2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 7 - POLICIES AND POLICYHOLDERS 33|373 (§§ 56-7-NEW — 56-7-3722) › Part 23 - MANDATED INSURER OR PLAN COVERAGE (§§ 56-7-NEW — 56-7-2369) › Section 56-7-2305 - Group life - Required provisions

(a)
(1)
Subject to the limitations of subdivision (a)(2), no policy of group life insurance shall be delivered in this state unless it contains in substance the provisions contained in subdivision (a)(3), or provisions that, in the opinion of the commissioner, are more favorable to the persons insured, or at least as favorable to the persons insured and more favorable to the policyholder.
(2)
(A)
Subdivisions (a)(3)(F)-(J) do not apply to policies issued to a creditor to insure debtors of the creditor;
(B)
The standard provisions required for individual life insurance policies shall not apply to group life insurance policies; and
(C)
If the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision or provisions that, in the opinion of the commissioner, are equitable to the insured persons and to the policyholder, but nothing in this subdivision (a)(2)(C) shall be construed to require that group life insurance policies contain the same nonforfeiture provisions as are required for individual life insurance policies.
(3)
The mandatory provisions referred to in subdivision (a)(1) are:
(A)
A provision that the policyholder is entitled to a grace period of thirty-one (31) days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder has given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during the grace period;
(B)
A provision that the validity of the policy shall not be contested, except for nonpayment of premiums after it has been in force for two (2) years from its date of issue; and that no statement made by any person insured under the policy relating to the person's insurability shall be used in contesting the validity of the insurance with respect to which the statement was made after the insurance has been in force prior to the contest for a period of two (2) years during the person's lifetime nor unless it is contained in a written instrument signed by the person;
(C)
A provision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by the persons insured shall be deemed representations and not warranties, and that no statement made by any person insured shall be used in any contest unless a copy of the instrument is or has been furnished to the person or to the person's beneficiary;
(D)
A provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of the person's coverage;
(E)
A provision specifying an equitable adjustment of premiums or of benefits or of both to be made in the event the age of a person insured has been misstated, the provision to contain a clear statement of the method of adjustment to be used;
(F)
A provision that any sum becoming due by reason of the death of the person insured shall be payable to the beneficiary designated by the person insured, subject to the policy in the event there is no designated beneficiary, as to all or any part of the sum, living at the death of the person insured, and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of the sum not exceeding five hundred dollars ($500) to any person appearing to the insurer to be equitably entitled to the sum by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured;
(G)
A provision that the insurer will issue to the policyholder for delivery to each person insured an individual certificate setting forth a statement as to the insurance protection to which the person is entitled, to whom the insurance benefits are payable, and the rights and conditions set forth in subdivisions (a)(3)(H)-(J);
(H)
A provision that if the insurance, or any portion of it, on a person covered under the policy ceases because of termination of employment or of membership in the class or classes eligible for coverage under the policy, the person shall be entitled to have issued to the person by the insurer, without evidence of insurability, an individual policy of life insurance without disability or other supplementary benefits; provided, that application for the individual policy shall be made, and the first premium paid to the insurer, within thirty-one (31) days after the termination; and provided, further, that:
(i)
The individual policy shall, at the option of the person, be on any one (1) of the forms then customarily issued by the insurer at the age and for the amount applied for, except that the group policy may exclude the option to elect term insurance;
(ii)
The individual policy shall be in an amount not in excess of the amount of life insurance that ceases because of the termination, less the amount of any life insurance for which the person is or becomes eligible under the same or any other group policy within thirty-one (31) days after the termination, except any amount of insurance that has matured on or before the date of the termination as an endowment payable to the person insured, whether in one (1) sum or in installments or in the form of an annuity, shall not, for the purposes of this provision, be included in the amount that is considered to cease because of the termination; and
(iii)
The premium on the individual policy shall be at the insurer's then customary rate applicable to the form and amount of the individual policy, to the class of risk to which the person then belongs, and to the person's age attained on the effective date of the individual policy;
(I)
A provision that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured under the policy at the date of the termination whose insurance terminates and who has been insured for at least five (5) years prior to the termination date shall be entitled to have issued to the person by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided by subdivision (a)(3)(H), except that the group policy may provide that the amount of the individual policy shall not exceed the smaller of:
(i)
The amount of the person's life insurance protection ceasing because of the termination or amendment of the group policy, less the amount of any life insurance for which the person is or becomes eligible under any group policy issued or reinstated by the same or another insurer within thirty-one (31) days after the termination; and
(ii)
Two thousand dollars ($2,000);
(J)
A provision that if a person insured under the group policy dies during the period within which the person would have been entitled to have an individual policy issued in accordance with subdivision (a)(3)(H) or (I) and before the individual policy has become effective, the amount of life insurance that the person would have been entitled to have issued under the individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium for the individual policy has been made; and
(K)
In the case of a policy issued to a creditor to insure debtors of the creditor, a provision that the insurer will furnish to the policyholder for delivery to each debtor insured under the policy a form that will contain a statement that the life of the debtor is insured under the policy and that any death benefit paid under the policy by reason of the debtor's death shall be applied to reduce or extinguish the indebtedness.
(b)
In the case of a policy that provides that each insured debtor whose protection under the group insurance policy terminates by reason of absolute assignment by the creditor of the insured debtor's indebtedness for the discharge of which the debtor when incurring the indebtedness had agreed upon installment payments over a period of more than ten (10) years, there shall be a provision that each insured debtor shall be entitled to have issued to the person by the insurer, without evidence of insurability, upon application made to the insurer and upon the payment of the premium applicable to the class of risk to which the person belongs and to the form and amount of the policy at that person's then attained age within thirty-one (31) days after the assignment of the indebtedness, an individual policy of life insurance; provided, that the individual policy of life insurance shall be in any one (1) of the level premium forms customarily issued by the insurer, except term insurance, in an amount equal to the amount of the person's protection terminated under the group insurance policy because of the assignment, less the amount of insurance for which the insured debtor may become eligible and qualify under any group insurance policy in effect with the assignee at the date of the assignment or issued to the assignee within the period of thirty-one (31) days; and provided, further, that in the event that the assignment of the indebtedness is made by the creditor at the request of the insured debtor, the insurer may require satisfactory evidence of the debtor's insurability before making the individual policy of life insurance effective. If the insured debtor dies during the period within which the debtor would have been entitled to have an individual policy issued in accordance with this subsection (b), and before the individual policy has become effective, the amount of life insurance that the person would have been entitled to have issued under the individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium for the policy has been made.
(c)
If any individual insured under a group life insurance policy delivered in this state becomes entitled under the terms of the policy to have an individual policy of life insurance issued to the person without evidence of insurability, subject to making of application and payment of the first premium within the period specified in the policy, and if the individual is not given notice of the existence of the right at least fifteen (15) days prior to the expiration date of the period, then the individual shall have an additional period within which to exercise the right, but nothing contained in this subsection (c) shall be construed to continue any insurance beyond the period provided in the policy. This additional period shall expire fifteen (15) days after the individual is given notice, but in no event shall the additional period extend beyond sixty (60) days after the expiration date of the period provided in the policy. Written notice presented to the individual or mailed by the policyholder to the last known address of the individual or mailed by the insurer to the last known address of the individual as furnished by the policyholder shall constitute notice for the purpose of this subsection (c).
Acts 1957, ch. 122, § 1; 1976, ch. 417, § 6; 1976, ch. 461, § 1; 1977, ch. 15, § 1; T.C.A., § 56-1141; Acts 1992, ch. 984, § 1; T.C.A., §
56-7-601
; Acts 1994, ch. 577, § 1.