CHAPTER 517

AN ACT to amend and reenact § 88-428 of the Code of Virginta
of 1950, relating to group life insurance.
H 489 ]

Approved April 7, 1950

Be it enacted by the General Assembly of Virginia:
1. That § 88-428 of the Code of Virginia of 1950 be amended
and reenacted as follows: .

§ 38-428. What constitutes group life insurance.—Group
life insurance is hereby declared to be that form of life insur-
ance covering not less than twenty-five employees with or with-
out medical examination, written under a policy issued to the
employer (or to the trustees of a fund established by the em-
ployer), the premium on which is to be paid by, or from funds
contributed by, the employees, employer, or by the employer
and employees jointly, and insuring only all of the employees
of such employer, or all of any class or classes thereof deter-
mined by conditions pertaining to the employment, for amounts
of insurance based upon some plan which will preclude indi-
vidual selection, for the benefit of persons other than the em-
ployer; provided, that when the premium is to be paid by, or
from funds contributed by, the employees or by the employer
.and employees jointly and the henefits of the policy are offered
to all eligible employees not less than seventy-five per centum
of such employees may be so insured. If the policy is issued to
trustees, the trustees shall constitute the “employer” under Sec-
tion 88-429 for the purpose of application for the policy and as
the persons to whom the individual employee certificates shall
be delivered.

The policy may provide that the term “employees” shall in-
clude 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 tf the employer is an individual proprietor or a partner-
ship. The policy may provide that the term “employees” shall in-
clude retired employees.

The following forms of life insurance are hereby also de-
clared to be group life insurance within the meaning of this sec-
tion and the provisions of the paragraph immediately preceding
shall, in so far as applicable, apply with respect to such forms of
group life insurance:

(1) Life insurance covering the members of one or more
companies, batteries, troops, or other units of the national guard,
of any state or the District of Columbia, written under a policy
issued to the commanding general of the national guard, who
shal] be deemed to be the employer for the purposes of this sec-
tion, the premium on which is to be paid by the members of such
units for the benefit of persons other than the employer; pro-
vided, however, that when the benefits of the policy are offered
to all eligible members of a unit of the national guard, not less
than seventy-five per centum of the members of such a unit may
be so insured; |
(2) Life insurance covering the members of one or more
troops or other units of Federal, State or municipal troopers or
Federal, State or municipal police of any state, written under a
policy issued to the commanding officer of the Federal, State, or
municipal troopers or Federal, State or municipal police, who
shall be deemed to be the employer for the purposes of this sec-
tion, the premium on which is to be paid by the members of such
units for the benefit of persons other than the employer; pro-
vided, however, that when the benefits of the policy are offered
to all eligible members of a unit of the Federal, State, or mu-
nicipal troopers or Federal, State, or municipal police not less
than seventy-five per centum of the members of such unit may
be so insured;

(3) Life insurance covering not less than * twenty-five
employees of the Federal, State or * any county or municipal
government *, or of any Federal, State, county or municipal
department, bureau, board, commission or institution, with or
without medical examination, written under a policy issued to
the Governor of the State, the Mayor of the municipality, the
governing body of the county, or to the head of any Federal,
State or county municipal department, bureau, board, commis-
sion or institution, as the case may be, the premium on which
is to be paid by the employees, or employer and employees
jointly, and insuring only all employees, or all of any class
or classes thereof determined by conditions pertaining to the
employment, for amounts of insurance based upon some plain
which will preclude individual selection, for the benefit of
persons other than the employer; provided, that when the pre-
mium is to be paid by the employees or by the employer and
employees jointly and the benefits of the policy are offered to all
eligible employees, not less than seventy-five per centum of such
employees may be so insured;

(4) Life insurance covering the members of any labor
union, written under a policy issued to such union which shall
be deemed to be the employer for the purpose of this section,
the premium on which is to be paid by the union or by the union
and its members, jointly, and insuring only all of its members
who are actively engaged in the same occupation, for amounts
of insurance based upon some plan which will preclude indi-
vidual selection, for the benefit of persons other than the union
or its officials; provided, that when the premium is to be paid
by the union and its members jointly and the benefits are offered
to all eligible members, not less than seventy-five per centum
of such members may be so insured; and provided further that
when members apply and pay for additional amounts of insur-
ance a smaller percentage of members may be insured for such
additional amounts if they pass satisfactory medical exami-
nations; .

(5) Life insurance covering the members of any voluntary
association of employees of one employer, written under a policy
issued to such association which shall be deemed to be the
employer for the purpose of this section, the premium on which
shall be paid by the association, and insuring a portion or all of
its members for amounts of insurance based upon some plan
which shall preclude individual selection, for the benefit of per-
sons other than the employer; provided, however, such members
may obtain additional insurance through such association if they
furnish evidence of insurability satisfactory to the life insurance
company;

(6) Life insurance issued to a creditor or vendor, who shall
be deemed to be the policyholder and for the purpose of this
section the employer, insuring only all of the members, or only
all of the members except those as to whom the evidence of
insurability submitted is not satisfactory to the insurer, of a
group of debtors or vendees, defined as follows: All of the bor-
rowers, or borrowers and guarantors of borrowers, from one
financial or other institution or from such institution and its sub-
sidiary or affiliated companies, or all of the purchasers of securi-
ties, merchandise or other property from one vendor, or all of
any class or classes of such debtors or purchasers determined by
conditions pertaining to the type of indebtedness or purchase,
under agreements by such debtors or such purchasers for the
payment of the sum borrowed or the balance of the purchase
price, as the case may be, in instalments over a period of not
more than ten years, provided the new entrants of such group
number at least one hundred persons annually. :

When the premium, or any part thereof, for such insur-
ance is to be paid, either directly or indirectly, by the insured
debtors, guarantors of debtors or vendees and the benefits of
the policy are offered to all eligible debtors, guarantors of
debtors or vendees, not less than seventy-five per centum of such
debtors, guarantors of debtors or vendees may be so insured.

Such policy may be issued to an assignee to whom such
creditor or vendor has transferred or agreed to transfer all of
its right, title, and interest to the unpaid indebtedness, or to
the unpaid purchase price, under all such agreements made by it.

The amount of insurance under any such policy on any
person insured shall not at any time exceed the amount of
unpaid indebtedness due from such person or the amount of the
purchase price unpaid by such person, nor the sum of ten
thousand dollars, whichever is less.

The premiums on such insurance shall be remitted by the
policyholder to the insurer. The benefits thereof shall be pay-
able to the policyholder, and the receipt of such benefits by the
policyholder shall release the insurer from all obligations under
the policy to the extent of the benefits so paid; the amount of
any death benefit received by the policyholder thereunder shall
be applied by the policyholder to the discharge of any obliga-
tion of the person insured, or his personal representatives, to
the policyholder;

(7) Life insurance covering the employees of two or more
employers, referred to in this clause (7) as “individual em-
ployers”, who are bona fide members of an incorporated associa-
tion, formed for purposes other than obtaining insurance, of
employers engaged in the same or a similar kind or class of
business, written under a policy issued to such association which
shall be deemed to be the employer for the purpose of this
section and § 38-429, the premium to be paid by the individual
employers or by the individual employers and employees jointly,
and insuring, with or without medica] examination, all em-
ployees, or all of any class or classes thereof determined in
accordance with a uniform plan by conditions pertaining to the
employment, of those individual employer members of the asso-
ciation who, under a plan establishing an eligible class or classes
of individual employers according to some condition not per-
taining to the insurance, elect for their employees to be insured,
for amounts based upon some uniform plan which will preclude
individual selection, for the benefit of persons other than the
association or the individual employers; provided, either (a) the
total insured employees must not be less than six hundred,
and not less than sixty per centum of the total insured em-
ployees must be employees of one or more individual employers
with at least twenty insured employees each, and not more than
ten per centum of the total insured employees may be employees
of individual employers with less than ten insured employees
each, or (b) the total insured employees must not be less
than one hundred fifty, nor less than sixty per centum of the
total number in the eligible classes of employees of all indi-
vidual employers who are eligible to elect for their employees
to be insured; each individual employer, in so far as applicable
to his own employees, may select the method of apportionment
of the premium payment between himself and his employees,
and such method may be varied as among the individual em-
ployer members; when the premium is to be paid by the indi-
vidual employer and employees jointly, not less than seventy-
five per centum of the eligible employees of each covered indi-
vidual employer may be so insured; individuals constituting an
individual employer may be insured hereunder as employees;

(8) Life insurance covering the employees of two or more
employers in the same industry, or the members of one or more
labor unions, or the employees of one or more employers and
the members of one or more labor unions, written under a policy
issued to the trustees of a fund established by such employers,
union or unions, or employer or employers and union or unions
jointly, 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 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
either (a) wholly from the funds contributed by the employer
or employers of the insured persons, or by the union or unions,
or by both, or (b) partly from such funds and partly from funds
contributed by the insured employees or members. No policy
may be issued under the provisions of this paragraph (8) on
which the entire premium is to be derived from funds con-
tributed by the insured employees or members. A policy on
which part of the premium is to be derived from funds con-
tributed by the insured employees or members may be placed
in force only if at least seventy-five per cent of the then eligible
employees of any employer unit participating in the trust, ex-
cluding any as to whom evidence of individual insurability is
not satisfactory to the insurer, elect to make the required con-
tributions. A policy on which no part of the premium is to be
derived from funds contributed by the insured employees or
members, must insure all eligible employees or members, 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 100 per-
sons and not less than an average of five persons per employer
unit; and if the fund is established by the members of an asso-
ciation of employers the policy may be issued only if (1) either
(a) the participating employers constitute at date of issue at
least 60% of those employer members whose employees are not
already covered for group life insurance or (b) the total num-
ber of persons covered at date of 1ssue exceeds 600; and (it) the
policy shall not require that, if a participating employer dis-
continues 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.
No policy may be issued which provides term insurance on any
person which together with any other term insurance under any
group life insurance policy or policies issued to the employers,
or any of them, or to the trustees of a fund established in whole
or in part by the employers, or any of them, exceeds $20,000.

(e) The trustees shall constitute the “employer” under
§ 38-429 for the purpose of application for the policy and as
the person to whom the individual employee certificates shall be
delivered.

(9) Life insurance covering the members of one or more
professional organizations or associations, formed for purposes
other than obtaining insurance and having had an active ex-
istence for at least two years immediately preceding the pur-
chase of such insurance, or the employees of one or more mem-
bers of such professional associations, written under a policy
issued to thé trustees of a fund established by such professional
association or associations for the benefit of persons other than
the associations, subject to the following requirement:

(a) The persons eligible for insurance shall be all of the
members of the professional associations, or all of any class or
classes thereof determined by conditions pertaining to member-
ship in the associations. The policy may provide that the term
employees shall include the trustees or their employees or both
uf their duties are principally connected with such trusteeship.

(b) The premium for the policy shall be paid by the trustees
either (a) wholly from the funds contributed by the professional
association or associations, or (b) partly from such funds and
partly from funds contributed by the insured members. No
policy may be issued under the provisions of this paragraph (9)
on which the entire premium is to be derived from funds con-
tributed by the members. A policy on which part of the pre-
mium is to be derived from funds contributed by the insured
members may be placed in force only if at least seventy-five per
cent of the then eligible members or employees of any unit par-
ticipating in the trust, 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 or members, must insure all eligible employ-
ees or members, or all except any as to whom evidence of indi-
vidual insurability ¢ is not satisfactory to the insurer.

(c) The policy must cover at date of issue at least 100
persons and not less than an average of three persons per em-
ployer unit; and if the fund is established by the members of
an association of employers the policy may be issued only uf (2)
either (a) the participating employers constitute at date of issue
at least 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 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.

) 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 pro-
fessional associations. No policy may be issued which provides
term insurance on any person which together with any other
term insurance under any group life insurance policy or policies
issued under the provisions of this paragraph (9) to the em-
ployers, or any of them, or to the trustees of a fund established
in whole or in part by the employers, or any of them, exceeds
$20,000.

(e) The trustees shall constitute the ‘‘employer’ under
Section 88-429 for the purpose of application for the policy and
as the person to whom the individual employee certificates shall
be delivered.