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the employee is given notice of the right of continuation by either his employer or the group policyholder. In no event, however, may the employee or member elect continuation more than thirty-one days after the date of such termination.

(3) An employee or member electing continuation must pay to the group policyholder or his employer, but not more frequently than on a monthly basis in advance, the amount of the required premium payment, but not more than the group rate for the benefits being continued under the group policy on the due date of each payment. The employee's or member's written election of continuation, together with the first premium payment required to establish premium payment on a monthly basis in advance, must be given to the policyholder or employer within thirtyone days of the date the employee's or member's benefits would otherwise terminate.

(4) Subject to paragraph one of this subsection, continuation of benefits under the group policy for any person shall terminate at the first to occur of the following:

(A) The date six months after the date the employee's or member's benefits under the policy would otherwise have terminated because of termination of employment or membership; or

(B) The end of the period for which premium payments were made, if the employee or member fails to make timely payment of required premium payment; or

(C) The date on which the group policy is terminated or, in the case of an employee, the date his employer terminates participation under the group policy. However, if this clause applies and the coverage ceasing by reason of such termination is replaced by similar coverage under another group policy, the following shall apply:

(1) The employee or member shall have the right to become covered under that other group policy, for the balance of the period that he would have remained covered under the prior group policy in accordance with this subparagraph had a termination described in subparagraph (C) of this paragraph not occurred, and

(ii) The minimum level of benefits to be provided by the other group policy shall be the applicable level of benefits of the prior group policy reduced by any benefits payable under that prior group policy, and

(iii) The prior group policy shall continue to provide benefits to the extent of its accrued liabilities and extension of benefits as if the replacement had not occurred.

(5) A notification of the continuation privilege and the time period in which to request continuation shall be included in each certificate of coverage.

§ 6. Subsection (b) of section four thousand two hundred sixteen of such law item (iii) of subparagraph (E) of paragraph three and subparagraphs (J) and (K) of paragraph three as amended by chapter seven hundred sixty-nine of the laws of nineteen hundred eighty-four, is amended to read as follows:

(b) Any life insurance company authorized to do business in this state may deliver in this state policies of group life insurance only as

follows:

(1) A policy issued to an employer or to [the] a trustee or trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, insuring with or without evidence of individual insurability satisfactory to the insurer, [not less than ten] employees of such employer, and insuring, except as hereinafter provided, all of such employees or all of any class or classes thereof determined by conditions pertaining to the employment, or by a combination of such conditions and conditions pertaining to the family status of the employee, for amounts of insurance on each person insured based upon some plan which will preclude individual selection. However, such a plan may permit a limited number of selections by employees if the selections offered utilize a consistent pattern of grading the amounts of insurance for individual group members so that the resulting pattern of coverage is reasonable. The premium for the policy shall be paid by the policyholder, either wholly from the employer's funds or funds contributed by him or from funds contributed by the insured employees, or from funds contributed jointly by the employer and employees. If [a] all or part of the premium is to be derived from funds contributed by the insured ployees, such policy must insure not less than [seventy-five] fifty percent of such eligible employees or, if less, fifty or more of such employees. Except as provided in subsection (b) of section four thousand

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two hundred thirty-one of this article and in paragraph five of subsection (a) of section three thousand two hundred twenty of this chapter, such policy shall provide for payment of all benefits thereunder, to the person insured or to some beneficiary or beneficiaries other than the employer, and shall provide for the issuance of a certificate to the policyholder for delivery to the person insured or to such beneficiary, as evidence of such insurance.

(2) A policy issued to a labor union, which shall be deemed the policyholder insuring, with or without evidence of individual insurability satisfactory to the insurer, not less than twenty-five members of such union, and insuring, except as hereinafter provided all of the members of such union or all of any class or classes thereof determined by conditions pertaining to their employment or membership in the union, or both, and who are actively engaged in their occupations, for amounts of insurance on each person insured based upon some plan which will preclude individual selection. However, such a plan may permit a limited number of selections by members if the selections offered utilize a consistent pattern of grading the amounts of insurance for individual group members so that the resulting pattern of coverage is reasonable. The premium on such policy may be paid by the union, by the members, or by the union and its members jointly. If the premium is paid by the members or by the union and its members jointly such policy must insure not less than [seventy-five] fifty percent of such eligible members or, if less, fifty or more of such members. Except as provided in paragraph five of subsection (a) of section three thousand two hundred twenty of this chapter, such policy shall provide for the payment of benefits to the person insured or to some beneficiary or beneficiaries, other than the union or any of its officials, representatives or agents, and shall provide for the issuance of a certificate to the union for delivery to the person insured or to such beneficiary, as evidence of such insurance. Any such policy may vary from the foregoing requirements, as follows:

(A) if the policy is cancellable at the option of the insurer at the end of any policy year and if the basis of premium rates may be changed by the insurer at the beginning of any policy year, all members of such labor union may be insured thereunder;

(B) if and when members of such union apply for and pay for additional amounts of insurance, a smaller percentage of such members than [seventy-five] fifty percent may, with evidence of individual insurability satisfactory to the insurer, be insured thereunder for such additional amounts.

(3) (A) A policy issued to a creditor or vendor, or to a trustee or agent designated by two or more creditors or vendors, which creditor, vendor, trustee, or agent shall be deemed the policyholder, except as hereinafter provided.

(B) The policy shall insure all of the members, but may exclude any as to whom evidence of individual insurability is not satisfactory to the insurer, of a group of debtors or vendees, defined as follows:

(i) all of the borrowers, or borrowers and guarantors of borrowers, or intended borrowers (under a program for defraying the cost of attendance of a student at a college or university or at an elementary or secondary school providing education required for minors, which program includes provision for immediate períodic payments by the parent or guardian of such student and a loan commitment to such parent and guardian by a financial institution, or by or on behalf of a college or university or such an elementary or secondary school to defray the cost of attendance at such college or university or elementary or secondary school in excess of the accumulated periodic payments by the parent or guardian) from one financial institution and its subsidiary or affiliated companies, or from two or more creditors or vendors So designating such trustee, trustees or agent, or

(ii) all of the
the purchasers

of securities, merchandise or other property from one vendor, or from two or more vendors SO designating such trustee or agent, or

(iii) all of any class or classes of such debtors or purchasers determined by conditions pertaining to the type of indebtedness or purchase. (C) The policy may specify the ages to which the insurance provided shall be limited.

EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

(D) If the agreement provides for repayment in instalments, the insurance may be continued for the duration of the debt over a period of not more than thirty-five years from the date the debt is first incurred; otherwise the insurance may be continued for a period not in excess 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.

i)

(the insurance Notwithstanding anything in this paragraph to the contrary, of borrowers, who incur indebtedness arising from the granting of policy loans pursuant to policy provisions therefor, provided under a policy issued to the insurance company granting the policy loan, may be continued for the duration of the indebtedness,

for

(ii) under a plan approved by the superintendent the insurance of debtors with respect to an agreement which does not provide repayment in instalments may be continued for the duration of the indebtedness but not more than seven years from the date the indebtedness is incurred, and

(iii) the insurance of persons who are tenants or shareholders of a mutual or other housing corporation (organized pursuant to the provisions of the private housing finance law and regulated by such statute as to rent, dividends and profits) under a policy issued with identifiable charges or fixed amounts of premiums to such corporation or to a trustee or trustees or agent designated by one or more such corporations may be continued for the term of the tenant's lease with such corporation or thirty-six months or whichever is the greater period, and the amount of insurance with respect to any person insured under such policy may be a fixed amount not greater than the lesser of fifty-five thousand dollars or an amount equal to thirty-six times the monthly instalments due under such lease.

(F) The benefits of any policy authorized under this paragraph shall be payable to the policyholder; but the amount of any benefit received by the policyholder thereunder not in excess of the actual indebtedness shall be applied by the policyholder to the discharge of any obligation of the person insured, or his personal representative, to the policyholder, creditor or his assignee and the amount of any benefit received by the policyholder thereunder in excess of the actual indebtedness shall be payable to a beneficiary named by the debtor or, if none, then either to the estate of the debtor or under the provision of a facility of payment clause.

(G) No such group shall be eligible for insurance hereunder unless the new entrants to such group number at least twenty-five persons yearly. (H) The premium for the policy shall be paid by the policyholder, either from the creditor's or vendor's funds, or from charges collected from the insured debtors or purchasers, or from both. A policy on which all or part of the premium to be derived from the collection from the insured debtors or purchasers of identifiable charges not required of uninsured debtors or purchasers may be issued only if the policy reserves to the insurer the right to require evidence of individual insurability if less than seventy-five percent of the new entrants in any year become insured and provided that such policy shall not include, in the class or classes of debtors or purchasers eligible for insurance, debtors or purchasers under obligations outstanding at its date of issue without evidence of individual insurability unless at least seventy-five percent of the then eligible debtors or purchasers elect to pay the required charges.

(1) The policy may be issued to an assignee to whom such creditor or vendor has transferred all of its right, title and interest to the unpaid indebtedness, or to the unpaid purchase price, under all such agreements made by it.

(J) The amount of insurance on any person insured under a policy shall not at any time exceed:

(i) in all cases except as hereinafter provided the lesser of fiftyfive thousand dollars and the amount of unpaid indebtedness or the amount of the purchase price unpaid by such person;

(ii) in the case of a loan commitment pursuant to the hereinabove program for defraying the cost of attendance of a student at a college or university or at such an elementary or secondary school, the lesser of fifty-five thousand dollars and the total of the unpaid balance of the scheduled periodic payments whether due or not due and the amount of any outstanding loan commitment pursuant to such a program; or

(iii) in the case of a transaction secured by a real estate mortgage, the lesser of the sum of one hundred ten thousand dollars and the amount of the indebtedness so secured.

(K) (i) With respect to loans made by production credit associations organized pursuant to the federal Farm Credit Act of 1933, 12 U. S. C. §§ 1131c 1138c, and with respect to loans made by a bank, trust company or industrial bank to a borrower engaged in the business of farming, crop production or the raising, breeding, fattening or marketing of livestock for the purposes of such business and other requirements of the borrower, the amount of insurance may exceed the unpaid indebtedness and shall not be limited as to amount except that the insurance shall not exceed the greater of the loan commitment or the outstanding balance of the loan at the inception of the period for which the borrower is insured.

(ii) With respect to loans made by Federal Land Banks established pursuant to an Act of Congress of the United States entitled the "Federal Farm Loan Act", approved July seventeenth, nineteen hundred sixteen, as amended, the amount of insurance on any person insured under the policy shall not at any time exceed the amount of the unpaid indebtedness at the inception of the period for which premiums are paid, but shall not otherwise be limited as to amount.

(L) The superintendent shall prescribe from time to time regulations determining the procedures, terms and conditions applicable to a policy issued pursuant to this paragraph to the trustee or agent designated by two or more creditors or vendors.

(M) Each insurer shall file with the superintendent its forms of policies, certificate statements and applications pertaining to credit insurance together with its premium rates for such insurance and the same shall be subject to his approval. The superintendent shall not approve any such forms if the premium charged is unreasonable in relation to the benefits provided.

(N) For the purposes of this paragraph: (i) "creditor" includes a lessor of real or personal property, (ii) "borrower" includes a lessee of real or personal property, and (iii) indebtedness" includes rentals payable under the lease of real or personal property.

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(4) A policy issued to [the] a trustee or trustees of a fund established or participated in 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, which trustee or trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions for the benefit of persons other than the employers or the unions, subject to the following requirements:

(A) The persons eligible for insurance shall be all of the employees of the employers 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 membership in the unions, or to both.

(B) The premium for the policy shall be paid by the trustees either wholly from funds contributed by the employer or employers of the insured persons or by the union or unions, or by both, or from funds contributed by the insured persons, or jointly from such funds and funds contributed by the insured persons specifically for their insurance. [A policy on which part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance may be placed in force only if it insures not less than seventy-five percent of the then eligible persons, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer. ] A policy on which no part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance must insure all eligible persons, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer.

(C) The policy shall insure at least [twenty-five] fifty persons at date of issue[, except that if part of the premium is to be derived from funds to be contributed by the insured persons specifically for their insurance the policy shall cover at least one hundred persons at date of issue].

(D) The amounts of insurance under the policy shall be based upon some plan precluding individual selection either by the insured persons or by the policyholder, employers, or unions. However, such a plan may permit a limited number of selections by employees or members if the selections EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

offered utilize a consistent pattern of grading the amounts of insurance for individual group members so that the resulting pattern of coverage is reasonable.

(E) With respect to a policy issued to a trustee or trustees of a fund established by one or more labor unions, or by one or more employers and one or more labor unions the proposed insured must submit, and the insurer must obtain, a written certification that a reasonable number of comparative bids have been obtained from different insurers and that such bids have been considered by the trustees before making a decision concerning which bid to accept. Such decision must be made at a trustees' meeting held on a date certain, and a copy of the minutes of such meeting must be attached to such certification.

(5) A policy issued to a trustee or trustees of a fund established or participated in by the employer members of a trade association, which trustee or trustees shall be deemed the policyholder, to insure employees of such employers for the benefit of persons other than the sociation or the employers, subject to the following requirements:

(A) The policy may be issued only if:

as

(i) the association has been in existence for at least [five] two years and was formed for purposes principally other than obtaining insurance, and

(ii) the participating employers, meaning such employer members whose employees are to be insured, constitute at date of issue at least fifty percent of the total employers eligible to participate, unless the total number of persons covered at date of issue exceeds six hundred, in which event such participating employers must constitute at least twenty-five percent of such total employers, in either case omitting from consideration any employer whose employees are already covered for group life in

surance;

(B) The persons eligible for insurance under the policy shall be all of the employees of the participating employers, or all of any class or classes thereof determined by conditions pertaining to their employment. (C) The premium for the policy shall be paid by the trustee or trustees either wholly from funds contributed by the employers or by the employees or funds contributed jointly by the employers and the employees. [A policy on which part of the premium so payable is to be derived from funds contributed by the insured employees may be placed in force only if at least seventy-five percent of the then eligible ployees of each participating employer, 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 so payable is to be derived from funds contributed by the insured employees must insure all eligible employees, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer;

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(D) The policy must cover at least [one hundred] fifty employees at date of issue;

(E) The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the employees or by the policyholder or the employer. However, such a plan may permit a limited number of selections by employees if the selections offered utilize a consistent pattern of grading the amount of insurance for individual group members so that the resulting pattern of coverage is reasonable. (6) A policy issued to a duly organized association of civil service employees which shall include in its membership not less than five thousand civil service employees having a common employer, or to a duly organized association of teachers having a membership of not less than five thousand, which association, in either event, shall be deemed the policyholder, and which shall have been formed and is maintained for purposes other than to effect group life insurance on its members. Such policy shall insure only members of such association, with or without evidence of individual insurability satisfactory to the insurer, based upon a plan which will preclude individual selection. However, such a plan may permit a limited number of selections by members if the selections offered utilize a consistent pattern of grading the amounts of insurance for individual group members so that the resulting pattern of coverage is reasonable. The premium on such policy may be paid by the association or by the association and the insured members jointly or by the insured members alone. Every member of such association in good standing shall have opportunity to apply for such insurance and not less than sixty percent of the eligible members in good standing may be SO insured. Such policy shall provide for the payment of benefits, except

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