2023 New York Laws › ISC - Insurance › Article 45 - Fraternal Benefit Societies › 4514 - Creation and Maintenance of Separate Funds; Premiums; Assessments and Other Contributions of Members.

§   4514.  Creation  and  maintenance  of  separate  funds;  premiums;
assessments and other contributions of  members.  (a)  Every  authorized
society  shall  create  a  separate fund or funds for the payment of all
insurance benefits as defined in section four thousand five hundred  one
of  this article, under all certificates or other contracts issued by it
or under any provisions of its constitution  or  by-laws  which  require
payment  of  premiums  or  other contributions as consideration for such
benefits. All such funds shall be known as the insurance funds  of  such
society.  In  addition  to  such  insurance  funds, any such society may
create, maintain, invest, disburse and apply, separate  and  independent
from  such  insurance funds, any general, expense, emergency, patriotic,
relief or other similar funds in accordance with  its  constitution  and
by-laws.  Except as provided in subsection (g) hereof, all such funds of
any such society may be invested only as permitted by paragraph  two  of
subsection  (a)  of  section  one  thousand  four  hundred three of this
chapter. All such funds shall be held, invested and  disbursed  for  the
use  and benefit of the society, and no member or beneficiary shall have
or  acquire  individual  rights  therein,  or  become  entitled  to  any
apportionment or the surrender of any part thereof, except in accordance
with  the  terms and provisions of an insurance or annuity contract made
by such society.
(b) In a provision of its by-laws relating to the payment of  premiums
or  other  required  periodical  contributions by insured members, every
such society shall distinctly indicate the amount  or  portion  of  such
premium  or  contribution which is to be used for insurance benefits, to
be known as the insurance contribution, and the amount or portion  which
may  be  used  for  expenses  and  other  purposes.  The  amount of such
insurance contributions shall be not less  than  that  required  by  the
standard  of  valuation  applicable  to  such certificate or contract in
accordance with the provisions of this  chapter.  Every  such  insurance
contribution  shall  without  any  deduction  be paid into the insurance
funds of such society.
(c) No authorized society shall issue or  deliver  in  this  state  or
elsewhere  any  certificate  which  does  not  require stated periodical
premiums or contributions at least equal to those required according  to
the  minimum  valuation standards set forth in subsection (c) of section
four thousand five hundred seventeen of this  article;  nor  shall  such
society  insure  in  this  state  or  elsewhere members for temporary or
permanent disability benefits or for hospital expense  or  surgical  and
medical  expense unless the rates thereof are adequate upon the basis of
tables based upon reliable experience with an  interest  assumption  not
higher than three percent per annum.
(d)  The  insurance  funds  of every such society shall consist of the
insurance  contributions  and  of  all  interest  or  other  income   on
investments  in  such funds and all other accretions to such funds. Such
insurance funds may be used  for  the  payment  of  benefits  under  any
insurance  or  annuity  contract  and  for  the  payment  of expenses of
investment of such funds. No part of such insurance funds shall be  used
for  any  other expenses or other purposes, except that any such society
having admitted assets, as shown by its last annual statement filed with
the superintendent, in excess of one hundred five percent of its  entire
liabilities,  including  its required reserves computed on a net tabular
basis, may transfer or allocate  such  excess  insurance  funds  to  the
expense   or  other  funds  of  the  society,  in  accordance  with  its
constitution and by-laws; but the amount so transferred in any  calendar
year  shall  not  exceed whichever is the smaller of (i) five percent of
the total contributions to the mortuary fund or funds  of  such  society

during  the next preceding calendar year or (ii) seventy-five per centum
of the sum of
(1)  the savings in mortality during the preceding calendar year under
certificates issued  on  rates  creating  and  maintaining  reserves  in
accordance with the table of mortality used, and
(2)   the  excess  interest  earnings  over  and  above  the  interest
requirements to maintain reserves, after deducting  from  such  sum  the
dividends,  if  any,  paid  to  members,  as determined by the valuation
report and annual statement required by this  chapter,  but  no  society
shall  make  any  such  transfer  or allocation within the limits herein
described which pays or agrees to pay a first year commission in  excess
of  fifty-five  percent  of  the  year's  premium  on any life insurance
certificate or annuity contract issued by such society. In  addition  to
any  transfer  or  allocation made within the limits herein described, a
society may transfer or allocate from the mortuary fund or funds to  the
general  or  expense fund, surrender charges, if any, provided for under
terminated life insurance contracts on a legal reserve basis.
(e) Any such  society  may  ascertain  and  distribute  any  divisible
surplus  accruing under its certificates on an equitable basis, provided
that any apportionment of such surplus shall be only on an annual basis.
(f)  Whenever  any  authorized  society  heretofore  organized  in  or
licensed  to do business in this state has substantially separate groups
or classes of certificates in force on which premiums or assessments are
payable according  to  substantially  different  tables  of  rates,  the
superintendent may require such society to file a separate accounting in
its annual report of such major classifications of certificates.
(g)  Any  such  society,  for the accomplishment of any lawful purpose
provided for in its charter or constitution,  may  own,  hold  or  lease
personal  and  real  property located within or without this state, with
necessary buildings thereon; but no such personal or real property shall
be deemed an admitted asset of such society, within the meaning of  this
chapter,  except  the  home office building of such society to an amount
not exceeding that permitted by paragraph seven  of  subsection  (a)  of
section one thousand four hundred four of this chapter. Any such real or
personal property may be acquired and maintained only out of the general
or  expense  fund  of such society, any voluntary contributions which it
may receive therefor, and such reasonable charges as may be made for the
facilities or services furnished thereby.
(h) Every authorized society shall at all times maintain a surplus not
less than the minimum amount established by rule of the superintendent.