Chap. 348.—An ACT to amend and re-enact sections 4259, 4260 and 4261 of the
Code of Virginia, relating to assessment or co-operative life and casualty cor-
porations, companies, societies or associations, | [H B 231]

Approved March 26, 1932

1. Be it enacted by the general assembly of Virginia, That sections
forty-two hundred and fifty-nine, forty-two hundred and sixty and
forty-two hundred and sixty-one of the Code of Virginia, in relation to
assessment or co-operative life and casualty corporations, companies,
societies or associations, be amended and re-enacted so as to read as
follows:

Section 4259. Prerequisites to commencing business.—No life or
casualty corporation, company, society or association, organized under
the laws of this State, on the assessment or co-operative plan, shall
commence business with a membership of less than two hundred in-
surable persons, who have subscribed to become insured therein in the
aggregate sum of not less than fifty thousand dollars, and have each
paid into its treasury not less than five per centum on the amount of
insurance severally subscribed for, in cash, to be held in trust as an
emergency fund for the beneficiaries; nor until the said corporation,
company, society or association shall have furnished the commissioner
of insurance and banking with a statement, under the seal of the com-
pany, verified by the oath of its president and secretary, or two of its
directors, showing the number and names of subscribers for insurance
in such corporation, company, society or association and the amount
paid into its treasury by each subscriber ; the amount of actual cash in
its treasury, and the amount invested in securities, with a list of such.
securities, and their actual cash value; nor until the said corporation,
company, society or association shall have obtained a license or cer-
tificate of authority to transact business, and has otherwise complied
with the law of this State. Every such corporation, company, society
or association shall have the right to divide its membership into classes
or units of five hundred members, or multiples thereof, and to provide
for the payment of death and/or disability benefits, and to provide for
the payment of such benefits in an amount not exceeding the maximum
sum provided in the policy or certificate of membership as and when
the same shall have been received from assessments made on its mem-
bers, or on the members of a class or unit thereof, at the assessment
rate required for the payment of a death and/or disability benefit on
each five hundred dollars of insurance, or multiples thereof, represent-
ing the maximum amount to be paid under its policies or certificates
of insurance, or any class or unit thereof. Every such policy or certi-
ficate shall be incontestable for any cause after it shall have been in
force during the lifetime of the insured for one year from its date,
except for the nonpayment of assessments thereon.

Section 4260. Death benefit or emergency fund—Every such cor-
poration, company, society or association shall provide in its contracts
with policy or certificate holders for the accumulation of a death bene-
fit fund and/or an emergency fund, which shall be at all times not less
than five advance assessments of not less than twenty-five cents on
each five hundred dollars of insurance representing the maximum
amount to be paid under its policies or certificates issued and in force.
Such death benefit fund and/or emergency fund shall be accumulated
by the levy of five such advance assessments against such membership,
or membership of any class or unit thereof, by the board of directors
of any such corporation, company, society or association; provided,
however, that this provision shall not apply to industrial sick benefit
companies, doing business on the assessment plan, which companies
shall reserve not less than ten per centum of their gross collections to
meet death losses.

Section 4261. Disposition of death benefit or emergency fund; dis-
continuance of business; receiver—The death benefit and/or emer-
gency fund mentioned in the preceding section, together with the in-
come thereon, shall be a trust fund for the payment of death and/or
disability claims. Whenever said death benefit and/or emergency fund
is in excess of the amount of the maximum sum provided under and
by the policies or certificates issued and in force by the corporation,
company, society or association, it may apply such excess, or any por-
tion thereof, in reduction of assessments upon policy or certificate
holders, or in such other equitable division or apportionment thereof
as its rules or contracts may provide. When any such corporation,
company, society or association shall discontinue business, any circuit
court judge, in vacation or in term of court, may appoint a receiver to
administer any unexhausted portion of such fund, which shall be used,
less such compensation, not to exceed five per centum thereof, when
the assets exceed five thousand dollars, as said court may allow the
receiver ; first, in the payment of accrued claims upon policies or cer-
tificates, or if insufficient to pay such claims in full, they shall be paid
pro rata; second, if a balance remain, in the payment of like claims
thereafter accruing in the order of their occurrence.