Section 376.697 - Required provisions for group life policiesNo policy of group life insurance shall be delivered in this state unless it contains in substance the following provisions, or similar provisions which, in the opinion of the director of the department of commerce and insurance, are more favorable to the persons insured or are at least as favorable to the persons insured and more favorable to the policyholder; provided, however, that the provisions in subdivisions (6) to (11) of this section shall not apply to policies insuring the lives of debtors, that the standard provisions required for individual life insurance policies shall not apply to group life insurance policies, and that if the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision which, in the opinion of the director of the department of commerce and insurance, is equitable to the insured persons and to the policyholder. Nothing contained herein shall be construed to require that group life insurance policies contain the same nonforfeiture provisions as are required for individual life insurance policies:
(1) A provision stating that the policyholder is entitled to a grace period of thirty-one days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder shall have given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during such a grace period;(2) A provision stating that the validity of the policy shall not be contested except for nonpayment of premiums and fraudulent misstatements made by the applicant in the application for such policy after the policy has been in force for two years from its date of issue, and that no statement made by any person insured under the policy relating to his insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force during such person's lifetime for a period of two years prior to the contest unless it is contained in a * written instrument signed by such person. Nothing in this subdivision shall preclude the assertion at any time of defenses based upon provisions in the policy which relate to eligibility for coverage;(3) A provision stating that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by the persons insured shall be deemed representations and not warranties, and that no statement made by any person insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such person or, in the event of death or incapacity of the insured person, to his beneficiary or personal representative;(4) A provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of his coverage;(5) A provision specifying an equitable adjustment of premiums or of benefits, or both, to be made in the event that the age of a person insured has been misstated, which provision shall contain a clear statement of the method of adjustment to be made;(6) A provision stating that any sum becoming due by reason of the death of the person insured shall be payable to the beneficiary designated by the person insured; except, that where the policy contains conditions pertaining to family status, if there is no designated beneficiary, the beneficiary as to all or any part of the benefit sum may, subject to the provisions of the policy, be the family member specified under the policy who is living at the death of the person insured. The rights of such family member shall be subject to any right reserved by the insurer in the policy and set forth in the certificate to pay, at its option, a part of such sum, not exceeding two thousand dollars, to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured;(7) A provision stating that the insurer will issue to the policyholder for delivery to each person insured a certificate specifying the insurance protection to which he is entitled, to whom the insurance benefits are payable, any dependent's coverage included in such certificate, and the rights and conditions set forth in subdivisions (8), (9), (10), and (11), of this section;(8) A provision stating that if the insurance, or any portion of it, on a person covered under the policy, or on any dependent of such person, ceases because of termination of employment or of membership in any class eligible for coverage under the policy, such person shall be entitled to have issued to him by the insurer, without evidence of insurability, an individual policy of life insurance, without disability or other supplementary benefits; provided, that application for the individual policy shall be made, and the first premium paid to the insurer, within thirty-one days after such termination; and, provided further, that: (a) The individual policy shall, at the option of such person, be on any one of the forms then customarily issued by the insurer at the age and for the amount applied for, except that the group policy may exclude the option to elect term insurance;(b) The individual policy shall be in an amount which does not exceed the life insurance which ceases because of such termination, less the amount of any life insurance for which such person becomes eligible under the same or any other group policy within thirty-one days after such termination; provided, that any amount of insurance which shall have matured on or before the date of such termination as an endowment payable to the person insured, whether in one sum, in installments, or in the form of an annuity, shall not, for the purposes of this paragraph, be included in the amount which is considered to cease because of such termination; and(c) The premium on the individual policy shall be at the insurer's then customary rate applicable to the form and amount of the individual policy, to the class of risk to which such person then belongs, and to the individual age attained on the effective date of the individual policy; Subject to the same conditions set forth in paragraphs (a), (b), and (c) of this subdivision the conversion privilege shall be available to a surviving dependent, if any, at the death of the employee or member, with respect to the coverage under the group policy which terminates by reason of such death; and to the dependent of the employee or member upon termination of coverage of the dependent, while the employee or member remains under the group policy, by reason of the dependent ceasing to be a qualified family member under the group policy;
(9) A provision stating that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of such termination whose insurance terminates, including the insured dependent of a covered person, and who has been so insured for at least five years prior to such termination date shall be entitled to have issued by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided under subdivision (8) of this section; except, that the group policy may provide that the amount of such individual policy shall not exceed the amount of the person's life insurance protection ceasing because of the termination or amendment of the group policy, less the amount of any life insurance for which he is or becomes eligible under a group policy issued or reinstated by the same or another insurer within thirty-one days after such termination, or ten thousand dollars, whichever is smaller;(10) A provision specifying that if a person insured under the group policy, or the insured dependent of a covered person, dies during the period within which the individual would have been entitled to have an individual policy issued in accordance with subdivision (8) or (9) of this section and before such an individual policy shall have become effective, the amount of life insurance which he would have been entitled to have issued under such individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium therefor has been made;(11) Where active employment is a condition of insurance, a provision stating that an insured may continue coverage during the insured's total disability by timely payment to the policyholder of that portion, if any, of the premium that would have been required from the insured had total disability not incurred. The continuation shall be on a premium paying basis for a period of six months from the date on which the total disability started, but shall not extend beyond the approval by the insurer of continuation of the coverage under any disability provision which the group insurance policy may contain or the discontinuance of the group insurance policy, whichever occurs earlier;(12) In the case of a policy insuring the lives of debtors, a provision stating that the insurer will furnish to the policyholder for delivery to each debtor insured under the policy a certificate of insurance describing the coverage and specifying that the death benefit shall first be applied to reduce or extinguish the indebtedness.