New York Laws
Article 45 - Fraternal Benefit Societies
4510 - Life Insurance Certificates; Required and Prohibited Provisions.

(1) For certificates in which the amount and frequency of premiums may
vary, a provision that, after payment of the first premium, the insured
is entitled to a grace period of not less than sixty-one days, beginning
on the day when the fraternal benefit society determines that the
certificate's net cash surrender value is insufficient to pay the total
charges necessary to keep the certificate in force for one month from
that day within which to pay sufficient premium to keep the policy in
force for three months from the date the insufficiency was determined.
During such grace period the certificate shall continue in full force,
but in case the certificate becomes a claim, on account of death,
maturity or other benefit accrued during such grace period before an
amount of premium sufficient to keep the certificate in force is paid,
an amount of premium sufficient to keep the policy in force until the
day the certificate became a claim may be deducted from any amount
payable in any settlement under the certificate. For all other
certificates, a provision that the insured is entitled to a grace period
of not less than one month or thirty days within which the payment of
any premium after the first may be made, and that during such grace
period the certificate shall continue in full force, but in case the
certificate becomes a claim, on account of death, maturity or other
benefit accrued during such grace period before the overdue premiums are
paid, the amount of such premium or premiums may be deducted from any
amount payable in any settlement under the certificate.
(2) A provision that the certificate shall be incontestable after it
has been in force during the lifetime of the insured member for a period
of two years from its date of issue, and, if a certificate provides that
the death benefit provided by the certificate may be increased, or other
certificate provisions changed, upon the application of the certificate
holder and the production of evidence of insurability, a provision that
the certificate with respect to each such increase or change shall be
incontestable after two years from the effective date of such increase
or change, except in each case for (i) non-payment of premiums, and (ii)
violation of the provisions of the certificate relating to military or
naval service, and, at the option of the society, (iii) provisions
relating to benefits in the event of total and permanent disability, and
(iv) provisions which grant additional insurance against death by
accident or accidental means.
(3) A provision that if it shall be found at any time before final
settlement under the certificate that the age of the insured (or the age
of the beneficiary, if considered in determining the premium) has been
misstated, and the discrepancy and the premium payment involved have not
been adjusted, the amount payable under the certificate shall be such as
the premium would have purchased at the correct age, except that if the
correct age was not an insurable age under the society's charter,
constitution or by-laws, and such charter, constitution or by-laws so
provide, only the net mortuary payments made thereunder shall be
returned or, at the option of the society, the amount payable under the
certificate shall be such as the premium would have purchased at the
correct age according to the society's promulgated rates and any
extension thereof based on actuarial principles.
(4) A provision that the holder of a certificate shall be entitled to
have the certificate reinstated at any time within three years from the
due date of the premium in default, unless the cash value has been duly
paid or the period of extended insurance has expired, upon the
production of evidence of insurability and good health satisfactory to
the society and the payment of all overdue premiums and any other
indebtedness to the society upon such certificate together with interest
on such premiums, at a rate not exceeding six percent per annum payable
annually and interest on such indebtedness at a rate or rates not
exceeding the applicable loan rate or rates determined in accordance
with the certificate's provisions. Such provision shall be required only
if the certificate provides for termination or lapse in the event of a
default in making a regularly scheduled premium. Such provision may give
the society the right to contest the reinstated certificate, as to
statements made to procure reinstatement, within a period after date of
reinstatement not exceeding the period of contestability prescribed in
the original certificate with the same exceptions permitted by paragraph
two hereof.
(5) In the case of certificates which cause on a basis guaranteed in
the certificate unscheduled changes in benefits or premiums, or which
provide an option for changes in benefits or premiums other than a
change to a new certificate, a provision specifying the mortality table,
interest rate and method used in calculating cash surrender values and
the paid-up nonforfeiture benefits available under the certificate. In
the case of all other certificates, a provision specifying the
nonforfeiture options available under the certificate in the event of
default in a premium payment after premiums have been paid for a
specified period, together with a table showing, in figures, the options
so available, and also the loan values, if any, available during each of
the first twenty years after the issuance of the certificate. Such
options shall conform with the requirements of section four thousand
five hundred eleven of this article.
(6) A provision for certificates issued on and after January first,
nineteen hundred seventy-five, that after three full years' premiums
have been paid or, in the case of certificates that provide that the
certificate holder may vary the amount and frequency of premiums to be
paid to the society, after three years from the issue of the
certificate, if the certificate is in force and not in default, the
society will, at any time while the certificate is in force, advance, on
proper assignment or pledge of the certificate and on the sole security
thereof, a sum equal to, or at the option of the person entitled
thereto, less than, the amount of the cash surrender value calculated in
accordance with the provisions of section four thousand five hundred
eleven of this article; and that the society may deduct from such loan
value (in addition to the indebtedness deducted in determining such
value) any unpaid balance of the premium for the current certificate
year; and that if the loan is made or repaid on a date other than the
anniversary of the certificate the society may collect interest for the
portion of the current certificate year on a pro rata basis. The
certificate shall provide, at the option of the society, either that (i)
any such loan shall bear interest at a maximum rate of not more than
seven and four-tenths per centum per annum if payable in advance or the
equivalent effective rate of interest if otherwise payable, or (ii) any
such loan shall bear interest at a rate not in excess of an adjustable
maximum rate established from time to time by the society as permitted
by law. If the certificate provides for an adjustable rate, the
certificate shall specify the regular intervals at which the interest
rate is to be determined which shall be at least once every twelve

months, but not more frequently than once in any three month period. The
certificate may further provide that if the interest on the loan is not
paid when due, it shall be added to the existing loan, and shall bear
interest at the applicable rate or rates payable on the loan determined
in accordance with the provisions of the certificate; and subject to
subsection (e) of section three thousand two hundred six of this chapter
may further provide that if and when the total indebtedness on the
certificate, including interest due or accrued, equals or exceeds the
amount of the loan value thereof at such time, and if at least thirty
days' prior notice shall have been given in the manner provided in
section three thousand two hundred eleven of this chapter, then the
certificate shall terminate and become void. This provision shall not
apply to term insurance.
Any certificate which provides for the crediting of additional amounts
pursuant to section four thousand five hundred eighteen of this article
may also provide that if any indebtedness is owed to the society on any
part of the loan value which would otherwise be credited with additional
amounts, such additional amounts may be reduced so that the total
amounts credited on such part are so credited at a rate that is up to
two percent per annum less than the applicable loan interest rate
charged or at such other rate as the superintendent, upon the society's
demonstrating justification therefor, may allow.
(7) If in the judgment of the superintendent, the charter,
constitution or by-laws of the society provide that the violation of any
section or sections thereof shall result in the reduction or termination
of any benefit payable under the certificate, then a provision which
either:
(A) recites fully all such sections,
(B) sets forth the substance of all such sections, or
(C) states in substance that no section of the charter, constitution
or by-laws shall be relied upon or be used to reduce or terminate any
benefit payable under the certificate unless such section is
specifically set forth or referred to in the certificate.
(8) The provision in the constitution or by-laws required by
subsection (g) of section four thousand five hundred four of this
article.
(9) A provision that in case the by-laws of the society provide for
expulsion or suspension of a member, any member so expelled or suspended
except for non-payment of a premium or contribution, or within the
contestable period for material misrepresentations in his application
for membership, shall have the privilege of maintaining his insurance in
force by continuing payment of the required premium or contribution
payable under the certificates and of such other assessments as may be
required of members holding certificates of the same class.
(10) If issued for delivery in this state by any authorized foreign or
alien society, a provision that the rights or obligations of the insured
member under such certificate or other evidence of such life insurance
contract or of any person rightfully claiming thereunder shall be
governed by the laws of this state.
(11) A provision that the society shall annually ascertain and
apportion any divisible surplus accruing on the certificate.
(12) In any certificate under which additional amounts may be credited
pursuant to section four thousand five hundred eighteen of this article,
provisions stating
(A) the guaranteed factors of mortality, expense and interest, and the
method used by the society in calculating actual certificate values;
(B) that such additional amount shall be nonforfeitable after the
effective date of their crediting except for any charges imposed under

the certificate which are not greater than those allowed under
subsection (n-1) or any market value adjustment made pursuant to
subsection (n-2) of section four thousand two hundred twenty-one of this
chapter; and
(C) that the society shall credit any such amounts no less frequently
than annually during such period.
(13) Operative on January first, nineteen hundred eighty-five or with
respect to certificates issued by any particular society operative on
such earlier date as the society may have specified in a written notice
filed with the superintendent as the date the society elects to begin
compliance with the provisions of this paragraph, a provision that (i)
if the death of the insured shall occur within a period for which the
premium has been paid, the society shall add to the certificate proceeds
a refund of the pro rata portion of premium paid for any period beyond
the end of the certificate month in which death occurred, provided such
premium was not waived under any waiver of premiums benefit included in
the certificate or attached thereto, and (ii) if the death of the
insured shall occur within a period for which the premium has not been
paid, but within the grace period provided in the certificate, the
society may deduct from the certificate proceeds that portion of overdue
premium as applies to the period ending with the last day of the
certificate month in which death occurred; provided however, that the
provisions of this paragraph shall not be applicable to single premium
certificates and paid-up certificates.
(b) (1) No such certificate or other evidence of a life insurance
contract delivered or issued for delivery in this state shall contain
any exclusory or restrictive provisions relating to liability in the
event of death caused in a certain specified manner except the following
provisions, or provisions which in the opinion of the superintendent are
substantially the same or more favorable to holders of such certificate
or contracts, excluding or restricting coverage in the event of death:
(A) as a result of war or an act of war, if the cause of death occurs
while the insured is serving in the military, naval or air forces of any
country, international organization or combination of countries or in
any civilian noncombatant unit serving with such forces, provided such
death occurs while in such forces or units or within six months after
termination of service in such forces or units;
(B) as a result of the special hazards incident to service in the
military, naval or air forces of any country, international organization
or combination of countries or in any civilian non-combatant unit
serving with such forces, if the cause of death occurs while the insured
is serving in such forces or units and is outside the home area,
provided such death occurs outside the home area or within six months
after the insured's return to the home area while in such forces or
units or within six months after the termination of service in such
forces or units, whichever is earlier;
(C) as the result of war or an act of war, within two years from the
date of issue of the certificate, while the insured is not in such
forces or units, if the cause of death occurs while the insured is
outside the home area; provided such death occurs outside the home area
or within six months after the insured's return to the home area;
(D) as a result of suicide within two years from the date of issue of
the certificate;
(E) as a result of aviation under conditions specified in the
certificate; or
(F) within two years from the date of issue of the certificate as a
result of specified hazardous occupations, or while the insured is a
resident of a specified foreign country or countries.
(2) The provisions of this paragraph shall apply only to subparagraphs
(A), (B) and (C) of paragraph one hereof.
(A) As used in such subparagraphs, "home area" means the states of the
United States, the District of Columbia and Canada; "war" includes, but
is not limited to, any war declared or undeclared, and armed aggression
resisted by the military, naval or air forces of any country,
international organization or combination of countries; "act of war"
means any act peculiar to military, naval, or air operations in time of
war; and "special hazards incident to service" includes, but is not
limited to, those hazards resulting in the insured's death being
presumed by reason of being missing or missing in action, and those
hazards resulting in death from disease or injury, accidental or
otherwise, to which a person serving in, or with, such forces or units
is exposed in the line of duty.
(B) In permitting such war exclusions it is the legislative intent
that such exclusions are not to be construed or interpreted as
exclusions because of the status of the insured as a member of such
forces or units or because of the presence of the insured as a civilian
in a combat area or area adjacent thereto. Such permissible exclusions
shall be construed and interpreted according to the fair import of their
terms so as not to exclude deaths due to diseases or accidents which are
common to the civilian population and are not attributable to special
hazards to which a person serving in such forces or units is exposed in
the line of duty.
(C) The superintendent may, by regulation, prescribe reasonable
conditions relative to the use of such war exclusion provisions.
(3) In the event of death as to which there is such an exclusion or
restriction, the society shall pay the reserve on the face amount of the
certificate, computed according to the mortality table and interest rate
specified in the certificate, together with the reserve for any paid-up
additions thereto, and any dividends standing to the credit of the
certificate, less any indebtedness to the society on the certificate,
including interest due or accrued; provided that if the certificate
shall have been in force for not more than two years the society shall
pay the amount of the gross premiums charged on the certificate less
dividends paid in cash or used in the payment of premiums thereon and
less any indebtedness to the society on the certificate; including
interest due or accrued.
(4) Nothing contained in this subsection shall apply to any provision
in a life insurance certificate for additional benefits in the event of
death by accident or by accidental means.
(5) If a certificate provides that the death benefit may be increased,
or other certificate provisions changed, upon the application of the
certificate holder and the production of evidence of insurability, the
certificate may also provide that the two year exclusions permitted
under subparagraph (C), (D) or (F) of paragraph one of this subsection
shall run from the date of issue of the certificate except that it shall
run from the effective date of each subsequent increase or change with
respect to each such increase or change.
(c) No such certificate or other evidence of a life insurance contract
shall be issued or delivered in this state by any society if, in
substance, any of the following provisions are in any way made a part of
the contract:
(1) any provision limiting the time within which any action at law or
in equity may be commenced to less than eighteen months after the cause
of action shall accrue;
(2) any provision for forfeiture, lapse or termination of any
certificate because of failure to repay any loan on the certificate or

to pay interest on such loan, while the total unpaid amount of any loan
or loans under such certificate, including interest, is less than the
loan value thereof; or
(3) any provision whereby the suspension or expulsion of the insured
member, or change of occupation, or any other violation of the terms and
conditions of the insurance contract shall result in the loss or
reduction of the cash surrender value or other withdrawal equity, if
any, available by the terms of such certificate.