CHAPTER 272

An Act to amend and reenact §§ 38.1-472 as amended, 88.1-475, 38.1-476,
88.1-477, 38.1-479 as amended and 38.1-480 of the Code of Virginia,
and to amend the Code of Virginia by adding sections numbered $88.1-
472.1 and 38.1-476.1, the amended and new sections relating to group
life imsurance; and to repeal §§ 38.1-478, 88.1-474 as amended, 88.1-
477.1, 88.1-477.2, 38.1-478 and 38.1-481, relating to the same matters.

[H 215]
Approved March 15, 1960

Be it enacted by the General Assembly of Virginia:

1. That §§ 38.1-472 as amended, 38.1-475, 38.1-476, 38.1-477, 38.1-479 as
amended and 38.1-480 of the Code of Virginia be amended and reenacted,
and that the Code of Virginia be amended by adding sections numbered
38.1-472.1 and 38.1-476.1, as follows:

§ 38.1-472. A policy of group life insurance * may be issued to an
employer, or to the trustees of a fund established by the employer, which
employer or trustee shall be deemed to be the policyholder, * to insure em-
ployees of the employer for the benefit of persons other than the employer,
subject to the following requirements:

(1) 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 pi oprietors,
and partners of one or more affiliated corporations, proprietors or part-
nerships if the business of the employer and of such affiliated corporations,
proprietors or partnerships is under common control through stock owner-
ship or contract or otherwise. The policy may provide that the term
“employees” shall include the individual proprietor or partners if the em-
ployer 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 direc-
tor. 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 part-
nership.
(2) The premium for the policy shall be paid by the policyholder,
from funds contributed by the employer, the employees or the employer
and the employees jointly. A policy on which all or a part 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 per centum 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 con-
tributed by the insured employees must insure all eligible employees, or
all except any as to whom evidence of individual insurability is not satis-
factory to the insurer.

(3) The policy must cover at least ten employees at date of issue.

(4) 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 trustee.

§ 38.1-472.1. (1) Insurance under any group life insurance policy
issued pursuant to § 38.1-472, or § 38.1-479 may, if seventy-five per centum
of the then insured employees elect, be extended to insure the spouse and
minor children, or any class or classes thereof, of each such insured em-
ployee who so elects, in amounts in accordance with a plan which precludes
individual selection by the employees or by the employer or trustee. The
insurance on the life of any one family member shall not be in excess of
fifty per centum of the insurance on the life of the insured employee or the
amount shown in the schedule below, whichever ts less:

Age of family Maximum
member at death Insurance
Under 6 Months $100
6 months and under 2 years $200
2 years and under 3 years $400
3 years and under 4 years $600
4 years and under 5 years $800
5 years and over $1,000

Premiums for the insurance on such family members shall be paid
by the policyholder, either from the employer’s funds or funds contributed
by him, trustee’s funds, or from funds contributed by the insured em-
ployees, or from both.

(2) A spouse insured pursuant to this section shall have the same
conversion right as to the insurance on his or her life as is vested in the
employee.

(3) Notwithstanding the provisions of § 38.1-428, only one ceritficate
need be issued for each family unit if a statement concerning any de-
pendent’s coverage is included in such certificate.

§ 38.1-475. A policy of group life insurance may be issued * to a
department head or to a trustee, or to an association of public employees
formed for purposes other than obtaining insurance, which department
head or trustee or association shall be deemed the policyholder, to insure
the members of a group of public employees, subject to the following re-
quirements:

(1) The persons eligible for insurance under the policy shall be all
of the employees of the department or members of the association, or all
of any class or classes thereof determined by conditions pertaining to their
employment, or to membership in the association, or both.

(2) The premium for the policy shall be paid by the policyholder,
either (a) from salary deductions authorized by, or charges collected from,
the insured employees or members specifically for the insurance, or from
the association’s own funds, or from both, or (b) partly from such funds
and partly from funds contributed by the employer. Any such deductions
from salary may be paid by the employer to the association or directly to
the insurer. No policy may be placed in force unless and until at least
seventy-five per centum of the then eligible employees or association mem-
bers, excluding any as to whom evidence of individual insurability is not
satisfactory to the insurer, have elected to be covered and have authorized
their employer to make any required deductions from salary.

(3) The policy must cover at least twenty-five persons at date of issue.

(4) The amounts of insurance under the policy must be based upon
some plan precluding individual selection either by the employer, the em-
ployees or members or by the association.

(5) As used herein, “public employees” means employees of the
United States government, or of any state, or of any political subdivision
or instrumentality of any of them, including elected or appointed officials,
teachers in the public schools, members of the State police and, if full time
employees, members of municipal or county police and fire departments;
“department ” means a governmental department, division, bureau, office
or agency; and “department head’ means the officer in charge thereof.

§ 38.1-476. A policy of group life insurance may be 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:

(1) 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 deter-
mined by conditions pertaining to their employment, or to membership in
the union, or both.

(2) 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 in-
surance. No policy may be issued on which the entire premium is to be
derived from funds contributed by the insured members specifically for
thetr insurance. A policy on which part of the premium is to be derived
from funds contributed by the insured members specifically for their in-
surance may be placed in force only if at least seventy-five per centum of
the then eligible members, excluding any as to whom evidence of indi-
vidual 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.
. (8) The policy must cover at least twenty-five members at date of
1S8Ue.

(4) The amounts of insurance under the policy must be based upon
some plan precluding individual selection either by the members or by the
union.

§ 38.1-476.1. A policy of group life insurance may be issued to a credit
union organized pursuant to the laws of this State or pursuant to the
Federal Credit Union Act, which credit union shall be deemed the policy-
holder, to insure members of the credit union for the benefit of persons
other than the credit union, subject to the following requirements:

(1) The members eligible for insurance under the policy shall be all
of the members of the credit union, or all of any class or classes thereof
determined by age, or by membership in the credit union, or both.

(2) The premium for the policy shall be paid by the policyholder
wholly from funds contributed by the insured members specifically for
such insurance at prevailing rates, and the policy must insure at least
seventy-five per centum of the eligible members, or seventy-five per cent
except any as to whom evidence of individual insurability is not satts-
factory to the insurer.
_ (8) The policy must cover at least twenty-five members at date of
Issue.

(4) The amount of insurance on the life of any member shall not
exceed the total amount of his shares and deposits in the credit unton
or $2,000.00, whichever is less.

§ 38.1-477. A policy of group life insurance may be issued * to an
association of employees of one employer*, formed for purposes other than
obtaining insurance, which association shall be deemed the policyholder,
to insure members of the association for the benefit of persons other than
the employer or the association, subject to the following requirements:

(1) The members eligible for insurance under the policy shall be all
of the members of the association, or all of any class or classes thereof
determined by conditions pertaining to their employment, or to member-
ship in the association, or both.

(2) The premium for the policy shall be paid by the policyholder,
either wholly from the association’s funds, or partly from such funds and
partly from funds contributed by the insured members specifically for thetr
ensurance. A policy on which part of the premium is to be derived from
funds contributed by the insured members specifically for their insurance
may be placed in force only if at least seventy-five per centum of the then
eligible members, excluding any as to whom evidence of individual insur-
ability 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 members specifically for their in-
surance must insure all eligible members, or all except any as to whom
evidence of individual insurability is not satisfactory to the insurer.

_ (8) The policy must cover at least one hundred members at date of
issue.

(4) The amounts of insurance under the policy must be based upon
some plan precluding individual selection either by the insured members
or by the association.

§ 38.1-479. A policy of group life insurance may be issued * (a) to
an incorporated association of employers in the same industry, formed for
purposes other than obtaining insurance, or (b) to the trustees of a fund
established by two or more employers in the same industry, or by * one
or more labor unions, or by * one or more employers and * one or more
labor unions, or (c) to the trustees of a fund established by one or more
professional organizations or associations, formed for purposes other than
obtaining insurance, which association or trustees shall be deemed the
policyholder, to insure under (a) employees of two or more employer
members of the association, or under (b) employees of the employers or
members of the unions, or under (c) members of the professional associa-
tion or associations and the employees of one or more such members, for the
benefit of persons other than the associations, or the employers or the
labor unions, subject to the following requirements:

* (1) The persons eligible for insurance shall be all of the employees
of the employers or all of the members of the professional associations
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 member-
ship, * 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 1-
dividual 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 busines 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.

* (2) The premium for the policy shall be paid by the * policyholder
either (a) wholly from * 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 in-
sured employees or union members, or (c) wholly from funds contrib-
uted by the professional association or associations, or (d) partly from
such funds and partly from funds contributed by the insured associa-
tion members. No policy may be issued under * this section on which
the entire premium is to be derived from funds contributed by the in-
sured * persons specifically for their insurance. A policy on which part
of the premium is to be derived from funds contributed by the insured *
persons may be placed in force only if at least seventy-flve per centwm
of the then eligible members or employees of any participating employer
unit, * 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 eli-
gible * persons, or all except any as to whom evidence of individual in-
surability is not satisfactory to the insurer. 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 em-
ployees, and such method may be varied as among the individual partic-
ipating employers.

* (8) The policy must cover at date of issue at least one hundred
persons and not less than an average of * three 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) either (a) the participat-
ing employers constitute at date of issue at least sixty per centum 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; and (ii) the policy shall not require that,
if a participating employer discontinues membership in the association,
the insurance of his employes shall cease solely by reason of such dis-
continuance.

* (4) 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, * unions, or associations. *

§ 38.1-480. A policy of group life insurance may be issued * to a
creditor, who shall be deemed the policyholder, to insure debtors of the
creditor, subject to the following requirements:

(1) The debtors eligible for insurance under the policy shail be
all of the debtors of the creditor whose indebtedness is repayable in install-
ments over a period of not less than five years 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
or more subsidiary corporations, and the debtors of one 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 irrevo-
cable obligation to repay which is binding upon him during his lufetume
at the time the insurance becomes effective upon his life.

(2) The premium for the policy shall be paid by the policyholder,
either from the creditor’s funds, or from charges collected from the in-
sured debtors, or from both. A policy on which part or all of the pre-
mium 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 per centum 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.

(3) 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 persons
yearly, or may reasonably be expected to receive at least one hundred
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 per centum of the new entrants become insured.
The policy may exclude from the classes eligible for insurance classes of
debtors determined by age.

(4) The amount of insurance on the life of any debtor shall at no
time exceed the amount owed by him which is repayable in installments
to the creditor, or ten thousand dollars, whichever is less. Where the
indebtedness is repayable in one sum to the creditor, the insurance on
the life of any debtor shall in no instance be in effect for a period in ex-
cess of eighteen months except that such insurance may be continued
for an additional period not exceeding six months in the case of default,
extension or recasting of the loan. The amount of the insurance on the
life of any debtor shall at no time exceed the amount of the unpaid in-
debtedness, or ten thousand dollars, whichever is less.

(5) The insurance shall be payable to the policyholder. Such pay-
ment shall reduce or extinguish the unpaid indebtedness of the debte:
to the extent of such payment.

2. That §§ 38.1-473, 38.1-474 as amended, 38.1-477.1, 38.1-477.2, 38.1-478
and 38.1-481 of the Code of Virginia are repealed.

3. 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 renewal 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.