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12  AN ACT concerning group life insurance; persons who may be insured;
13    amending K.S.A. 1996 Supp. 40-433 and repealing the existing section.
14
15  Be it enacted by the Legislature of the State of Kansas:
16    Section 1.  K.S.A. 1996 Supp. 40-433 is hereby amended to read as
17  follows: 40-433. No policy of group life insurance shall be delivered in
18  this state unless it conforms to one of the following descriptions:
19    (1)  A policy issued by an insurance company organized under the laws
20  of the state of Kansas on its employees and agents, which agents for the
21  purpose of this act only shall be deemed employees, the beneficiaries
22  under such policies to be persons designated by each insured, or a policy
23  issued to an employer, or to the trustees of a fund established by an
24  employer, which employer or trustees shall be deemed the policyholder,
25  to insure employees of the employer for the benefit of persons other than
26  the employer, both subject to the following requirements: (a) The em-
27  ployees eligible for insurance under the policy shall be all of the employ-
28  ees of the employer, or all of any class or classes thereof determined by
29  conditions pertaining to their employment. The policy may provide that
30  the term ``employees'' shall include the employees of one or more sub-
31  sidiary corporations, and the employees, individual proprietors, and part-
32  ners of one or more affiliated corporations, proprietors or partnerships if
33  the business of the employer and of such affiliated corporations, propri-
34  etors or partnerships is under common control through stock ownership,
35  contract or otherwise. The policy may provide that the term ``employees''
36  shall include the individual proprietor or partners if the employer is an
37  individual proprietor or a partnership. The policy may provide that the
38  term ``employees'' shall include retired employees. No director of a cor-
39  porate employer shall be eligible for insurance under the policy unless
40  such person is otherwise eligible as a bona fide employee of the corpo-
41  ration by performing services other than the usual duties of a director.
42  No individual proprietor or partner shall be eligible for insurance under
43  the policy unless the proprietor or partner is actively engaged in and
SB 57--Am. by SCW
                                     

 1  devotes a substantial part of their time to the conduct of the business of
 2  the proprietor or partnership. A policy issued to insure the employees of
 3  a public body may provide that the term ``employees'' shall include
 4  elected or appointed officials. (b) The premium for the policy shall be
 5  paid by the policyholder, either wholly from the employer's funds or funds
 6  contributed by the employer, or partly from such funds and partly from
 7  funds contributed by the insured employees. No policy shall be issued on
 8  which the entire premium is to be derived from funds contributed by the
 9  insured employees. A policy on which part of the premium is to be derived
10  from funds contributed by the insured employees may be placed in force
11  only if at least 75% of the then eligible employees, excluding any as to
12  whom evidence of individual insurability is not satisfactory to the insurer,
13  elect to make the required contribution. A policy on which no part of the
14  premium is to be derived from funds contributed by the insured em-
15  ployees shall insure all eligible employees, or all except any as to whom
16  evidence of individual insurability is not satisfactory to the insurer. (c)
17  The policy shall cover at least three employees at date of issue. (d) The
18  amounts of insurance under the policy shall be based upon some plan,
19  precluding individual selection either by the employees or by the em-
20  ployer or trustees.
21    (2)  A policy issued to a creditor, who shall be deemed the policyhol-
22  der, to insure debtors of the creditor, subject to the following require-
23  ments: (a) The debtors eligible for insurance under the policy shall be all
24  of the debtors of the creditor whose indebtedness is repayable in install-
25  ments, or all of any class or classes thereof determined by conditions
26  pertaining to the indebtedness or to the purchase giving rise to the in-
27  debtedness. (b) The premium for the policy shall be paid by the policy-
28  holder, either from the creditor's funds or from charges collected from
29  the insured debtors, or from both. A policy on which part or all of the
30  premium is to be derived from the collection from the insured debtors
31  of identifiable charges not required of uninsured debtors shall not in-
32  clude, in the class or classes of debtors eligible for insurance, debtors
33  under obligations outstanding at its date of issue without evidence of
34  individual insurability unless at least 75% of the then eligible debtors elect
35  to pay the required charges. A policy on which no part of the premium
36  is to be derived from the collection of such identifiable charges shall
37  insure all eligible debtors, or all except any as to whom evidence of in-
38  dividual insurability is not satisfactory to the insurer. (c) The policy may
39  be issued only if the group of eligible debtors is then receiving new en-
40  trants at the rate of at least 100 persons yearly, or may reasonably be
41  expected to receive at least 100 new entrants during the first policy year,
42  and only if the policy reserves to the insurer the right to require evidence
43  of individual insurability if less than 75% of the new entrants become
SB 57--Am. by SCW
                                     

 1  insured. (d) The amount of insurance on the life of any debtor shall at
 2  no time, under one or more policies, exceed the amount owed by that
 3  debtor which is repayable in installments to the creditor, or $100,000,
 4  whichever is less. (e) The insurance shall be payable to the policyholder.
 5  Such payment shall reduce or extinguish the unpaid indebtedness of the
 6  debtor to the extent of such payment.
 7    (3)  A policy issued to a labor union, which shall be deemed the pol-
 8  icyholder, to insure members of such union for the benefit of persons
 9  other than the union or any of its officials, representatives or agents,
10  subject to the following requirements: (a) The members eligible for in-
11  surance under the policy shall be all of the members of the union, or all
12  of any class or classes thereof determined by conditions pertaining to their
13  employment, or to membership in the union, or both.
14    (b)  The premium for the policy shall be paid by the policyholder,
15  either wholly from the union's funds, or partly from such funds and partly
16  from funds contributed by the insured members specifically for their
17  insurance. No policy shall be issued on which the entire premium is to
18  be derived from funds contributed by the insured members specifically
19  for their insurance. A policy on which part of the premium is to be derived
20  from funds contributed by the insured members specifically for their
21  insurance may be placed in force only if at least 75% of the then eligible
22  members excluding any as to whom evidence of individual insurability is
23  not satisfactory to the insurer, elect to make the required contributions.
24  A policy on which no part of the premium is to be derived from funds
25  contributed by the insured members specifically for their insurance shall
26  insure all eligible members, or all except any as to whom evidence of
27  individual insurability is not satisfactory to the insurer.
28    (c)  The policy shall cover at least 25 members at date of issue.
29    (d)  The amounts of insurance under the policy shall be based upon
30  some plan precluding individual selection either by the members or by
31  the union.
32    (4)  A policy issued to the trustees of a fund established in this state
33  by two or more employers if a majority of the employees to be insured
34  of each employer are located within the state, or to the trustees of a fund
35  established by one or more labor unions, or by one or more employers
36  and one or more labor unions, which trustees shall be deemed the poli-
37  cyholder, to insure employees of the employers or members of the unions
38  for the benefit of persons other than the employers or the unions, subject
39  to the following requirements: (a) The persons eligible for insurance shall
40  be all of the employees of the employers or all of the members of the
41  unions, or all of any class or classes thereof determined by conditions
42  pertaining to their employment, or to membership in the unions, or to
43  both. The policy may provide that the term ``employees'' shall include
SB 57--Am. by SCW
                                     

 1  retired employees and the individual proprietor or partners if any em-
 2  ployer is an individual proprietor or a partnership. No director of a cor-
 3  porate employer shall be eligible for insurance under the policy unless
 4  such person is otherwise eligible as a bona fide employee of the corpo-
 5  ration by performing services other than the usual duties of a director.
 6  No individual proprietor or partner shall be eligible for insurance under
 7  the policy unless the proprietor or partner is actively engaged in and
 8  devotes a substantial part of their time to the conduct of the business of
 9  the proprietor or partnership. The policy may provide that the term ``em-
10  ployees'' shall include the trustees or their employees, or both, if their
11  duties are principally connected with such trusteeship. (b) The premium
12  for the policy shall be paid by the trustees either wholly from funds con-
13  tributed by the employer or employers of the insured persons, or by the
14  union or unions, or by both, or partly from such funds and partly from
15  funds contributed by the insured employees. No policy shall be issued on
16  which the entire premium is to be derived from funds contributed by the
17  insured persons. The policy shall insure all eligible persons, or all except
18  any as to whom evidence of individual insurability is not satisfactory to
19  the insurer. (c) The policy shall cover at date of issue at least 100 persons
20  and not less than an average of five persons per employer unit. (d) The
21  amounts of insurance under the policy shall be based upon some plan
22  precluding individual selection either by the insured persons or by the
23  policyholder, employers, or union.
24    (5)  A policy issued to an association which has been organized and is
25  maintained for purposes other than that of obtaining insurance, insuring
26  at least 25 members, employees, or employees of members of the asso-
27  ciation for the benefit of persons other than the association or its officers.
28  The term ``employees'' as used herein shall be deemed to include retired
29  employees. The premiums for the policies shall be paid by the policy-
30  holder, either wholly from association funds, or funds contributed by the
31  members of such association or by employees of such members or any
32  combination thereof. The amounts of insurance under the policy shall be
33  based upon some plan precluding individual selection either by the in-
34  sured person or by the association or by the member.
35    (6)  Any policy issued pursuant to this section may be extended to
36  insure the employees against loss due to the death of their spouses or the
37  employees' children under 21 years of age, or employees' children 21
38  years or older who are attending an educational institution and relying
39  upon the insured employees for financial support, their children or
40  grandchildren or their spouses' children or grandchildren or their par-
41  ents or their spouses' parents [their grandchildren, their spouse's chil-
42  dren, their spouse's grandchildren, their parents, their spouse's par-
43  ents,] or any class or classes thereof, subject to the following
SB 57--Am. by SCW
                                     

 1  requirements:
 2    (a)  The premium for the insurance shall be paid by the policyholder,
 3  either from the employer's funds or from funds contributed by the in-
 4  sured employees, or from both. If any part of the premium is to be derived
 5  from funds contributed by the insured employees, the insurance with
 6  respect to spouses parents and, children, grandchildren, parents, the
 7  spouses' children, grandchildren and[, their children, their grand-
 8  children, their spouse's children, their spouse's grandchildren, their
 9  parents and their spouse's] parents may be placed in force only if at
10  least 75% of the then eligible employees, excluding any as to whose family
11  members' evidence of insurability is not satisfactory to the insurer, elect
12  to make the required contribution. If no part of the premium is to be
13  derived from funds contributed by the employees, all eligible employees,
14  excluding any as to whose family members' evidence of insurability is not
15  satisfactory to the insurer, shall be insured with respect to their spouses
16  and,  children, grandchildren, parents, their spouses' children, grand-
17  children and[, their children, their grandchildren, their spouse's
18  children, their spouse's grandchildren, their parents, their spouse's]
19  parents.
20    (b)  The amounts of insurance shall be based upon some plan pre-
21  cluding individual selection either by the employees or by the policyhol-
22  der, or employer and shall not exceed with respect to any spouse or child,
23  child or parent 50% of the insurance on the life of such insured employee.
24    (c)  Upon termination of the insurance with respect to the spouse of
25  an employee by reason of the employee's termination of employment or
26  death, the spouse insured pursuant to this section shall have the same
27  conversion rights as to the insurance on such spouse's life as is provided
28  for the employee under K.S.A. 40-434 and amendments thereto.
29    (d)  Notwithstanding the provisions of K.S.A. 40-434 and amend-
30  ments thereto only one certificate need be issued for delivery to an in-
31  sured person if a statement concerning any dependent's coverage is in-
32  cluded in such certificate.
33    (7)  A policy may be issued to any other group which the commis-
34  sioner of insurance finds is the proper subject of a group life insurance
35  policy or contract. Any such group shall be subject to any appropriate
36  conditions or provisions relating thereto which the commissioner may
37  establish or require, consistent with the provisions of this act, and such
38  conditions and provisions shall be included in the policy or contract.
39    Sec. 2.  K.S.A. 1996 Supp. 40-433 is hereby repealed.
40    Sec. 3.  This act shall take effect and be in force from and after its
41  publication in the statute book.