum at the end of a period not in excess of sixty (60) months from the initial date of debt, or all of any class or classes thereof determined by conditions pertaining to the indebtedness or to the purchase giving rise to the indebtedness. The policy may provide that the term “debtors” shall include the debtors of one (1) or more subsidiary corporations, and the debtors of one (1) or more affiliated corporations, proprietors or partnerships if the business of the policyholder and of such affiliated corporations, proprietors or partnerships is under common control through stock ownership, contract, or otherwise. No debtor shall be eligible unless the indebtedness constitutes an obligation to repay which in binding upon him during his lifetime, at and from the date the insurance becomes effective upon his life.
(b) The premium for the policy shall be paid by the policyholder, either from the creditor’s funds, or from charges collected from the insured debtors, or from both. A policy on which part or all of the premium is to be derived from the collection from the insured debtors of identifiable charges not required of uninsured debtors shall not include, in the class or classes of debtors eligible for insurance, debtors under obligations outstanding at its date of issue without evidence of individual insurability unless at least seventy-five percent (75%) or more of the then eligible debtors elect to pay the required charges. A policy on which no part of the premium is to be derived from the collection of such identifiable charges must insure all eligible debtors, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.
(c) The policy may be issued only if the group of eligible debtors is then receiving new entrants at the rate of at least one hundred (100) persons yearly, or may reasonably be expected to receive at least one hundred (100) new entrants during the first policy year, and only if the policy reserves to the insurer the right to require evidence of individual insurability if less than seventy-five percent (75%) of the new entrants become insured. The policy may exclude from the classes eligible for insurance classes of debtors determined by age.
(d) The amount of insurance on the life of a debtor shall at no time exceed the amount owed by him.
(e) The insurance shall be payable to the policyholder. Such payment shall reduce or extinguish the debtor’s obligation up to a maximum equal to the total of such payment.
(3) A policy issued to a labor union, which shall be deemed the policyholder, to insure members of such union for the benefit of persons other than the union or any of its officials, representatives or agents, subject to the following requirements:
(a) The members eligible for insurance under the policy shall be all of the members of the union, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in the union, or both.
(b) The premium for the policy shall be paid by the policyholder, either wholly from the union’s funds, or partly from such funds and partly from funds contributed by the insured members specifically for their insurance, or totally from funds contributed by the insured member specifically for their insurance. A policy on which part of the premium or the total thereof is to be derived from funds contributed by the insured members specifically for their insurance may be placed in force only if seventy-five percent (75%) or more of the then eligible members, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer, elect to make the required contributions. A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.
(c) The policy must cover at least twenty-five (25) members at date of issue.
(d) The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the members or by the union.
(4) A policy issued to the trustees of a fund established by two (2) or more employers in the same industry or by one (1) or more labor unions, or by one (1) or more employers and one (1) or more labor unions, which trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions for the benefit of persons other than the employers or the unions, subject to the following requirements:
(a) The persons eligible for insurance shall be all of the employees of the employers or all of the members of the unions, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in the unions, or to both. The policy may provide that the term “employees” shall include retired employees, and the individual proprietor or partners if an employer is an individual proprietor or a partnership. No director of a corporate employer shall be eligible for insurance under the policy unless such person is otherwise eligible as a bona fide employee of the corporation by performing services other than the usual duties of a director. No individual proprietor or partner shall be eligible for insurance under the policy unless he is actively engaged in and devotes a substantial part of his time to the conduct of the business of the proprietor or partnership. The policy may provide that the term “employees” shall include the trustees or their employees, or both, if their duties are principally connected with such trusteeship.
(b) The premium for the policy shall be paid by the trustees wholly from funds contributed by the employer or employers of the insured persons, or by the union or unions, or by both, or by funds totally or partially contributed by the insured individuals. A policy of which a part or the total of the premiums is to be derived from funds contributed by the insured members specifically for their insurance may be placed in force only if seventy-five percent (75%) or more of the then eligible members or employees, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer, elect to make the required contribution. In the case in which the premium is not partially or totally paid by the insured individuals, the policy must insure all eligible persons, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.
(c) The policy must cover at date of issue at least one hundred (100) persons and not less than an average of five (5) persons per employer unit; and if the fund is established by the members of an association of employers the policy may be issued only if
(i)
(A) the participating employers constitute at date of issue at least sixty percent (60%) of those employer members whose employees are not already covered for group life insurance, or
(B) the total number of persons covered at date of issue exceeds six hundred (600); and
(ii) the policy shall not require that, if a participating employer discontinues membership in the association, the insurance of his employees shall cease solely by reason of such discontinuance.
(d) The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the insured persons or by the policyholder, employers, or unions.
(5) A policy issued to a cooperative association, or an association of persons licensed by the Commonwealth of Puerto Rico to engage in a recognized profession or an association of federal, commonwealth or municipal employees, or trade association or college, to insure members of said association for the benefit of persons other than the association or any of its officers, representatives or agents, or a policy issued to a financial institution, which shall be deemed the policyholder, to insure depositors thereof, subject to the following requirements:
(a) The members eligible for insurance under the policy shall be all the members of the association, or all of any class or classes thereof determined by conditions pertaining to their employment or profession, or to their membership of the association, or both. The policy may provide that the term “member” shall include retired members.
(b) The premium for the policy shall be paid by the policyholder either wholly from the association fund, or partly from such funds and partly from funds contributed by the insured members specifically for their insurance or totally from funds contributed by the insured members specifically for their insurance. A policy on which part of the premium or the total thereof is to be derived from funds contributed by the insured members specifically for their insurance may be placed in force only if seventy-five percent (75%) or more of the then eligible members, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer, elect to make the required contributions. A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.
(c) The policy must cover at least twenty-five (25) members at date of issue.
(d) The amounts of insurance under the policy must be based upon some plan precluding the individual selection either by the members or by the association.
(6) Any group life policy issued to the groups described in subsections (1), (3), (4) and (5) of this section may be extended to cover the lives of the spouse and/or dependent children of the insured employee or member, subject to the following requirements:
(a) The premium of this insurance shall be paid by the policyholder, either wholly from his funds or wholly from the funds contributed by the employees or members insured, or from both. If all or part of the premium is to be derived from funds contributed by the insured employees or members, the insurance with respect to the spouse and dependent children shall be made effective only if at least seventy-five percent (75%) or more of the then eligible employees or members, excluding any whose spouse and/or dependent children show no evidence of insurability satisfactory to the insurer, decide to make the required contribution. In case the premium is not fully or partly paid by the insured persons, the policy shall have to insure all the spouses and dependent children, except any with respect to whom the evidence of individual insurability is not satisfactory to the insurer.
(b) The amounts of insurance under the policy shall be based on some plan that precludes individual selection, either by the insured persons or by the policyholder. Said amounts shall not exceed, with respect to the spouse, fifty percent (50%) of the insurance on the life of the insured employee or member, and two thousand dollars ($2,000) with respect to the dependent child.
(c) If the insurance on the life of the spouse and/or dependent children of the insured employee or member ceases because of the termination of his employment or membership, said spouse or dependents shall enjoy the benefit of conversion as provided in § 1410 of this title.
(d) Notwithstanding the provisions of § 1409 of this title, a single certificate may be issued to the insured employee or member if the spouse and dependent children are included therein.
History —Ins. Code § 14.010; June 6, 1960, No. 64, p. 98; May 21, 1969, No. 8, p. 10; May 10, 1976, No. 32, p. 84, § 14; July 20, 1979, No. 165, p. 420, § 3; July 20, 1979, No. 174, p. 456.