CHAPTER 273

An Act to amend and reenact $§ 38.1-424, 38.1-426, 38.1-427 and 38.1-428
of the Code of Virginia, and to amend the Code by adding sections num-
bered $8.1-424.1, 38.1-426.1, 38.1-427.1, 38.1-428.1, 38.1-428.2, 38.1-
428.8 and 88.1-428.4, the amended and new sections all relating to
standard provisions in policies of group life insurance. H

(H 216]

Approved March 15, 1960

Be it enacted by the General Assembly of Virginia:
1. That §§ 38.1-424, 38.1-426, 38.1-427 and 38.1-428 of the Code of Vir-
ginia be amended and reenacted, and that the Code be amended by adding
sections numbered 38.1-424.1, 38.1-426.1, 38.1-427.1, 38.1-428.1, 38.1-428.2,
38.1-428.3 and 38.1-428.4, as follows:

§ 38.1-424. No policy of group life insurance shall be delivered or
issued for delivery in this State unless it contains in substance * the
provisions prescribed in this article, or provisions which in the opinion of
the Commission are more favorable * to the persons insured, * or at
least as favorable to the persons insured and more favorable to the policy-
holder; provided, however, (a) that provision in §§ 38.1-427.1 to 38.1-428.8
enclusive shall not apply to policies issued to a creditor to insure debtors of
such creditor; (b) that the standard provisions required for individual life
msurance policies shall not apply to group life insurance policies; and (c)
that if the group life insurance policy is on a plan of insurance other than
the term plan, it shall contain a nonforfeiture provision or provisions
which in the opinion of the Commission is or are equitable to the insured
persons and to the policyholder, but nothing herein shall be construed to
require that group life insurance policies contain the same nonforfeiture
provisions as are requircd for individual life insurance policies.

§ 38.1-424.1. In each such policy there shall be a provision 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
benejit 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 grace period.

§ 38.1-426. In each such policy there shall be a provision that the
policy, or the policy, the application, if any, of the policyholder, and the in-
dividual applications, if any, of the persons insured shall constitute the
entire contract between the parties; 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 * written state-
ment 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 to his beneficiary.

§ 38.1-426.1. In each such policy there shall be 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.

§ 38.1-427. In each such policy there shall be a provision specifying
an equitable adjustment of * premiums or * of benefits or of both to be

in the event * the age of a person insured has been misstated, such
hal to contain a clear statement of the method of adjustment to be
used.

§ 38.1-427.1 In each such policy there shall be a provision 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, subject to the
provisions of the policy in the event there is no designated beneficiary, as
to all or any part of such sum, living at the death of the person insured,
and 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 five
hundred dollars to any person appearing to the insurer to be equitably en-
titled thereto by reason of having incurred funeral or other expenses in-
cident to the last illness or death of the person insured.

§ 38.1-428. In each such policy there shall be a provision that the
insurer will issue to the policyholder for delivery to each person * insured
* an individual certificate setting forth a statement as to the insurance
protection to which he is entitled, to whom the insurance benefits are pay-
able, * and the rights and conditions set forth in §§ 38.1-428.1, 38.1-428.2
and $8.1-428.8, following.

§ 38.1-428.1. In each such policy there shall be a provision that tf
the insurance, or any portion of it, on a person covered under the policy,
other than a child of an employee insured pursuant to § 38.1-472.1,
ceases because of termination of employment or of membership in the
class or classes eligible for coverage under the policy, such person shall be
entitled to have issued to him by the insurer, without evidence of insur-
abtity, an individual policy of life insurance without disability or other
supplementary benefits, provided 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, except term insurance, then customarily issued by
the insurer at the age and for the amount applied for;

(b) the individual policy shall be in an amount not in excess of the
amount of life insurance which ceases because of such termination less
the amount of any life insurance for which such person is or becomes
eligible under any group policy within thirty-one days after such termina-
tion, 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 or in instalments or in the form of
an annuity, shall not, for the purposes of this provision, 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 his
age attained on the effective date of the individual policy.

§ 38.1-428.2. In each such policy there shall be a provision that tf the
group policy terminates or is amended so as to terminate the insurance of
any class of insured persons, every person, other than a child of an em-
ployee insured pursuant to § 38.1-472.1, insured thereunder at the date
of such termination whose insurance terminates and who has been so tin-
sured for at least five years prior to such termination date shall be en-
titled to have issued to him by the insurer an individual policy of life in-
surance, subject to the same conditions and limitations as are provided
by § 38.1-428.1, except that the group policy may provide that the amount
of such individual policy shall not exceed the smaller of (a) 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 any group policy issued or re-
instated by the same or another insurer within thirty-one days after such
termination, and (b) two thousand dollars.

§ 38.1-428.38. In each such policy there shall be a provision that if a
person insured under the group policy dies during the period within which
he would have been entitled to have an individual policy issued to him in
accordance with § 88.1-428.1 or § 88.1-428.2 and before such an individual
policy shall have become effective, the amount of life insurance which he
would have been entitled to have issued to him under such individual policy
shall be payable as a claim under the group policy, whether or not applica-
tion for the individual policy or the payment of the first premium therefor
has been made.

§ 38.1-428.4. In each such policy issued to a creditor to insure debtors
of such creditor, where any part of the premium is paid by the debtors
or by the creditor from identifiable charges collected from the insured
debtors not required of an uninsured debtor, there shall be a provision
that the insurer will furnish to the policyholder for delivery to each debtor
insured under the policy a form which will contain a statement that the
life of the debtor is insured under the policy and that any death benefit
paid thereunder by reason of his death shall be applied to reduce or ex-
iunguish the indebtedness. ;
2. The provisions of this act shall not apply to any policy of group life
insurance legally in effect on the effective date of this act, or to any re-
newal or renewals thereof issued by the same carrier or to any reissue
thereof by another carrier on substantially the same terms as the policy
it replaces.