Missouri Revised Statutes

376.005. As used in this chapter, unless otherwise clearly indicated by the context, the following words mean:

(1) "Department", the department of insurance, financial institutions and professional registration; and

(2) "Director", the director of the department of insurance, financial institutions and professional registration.

(L. 2008 S.B. 788)

376.010. Any number of persons, not less than thirteen, may associate and form a company for the purpose of making insurance upon the lives of individuals, and every assurance pertaining thereto or connected therewith, and to grant, purchase and dispose of annuities and endowments of every kind and description whatsoever, and to provide an indemnity against death, and for weekly or other periodic indemnity for disability occasioned by accident or sickness to the person of the insured; but such accident and health insurance shall be made a separate department of the business of the life insurance company undertaking it.

(RSMo 1939 § 5800)

Prior revisions: 1929 § 5690; 1919 § 6101; 1909 § 6895

376.015. Corporations doing the business specified in section 376.010 may also make insurance to provide a periodic indemnity for involuntary unemployment when such insurance is sold in connection with an extension of credit. Any company making such insurance shall comply with the provisions of section 379.400 and the regulations promulgated pursuant thereto, and shall have, in addition to any other capital requirements for such company, a fully paid capital and surplus equal to the amount required in section 379.010. Involuntary unemployment insurance may be written on either an individual or a group basis, but in no event may group involuntary insurance coverage be offered to residents of a state other than Missouri unless the regulatory official governing insurance in such state has granted prior approval.

(L. 1985 H.B. 826, A.L. 1989 H.B. 615 & 563)

376.020. Corporations doing the business mentioned in section 376.010, which are owned and controlled entirely by the stockholders, and in neither the management nor the profits of which the policyholders participate, shall be considered "joint stock companies"; such corporations having no capital stock, and in the management and profits of which the policyholders alone participate shall be considered "mutual companies"; and such corporations having a capital stock, but in the management or in the profits of which, or in both, the policyholders or any class or classes of policyholders are or may become entitled to participate, shall be considered "stock and mutual companies"; provided, that any association consisting of not more than one thousand five hundred citizens, residents of the state of Missouri, all living within the boundaries of not more than three counties in this state, said counties to be contiguous to each other, organized not for profit and solely for the purpose of assessing each of the members thereof upon the death of a member, the entire amount of said assessment, except ten cents paid by each member, to be given to a beneficiary or beneficiaries named by the deceased member in his or her certificate of membership, said certificate of membership to be issued by such association, shall not be construed to be a life insurance company under the laws of this state, but provided, however, no officer, trustee or other employee of such association shall receive any remuneration for any services rendered, except the secretary of such association who shall be permitted to charge each member, for his services and for the cost of collecting the assessment, not more than ten cents for each assessment levied; and provided further, that said association may if necessary assess not more than twenty-five cents per member in any one year to be used only to purchase necessary supplies, pay court costs and attorney fees; and provided further, that whenever the director of the department of insurance, financial institutions and professional registration suspects or believes that any officer, trustee or other employee of such association is in fact directly or indirectly receiving remuneration, or that the secretary of such association is collecting and receiving more than herein provided for, he may cause an examination of the books, records and other effects of such association, including its officers and employees, to be made in order to ascertain the true condition of affairs and whenever such examination is made, an assessment shall be levied on the members thereof, sufficient to pay the cost of such examination, but no such assessment shall be for more than one dollar per member; provided, that nothing herein shall be construed to apply to any corporation organized under the provisions of sections 377.010 to 377.190 or to any association having more than one thousand five hundred members.

(RSMo 1939 § 5801)

Prior revisions: 1929 § 5691; 1919 § 6102; 1909 § 6896

376.050. The persons mentioned in section 376.010 shall be designated as "corporators", and such corporators, desiring to form a company for the purpose of transacting the business mentioned in said section, or any part of the same, shall file in the office of the director of the department of insurance, financial institutions and professional registration a declaration signed by each of said corporators, setting forth the place of residence of each of them, and their intention to form a corporation for the purpose of transacting the business aforesaid, which declaration shall comprise a copy of the charter proposed to be adopted by them; and they shall publish once in each week, or oftener, for at least four weeks, in a newspaper of general circulation, published in the county where such corporation is proposed to be located, a notice of the filing of such declaration, together with a copy of the same.

(RSMo 1939 § 5803)

Prior revisions: 1929 § 5693; 1919 § 6104; 1909 § 6898

376.060. When such corporators propose to form a joint stock company for the purposes designated in section 376.010, the charter comprised in the declaration mentioned in section 376.050 shall set forth

(1) The name assumed by such corporation and by which it shall be known;

(2) The place where the principal office for the transaction of its business shall be located;

(3) The specific kind or kinds of business which it proposes to transact;

(4) The amount of its capital stock, and the number of shares into which it shall be divided, and the manner in which it shall be paid up or secured;

(5) The manner in which the corporate powers granted by sections 376.010 to 376.670 shall be exercised, showing the number of directors, which shall not be less than nine or more than twenty-one, their powers and duties, the manner of electing them, the mode of filling vacancies, and such other particulars as may be necessary to make manifest the objects and purposes of the corporation, and the manner in which it is to be conducted.

(RSMo 1939 § 5804, A.L. 1943 p. 609)

Prior revisions: 1929 § 5694; 1919 § 6105; 1909 § 6899

376.070. Whenever the corporators have filed the declaration required by section 376.050 and also the proof of publication therein required by the affidavit of the publisher of the newspaper in which the publication was made, his foreman or clerk, with the director of the department of insurance, financial institutions and professional registration, the director shall submit the declaration to the attorney general of this state for examination, and if it is found by him to be in accordance with the provisions of sections 376.010 to 376.670 and not inconsistent with the constitution and laws of this state and the United States, he shall so certify and deliver it back to the director. The director shall cause the declaration and affidavit, with the certificate of the attorney general, to be recorded in a book kept for that purpose, and furnish a certified copy of the same to the corporators, and also file a certified copy of the same with the secretary of state, who, upon payment to the director of revenue of the tax required by section 351.065, shall issue a certificate of incorporation, upon the receipt of which they become a body politic and corporate, and may proceed to organize in the manner set forth in their charter, and to open books for subscription to the capital stock of the company, and keep the same open until the whole amount specified in the charter is subscribed. No company shall issue policies or transact any business of any kind or nature whatsoever, except as aforesaid, until it has fully complied with the requirements of sections 376.010 to 376.670.

(RSMo 1939 § 5805, A.L. 1957 p. 212)

Prior revisions: 1929 § 5695; 1919 § 6106; 1909 § 6900

376.080. Upon being notified that the capital stock named in the charter has been subscribed, and two hundred thousand dollars thereof paid in, the director shall make an examination, or cause one to be made by some disinterested person specially appointed by him for that purpose, and if it shall be found by himself, or if the person so appointed shall certify, under oath, that the provisions of section 376.280 have been complied with by said company, as far as applicable thereto, which certificate, when made, shall set forth the particulars of such compliance, then the director shall so certify, and the corporators or officers of such company shall be required to certify, under oath, to the person making such examination, that the money, notes, stocks, bonds, mortgages and deeds of trust exhibited to him are the bona fide property of said company.

(RSMo 1939 § 5806, A.L. 1967 p. 516)

Prior revisions: 1929 § 5696; 1919 § 6107; 1909 § 6901

376.090. When the corporators have fully complied with the requirements of the preceding sections, and the laws of this state governing the organization of private corporations, and said corporation has deposited with the director of the department of insurance, financial institutions and professional registration the amount of capital required to be deposited by section 376.290, and shall have filed with the director a certified copy of the certificate of incorporation issued by the secretary of state, it shall be his duty to furnish the company a certificate of such deposit, and his certificate of authority for it to commence the business proposed in its charter, which, with the certified copies of the aforesaid declaration and certificates, on being filed and recorded in the office of the recorder of the county in which the company is to be located, shall be its authority to commence business and issue policies; and such certified copies of the declaration certificates and certificate of deposit may be used in evidence for or against said company, with the same effect as the originals.

(RSMo 1939 § 5807)

Prior revisions: 1929 § 5697; 1919 § 6108; 1909 § 6902

376.100. When such corporators propose to form a mutual company, for the purpose designated in section 376.010, the charter comprised in the declaration mentioned in section 376.050 shall set forth:

(1) The name assumed by such corporation, and by which it shall be known;

(2) The place where the principal office for the transaction of its business shall be located;

(3) The specific kind or kinds of business which it proposes to transact;

(4) The number of persons from whom proposals for assurance shall be received, the amount of premiums to be received on deposit, and the amount of cash to be paid on the same, before the company shall begin to do business and issue policies;

(5) The manner in which the corporate powers granted by sections 376.010 to 376.670 are to be exercised, showing the number of directors, which shall not be more than twenty-one nor less than nine, their powers and duties, the manner of their election, the mode of filling vacancies, and such other particulars as may be necessary to make manifest the objects and purposes of the association, and the manner in which it is to be conducted.

(RSMo 1939 § 5808, A.L. 1951 p. 273)

Prior revisions: 1929 § 5698; 1919 § 6109; 1909 § 6903

376.110. Whenever the corporators have filed the declaration required by section 376.050 and also proof of the publication therein required by the affidavit of the publisher of the newspaper in which the publication was made, his foreman or clerk, with the director, the director shall submit the declaration to the attorney general of this state for examination, and if he finds it is in accordance with the provisions of sections 376.010 to 376.670, and not inconsistent with the constitution and laws of this state, and of the United States, he shall so certify and deliver it back to the director. The director shall cause the said declaration and affidavit with the certificate of the attorney general, to be recorded in a book kept for that purpose and furnish a certified copy of the same to the corporators, and also file a certified copy of the same with the secretary of state, who, upon payment to the director of revenue of the sum of seventy-five dollars, shall issue a certificate of incorporation, upon the receipt of which they become a body politic and corporate, and may proceed to organize in the manner set forth in their charter, and to open books and receive proposals and agreements for assurance and premiums for the same on deposit, and issue receipts therefor, and to keep such books open until the whole amount specified in its charter is received. It is not lawful for such company to issue policies or transact any business of any kind, except as aforesaid, until it fully complies with the requirements of sections 376.120, 376.130 and 376.290.

(RSMo 1939 § 5809, A.L. 1957 p. 212)

Prior revisions: 1929 § 5699; 1919 § 6110; 1909 § 6904

376.120. Upon being notified that the proposals and agreements for assurance named in the charter have been made, and the amount of premiums therein mentioned has been received, the director shall make an examination, or cause one to be made, by some disinterested person specially appointed by him for that purpose; and if it shall be found by himself, or if the person so appointed shall certify, under oath, that agreements have been entered into with said company, and premiums received in the manner and to the amount required by section 376.280, and that the amount required to be paid to said company is held by it in money, notes or bonds, then he shall so certify; and the corporators or officers of such company shall be required to certify, under oath, to the person making such examination, that the money, notes or bonds, or other obligations exhibited to him, have been received on deposit for premiums on bona fide proposals and agreements for insurance.

(RSMo 1939 § 5810)

Prior revisions: 1929 § 5700; 1919 § 6111; 1909 § 6905

376.130. When the corporators have fully complied with the requirements of the preceding sections, and the laws of this state governing the organization of private corporations, and said corporation has deposited with the director of the department of insurance, financial institutions and professional registration the amount of notes, bonds and mortgages, or deeds of trust, required by sections 376.010 to 376.670, and shall have filed with the director a certified copy of the certificate of incorporation issued by the secretary of state, it shall be his duty to furnish the company a certificate of such deposit, and his certificate of authority for it to commence the business proposed in its charter, which, with the certified copies of the aforesaid declaration and certificates, on being filed and recorded in the office of the recorder of the county in which the company is to be located, shall be its authority to commence business and issue policies; and such certified copies of the declarations, certificates and certificate of deposit may be used in evidence, for or against said company, with the same effect as the originals.

(RSMo 1939 § 5811)

Prior revisions: 1929 § 5701; 1919 § 6112; 1909 § 6906

376.142. 1. Any domestic stock life insurance corporation, incorporated under a general law, may become a mutual life insurance corporation, and to that end may carry out a plan for the acquisition of shares of its capital stock, provided such plan

(1) Has been adopted by a vote of a majority of the directors of such corporation;

(2) Has been approved by a vote of stockholders representing a majority of the capital stock then outstanding at a meeting of stockholders called for the purpose;

(3) Has been approved by a majority of the policyholders voting at a meeting of policyholders called for the purpose, each of whom is insured in a sum of at least one thousand dollars and whose insurance shall then be in force and shall have been in force for at least one year prior to such meeting.

2. As used in this section, "policyholder" means the person insured under an individual policy of life insurance, and the person to whom any annuity or pure endowment is presently or prospectively payable by the terms of an individual annuity or pure endowment contract, except where the policy or contract declares some other person to be the owner or holder thereof, in which case such owner or policyholder shall be deemed the policyholder, and except in cases of assignment. In the case of any individual policy or contract insuring two or more persons jointly or in case the policy or contract declares two or more persons to be the owner, the persons insured or declared to be the owner are considered as one policyholder for the purposes of this section. In case any such policy or contract has been assigned by an assignment absolute on its face to an assignee other than the corporation, and such assignment has been filed at the principal office of the corporation at least thirty days prior to the date of the meeting of the policyholders, then such assignee shall be deemed a policyholder. Except as provided in this section, an assignee of a policy or contract shall not be deemed a policyholder. The reference in subdivision (3) of subsection 1 to insurance in the amount of one thousand dollars or more is deemed to include any annuity contract, the commuted value of which is one thousand dollars or more on the date of said meeting, and any pure endowment contract for the principal sum of one thousand dollars or more.

3. Notice of the meeting of policyholders shall be given by mailing such notice from the home office of the corporation at least thirty days prior to such meeting in a sealed envelope, postage prepaid, addressed to such policyholders at their last known post-office addresses, provided that personal delivery of such written notice to any policyholder evidenced by written receipt therefor may be substituted for mailing the same. The meeting shall be otherwise provided for and conducted in such manner as is provided in the mutualization plan, provided that policyholders may vote in person, by proxy, or by mail, and that all votes shall be cast by ballot on a uniform ballot furnished by the corporation. The director of the department of insurance, financial institutions and professional registration shall supervise and direct the method and procedure of said meeting and shall appoint an adequate number of inspectors to conduct the voting at said meeting who may determine all questions concerning the verification of the ballots, the ascertainment of the validity of such ballots, the qualifications of the voters, and the canvass of the vote, and who shall certify to the director and to the corporation the result of such proceedings, which shall be supervised by said inspectors in accordance with such rules and regulations as are prescribed by the director. All necessary expenses incurred by the director shall be paid by the corporation, as certified to by him.

4. Such plan may provide for the acquisition of the shares of the capital stock of the corporation, the price at which it is proposed to acquire the same, and the method of acquisition and mode of payment therefor, whether immediate or deferred. Before such a plan can be carried out, it must be submitted to the director of the department of insurance, financial institutions and professional registration and must be approved by him in writing; provided that every payment for the acquisition of any shares of the capital stock of such corporation, the purchase price of which is not fixed by such plan, shall be subject to the approval of the director, and provided that neither such plan, nor any such payment, shall be approved by the director unless at the time of such approvals, respectively, the corporation, after deducting the aggregate sum appropriated by such plan for the acquisition of any part or all of its capital stock, and, in the case of any payment not fixed by such plan and subject to separate approval by the director, after deducting also the amount of such payment, shall be possessed of assets sufficient to maintain its deposit made previously with the director, and such assets shall be not less than the entire liabilities of the corporation, including the net values of its outstanding contracts computed according to the standard adopted by the corporation under sections 376.010 to 376.670 and including all funds, contingent reserves, and surplus, except for such surplus as has been appropriated or paid under such plan.

(L. 1957 p. 224 § 1)

376.143. 1. If a domestic stock life insurance corporation determines to become a mutual life insurance corporation, it may, in carrying out any plan to that end under section 376.142, acquire any shares of its own stock by gift, bequest, or purchase. Until all of such shares are acquired, any shares so acquired, or acquired pursuant to section 376.144, shall be acquired in trust for the corporation as provided in subsection 2, and shall be assigned and transferred on the books of the corporation to not less than three nor more than five trustees. Such shares shall be held by them in trust and be voted by such trustees at all corporate meetings at which stockholders have the right to vote, until all of the capital stock of such corporation is acquired, at which time the entire capital stock shall be retired and canceled and the corporation shall become, thereupon, a mutual life insurance corporation without capital stock.

2. The trustees provided for in subsection 1 shall be appointed and vacancies shall be filled by the director of the department of insurance, financial institutions and professional registration. Such trustees shall be qualified directors of the corporation at the time of such appointment and shall continue as such trustees until the purpose of the trust is accomplished or abandoned, unless they are removed for cause by the director. Said trustees shall file with the director a verified acceptance of their appointment and a declaration that they will faithfully discharge their duties as trustees. Such trustees shall give and file with the director bonds in such an amount as under the circumstances the director deems proper, with sureties thereon approved by the director. All dividends and other sums received by said trustees on the shares of stock held by them shall be immediately repaid to said corporation. The necessary expenses of executing the trust shall be paid by the corporation. All shares held by such trustees are considered as admitted assets of such corporation at their par value.

3. Neither the retirement of the corporation's capital stock nor the amendment of its articles of incorporation shall affect existing suits, rights, or contracts of such corporation. The deposit of securities made by such corporation, pursuant to sections 376.010 to 376.670, shall be retained by the director in trust for the benefit and security of all of the members and policyholders of such corporation.

(L. 1957 p. 224 §§ 2, 4)

376.144. 1. If a stockholder of any domestic stock life insurance corporation planning to become a mutual life insurance corporation under section 376.142 files with the corporation prior to or at the meeting of the stockholders at which the plan is submitted to a vote, a written objection to such plan and does not vote in favor thereof, and such stockholder within twenty days after the plan is approved by such meeting makes written demand on the corporation for payment of the fair cash value of his shares as of the day prior to the date on which such plan is approved by the stockholders, excluding from such fair cash value any appreciation or depreciation in consequence of such mutualization, such stockholder shall be entitled to receive, within ninety days after such fair cash value is agreed upon or determined, upon surrender of his certificates representing his shares, such fair cash value thereof. Any stockholder who fails to make such objection or having objected fails to make demand within the twenty-day period shall be conclusively presumed to have consented to the plan and shall be bound by the terms thereof.

2. Any such objection and demand for the payment of the fair cash value of shares shall state the number and kind of shares held by the dissenting stockholder making the demand, and the amount which such stockholder claims is their fair cash value.

3. The right of a dissenting stockholder to be paid the fair cash value of his shares shall cease when the corporation, for any reason and in accordance with the provisions set forth in this section, abandons the plan to mutualize the corporation.

4. No demand for payment of such fair cash value may be withdrawn by the stockholder making the same unless the corporation, by its board of directors, consents to such withdrawal.

5. Within ten days after the receipt of any such demand the corporation shall inform such stockholder in writing whether it will pay the demanded amount, and, if it refuses to pay such amount, it shall offer in writing to pay another amount as such fair cash value.

6. If, within thirty days after the date of the written demand made by the dissenting stockholder, the value of such shares is agreed upon between the dissenting stockholder and the corporation and such value is approved by the director of the department of insurance, financial institutions and professional registration, payment therefor shall be made within ninety days after the date of such agreement, upon the surrender of the stockholder's certificates representing such shares. Upon payment of the agreed value the dissenting stockholder ceases to have any interest in such shares and ceases to be a stockholder in the corporation, but the shares previously held by him and upon which he has been paid such fair cash value shall be transferred to and held by the trustees appointed under subsections 2 and 3 of section 376.143 for benefit of the corporation.

7. If, within such period of thirty days, the stockholder and the corporation do not agree upon the value of the shares, the corporation, or the dissenting stockholder if he has complied with this section, may, within sixty days after the expiration of the thirty-day period, petition the circuit court of the county in which the principal office of the corporation is located, to determine the fair cash value of the shares mentioned in such demand as of the day before the vote was taken approving such plan.

8. If such petition is not filed within the sixty-day period, the fair cash value of the shares is conclusively deemed to be equal to the amount offered to the dissenting stockholder by the corporation if any such offer has been made or, if not, then an amount equal to that demanded by the dissenting stockholder.

9. The petition shall contain a brief statement of the facts and shall show the vote and action objected to and facts entitling such dissenting stockholder to the relief demanded.

10. Upon the filing of such petition, the court, on the motion of the petitioner, shall enter an order fixing a date for hearing, and requiring a notice of the filing and prayer of such petition and of the date for hearing to be given to the respondent or defendant in the manner in which a summons is required to be served or substituted service is required to be made in other cases.

11. On the day fixed for the hearing of such petition, or any adjournment thereof, the court shall determine from the petition and such evidence as is submitted by either party whether the dissenting stockholder is entitled to be paid the fair cash value of any shares, and the number of such shares, and if the court finds and orders that such stockholder is entitled to be paid the fair cash value of any number of shares, the court shall appoint three appraisers to determine the fair cash value of such number of shares as of the day before the vote objected to was taken, excluding from such fair cash value any appreciation or depreciation in consequence of the mutualization or vote of the corporation, and said court shall further instruct the appraisers respecting their duties in making such determination.

12. The appraisers shall forthwith proceed to determine said fair cash value and said appraisers, or a majority of them, shall make a report or award within ten days, unless the court increases said time, and shall file such report in the office of the clerk of the circuit court, whereupon, on the motion of either party, said report shall be submitted to the court and considered on such evidence as the court considers relevant, and if said award is found to be reasonable, and is confirmed and approved by the court, judgment shall be rendered against the corporation for the payment of the amount of the award, with interest at six percent from a date which shall be fixed in such judgment.

13. If such appraisers, or a majority of them, fail to make and file an award within ten days, or within such further time as may be fixed by the court, or the award is not confirmed by the court, it shall summarily determine the fair cash value of said number of shares and render judgment therefor.

14. Any judgment shall further provide that simultaneously with its payment the certificates evidencing the shares of stock affected shall be surrendered to the corporation and, upon the failure of the holder thereof to surrender such certificates, the judgment shall stand as a cancellation of such certificates.

15. The cost of the proceedings, including reasonable compensation to the appraisers to be fixed by the court, shall be assessed or apportioned as the court considers equitable.

16. Such a proceeding is considered as a special proceeding and shall be advanced upon the court's docket, and final orders therein may be reviewed, affirmed, modified or reversed as in other civil actions or proceedings.

17. Two or more dissenting stockholders may join as plaintiffs or be joined as defendants in any proceeding under this section, and two or more such proceedings may be consolidated.

18. A stockholder who so objects in writing and demands in writing payment of the fair cash value of any shares shall not be entitled to vote such shares or to exercise any rights respecting such shares or to receive any dividends or distributions thereon, unless the plan of mutualization is abandoned, or, with the consent of the corporation, the objection and demand are withdrawn; provided that if, prior to such abandonment, dividends are paid in money to stockholders who are of record on or after the day on which the vote was taken authorizing such mutualization, then an amount of money equal to the dividends otherwise payable upon such dissenting shares shall be paid to the holders of record thereof who would, except for their dissent, be entitled to receive such dividends, and each such payment shall be a credit upon the total amount to be paid for such shares by the corporation. All the holders of such dissenting shares of record at the time of any such abandonment, shall thereupon be restored to the status of a stockholder, and any payments made previously on such shares shall be considered as dividends thereon.

19. Any stockholder who has assented to the plan or who has been concluded by the vote of the assenting stockholders, and any stockholder who has objected and made demand in writing for the fair cash value of his shares subsequent to which an agreement has been reached fixing such fair cash value, but who fails to surrender his certificates for cancellation upon payment of the amount to which he is entitled, may be ordered to do so by a decree of the circuit court for the county in which the principal office of such corporation is located after notice and hearing in an action instituted by the corporation for that purpose, and such decree may provide that, upon the failure of the stockholder to surrender such certificates for cancellation, the decree shall stand in lieu of such surrender and cancellation.

20. At any time before there has been a vote of the policyholders approving a plan of mutualization, the corporation may abandon such plan by the same vote of the directors and of the stockholders as was required for its adoption. Upon such abandonment, the rights of any stockholders to be paid for their stock in accordance with the plan, and the rights of any dissenting stockholders to be paid the fair cash value of their stock, whether or not judgment may have been rendered therefor, shall terminate, and the corporation shall continue to conduct its business as a domestic stock life insurance corporation as though no plan of mutualization had ever been adopted.

(L. 1957 p. 224 § 3)

376.145. When a domestic stock life insurance corporation has become converted into a mutual life insurance corporation, the officers and directors or trustees of the original corporation shall remain as the officers and directors or trustees of the newly converted corporation until the next annual meeting for the election of officers and directors or trustees, when their successors shall be elected in the manner provided in the articles of incorporation and articles of agreement previously adopted by said corporation.

(L. 1957 p. 224 § 5)

376.146. 1. The corporate powers of a mutual life insurance corporation shall be exercised by, and its business and affairs shall be controlled by, a board of directors or trustees composed of not less than three nor more than twenty-one natural persons who are policyholders or members of the corporation. The members of such board shall be at least eighteen years of age, and at least three members must be residents and citizens of this state.

2. In order to secure continuity of membership in its board of directors or trustees, the articles of incorporation of any mutual life insurance corporation may provide for division of the board into not more than three classes, as nearly equal in number as possible, and may fix the term of office for each class.

3. Unless such provision is made in the articles of incorporation, all directors and trustees shall be elected annually.

(L. 1957 p. 224 §§ 6, 7, A.L. 1976 S.B. 490)

376.147. 1. Meetings of the board of directors or trustees of any mutual life insurance corporation shall be upon such notice as the articles of agreement prescribe. Attendance of a director or trustee at any meeting constitutes a waiver of notice of such meeting, except when a director or trustee attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. The notice or waiver of notice need not specify the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors or trustees.

2. If the articles of agreement of any mutual life insurance corporation so provide, the board of directors or trustees, by a resolution adopted by a majority of the whole board, may designate three or more of its number to constitute an executive committee, which committee shall, to the extent provided in the resolution or in the articles of agreement, have and exercise, during the interim between the meetings of the board, all of the authority of the board in the management of the corporation.

3. The designation of such committee shall not relieve the board, or any member thereof, of any responsibility imposed by law.

(L. 1957 p. 224 §§ 8, 9)

376.148. 1. The articles of agreement of any mutual life insurance corporation shall provide that each policyholder of the corporation shall be a member of the corporation.

2. As used in this section, "policyholder" means the person insured under an individual policy of life insurance, and the person to whom any annuity or pure endowment is presently or prospectively payable by the terms of an individual annuity or pure endowment contract, except where the policy or contract declares some other person to be the owner or holder thereof, in which case such owner or policyholder shall be deemed the policyholder, and except in cases of assignment. In the case of any individual policy or contract insuring two or more persons jointly or in case the policy or contract declares two or more persons to be the owner, the persons insured or declared to be the owner are considered as one policyholder. In case any such policy or contract has been assigned by an assignment absolute on its face to an assignee other than the corporation and such assignment is filed at the principal office of the corporation, then such assignee shall be deemed a policyholder, but for the purpose of determining voting rights such assignment is not effective until thirty days after it has been filed with the corporation. Except as provided in this section an assignee of a policy or contract shall not be deemed a policyholder.

3. The articles of agreement shall provide that each policyholder who is insured in the sum of at least one thousand dollars, or who is the holder of an annuity which at normal date of maturity requires the payment of one hundred dollars or more annually, and whose insurance or contract of annuity is then in force and has been in force for at least one year prior to a policyholders' meeting, shall be entitled to only one vote, irrespective of the number of policies or contracts held by him or their amount.

4. The power to make, alter, amend, or repeal the articles of agreement is vested in the board of directors or trustees, unless it is reserved to the members by the articles of incorporation.

5. The articles of agreement of a mutual legal reserve life insurance corporation shall provide that such corporation shall issue no policy of life insurance or annuity contract which provides for the payment of any assessment by any policyholder or member in addition to the regular premium charged for such insurance or annuity.

(L. 1957 p. 224 § 10)

376.150. When such corporators propose to form a stock and mutual company for the purposes designated in section 376.010, the charter comprised in the declaration named in section 376.050 shall set forth all the particulars mentioned in section 376.060 in regard to the formation of corporations on the joint stock plan; and in addition thereto it shall state

(1) The extent, if any, to which the policyholders shall participate in the election of directors and in the management of the company, and the manner in which they shall do so;

(2) The time for which it is proposed to remain a stock and mutual company, provided it be intended to limit the same, and the manner of changing into a mutual or stock company, if such change is proposed; but no such change shall be made unless by two-thirds majority of all the votes cast at a meeting held for that purpose, such meeting to be called by a special notice, stating its object; which notice shall be published for at least once a week, for four weeks, in a newspaper of general circulation, and published in the county or city where such company is located.

(RSMo 1939 § 5813)

Prior revisions: 1929 § 5702; 1919 § 6113; 1909 § 6907

376.160. The provisions of sections 376.070 to 376.090, relating to the formation of joint stock companies, shall apply, in all respects, to the formation of stock and mutual companies; and a certified copy of the articles shall be filed with the secretary of state, who shall issue a certificate of incorporation, as provided by sections 376.070 and 376.110, on payment of the tax on the capital as by said sections required.

(RSMo 1939 § 5814)

Prior revisions: 1929 § 5703; 1919 § 6114; 1909 § 6908

376.170. All life insurance companies organized under the provisions of sections 376.010 to 376.670 shall deposit with the director of the department of insurance, financial institutions and professional registration, in addition to other amounts required by law to be deposited by life insurance companies before such companies are permitted to engage in the business of issuing policies of life insurance and annuity bonds, cash or securities of the kind and type in which life insurance companies are required to invest their funds under sections 376.291 to 376.307, as same now is or as same may be hereafter amended, in an amount sufficient to equal the net value on all policies or annuity bonds hereafter issued by such companies, the amount thereof to be determined by an evaluation made in accord with the provisions of sections 376.010 to 376.670.

(RSMo 1939 § 5815, A.L. 2007 S.B. 66)

Prior revisions: 1929 § 5704; 1919 § 6115; 1909 § 6909

376.180. 1. After making the deposits mentioned in section 376.170, the company shall issue its policies of insurance or annuity bonds and each policy may have set out in the body thereof the following: "This policy is registered and the net reserves secured by a pledge of bonds, deeds of trust on real estate and other securities deposited with the department of insurance, financial institutions and professional registration of Missouri as required by section 376.170, RSMo."

2. The company under the supervision of the director shall prepare and keep a permanent register thereof.

3. The provisions of this section pertaining to the registration of policies shall not apply to policies issued on the industrial or prudential plans except when such policies exceed one thousand dollars in amount, nor shall the provisions of this section apply to term policies of seven years or less and in amounts of ten thousand dollars or less, or to policies of group insurance or group annuity; except that nothing contained herein shall be deemed to prevent any policy from being registered hereunder, if the company issuing the policy shall so desire.

(RSMo 1939 § 5816, A.L. 1951 p. 274, A.L. 1953 p. 241, A.L. 1961 p. 170, A.L. 1963 p. 491, A.L. 1967 p. 516, A.L. 1969 S.B. 63)

Prior revisions: 1929 § 5705; 1919 § 6116; 1909 § 6910

376.190. The director shall annually cause the registered policies and annuity bonds of each company outstanding and in force to be carefully valued, and whenever the total of the actual net value of such policies and annuity bonds exceeds the market value of the securities on deposit, the company issuing such policies or annuity bonds shall immediately deposit sufficient securities of the same kind and type provided for in sections 376.291 to 376.307 to equal the net value of such policies and annuity bonds so that the market value of the securities deposited shall always be equal to the actual net value of the registered policies and annuity bonds issued by such company and still in force.

(RSMo 1939 § 5817, A.L. 1951 p. 275, A.L. 1961 p. 170, A.L. 2007 S.B. 66)

Prior revisions: 1929 § 5706; 1919 § 6117; 1909 § 6911

376.200. The term "net value" of any such registered policy or annuity bond as used in sections 376.010 to 376.670 shall be the total of the various reserve values thereof as defined by section 376.370, as same now is or as same may be subsequently amended, less the reserve on the reinsurance policy covering that portion of said policies or annuity bonds reinsured in other solvent companies organized or doing business under the provisions of sections 376.010 to 376.670 and less the sum of any policy loans and liens, premium notes and net uncollected and deferred premiums; provided, that the sum of said policy loans, liens, premium notes, and net uncollected and deferred premiums shall not exceed the reserve of such registered policy or annuity bond exclusive of the reserve required for total and permanent disability benefits, additional accidental death benefits and unpaid dividends.

(RSMo 1939 § 5818)

376.210. Whenever the aggregate market value of the securities deposited by any company shall exceed the net reserve liability of the company on all of its registered policies and annuity bonds, the excess may be returned to the company, or, whenever the liability of such company on such policies shall cease, the director of the department of insurance, financial institutions and professional registration shall return the securities deposited.

(RSMo 1939 § 5819)

376.220. Should any company depositing under section 376.170 become the owner of real estate for its own use and accommodations, or become temporarily seized and possessed of real estate in satisfaction of debt for which such real estate was pledged for security, such company may execute its own note for the value of such real estate, payable to the director, as trustee, and secure the said notes or bonds by duly recorded deeds of trust of said real estate; which notes or bonds thus secured may be deposited with said director as proper security, under and according to the provisions of sections 376.010 to 376.670, said value to be subject to the approval of the director of the department of insurance, financial institutions and professional registration.

(RSMo 1939 § 5820)

Prior revisions: 1929 § 5709; 1919 § 6120; 1909 § 6914

376.230. Any company shall have the right at any time to change the securities on deposit with the director of the department of insurance, financial institutions and professional registration by substituting a like amount of the character required in the first instance and to withdraw any excess of securities; and so long as such company shall remain solvent, and the amount of its deposits as herein required are not impaired, it may collect the interest on the securities deposited as the same accrues.

(RSMo 1939 § 5821)

Prior revisions: 1929 § 5710; 1919 § 6121; 1909 § 6915

376.240. The securities deposited under the provisions of section 376.170 shall be legally transferred to the director of the department of insurance, financial institutions and professional registration, and so large an amount thereof as may be necessary to equal, at all times, the net value of the outstanding registered policies and annuity bonds, less such liens not exceeding such value as the company may hold against them, shall be held by him in trust for the purposes of sections 376.010 to 376.670, until the obligations of said companies, under said registered policies and annuity bonds shall, to the satisfaction of the said director, be fully liquidated, canceled or annulled.

(RSMo 1939 § 5824)

Prior revisions: 1929 § 5713; 1919 § 6124; 1909 § 6918

376.250. The securities deposited under section 376.170 shall be deposited and kept in the same manner, but separate from other deposits of the company.

(RSMo 1939 § 5822)

Prior revisions: 1929 § 5711; 1919 § 6122; 1909 § 6916

376.260. The director of revenue, in addition to other fees allowed by law, shall be entitled to collect the following fees, including seal, from companies depositing under section 376.170: For issuing certificates of deposits, which he is hereby required to do, one dollar; for every other certificate, including seal, the fee shall be twenty-five cents.

(RSMo 1939 § 5823, A.L. 1945 p. 1020)

Prior revisions: 1929 § 5712; 1919 § 6123; 1909 § 6917

376.270. If at any time the affairs of any life insurance company which has deposited securities under section 376.170 shall, in the opinion of the director, appear in such condition as to render the issuing of additional policies and annuity bonds by such company injurious to the public interest, the director may take the same proceedings against such company as by law may be taken against other insolvent companies; and said companies shall, in all respects, be subject to the provisions of law affecting other companies.

(RSMo 1939 § 5825)

Prior revisions: 1929 § 5714; 1919 § 6125; 1909 § 6919

376.280. 1. No joint stock or stock and mutual company formed under the provisions of sections 376.010 to 376.670, or the laws of this state, for any purpose mentioned in section 376.010, shall commence to do business or issue policies unless upon an actual capital of at least six hundred thousand dollars and a surplus of at least six hundred thousand dollars, nor shall any such company commence to do any business unless the full amount of capital stock and surplus named in its charter or articles of association has been paid in and invested in such securities and in accordance with all the provisions as is provided for in sections 376.291 to 376.307, or as the same may be subsequently amended.

2. In order to continue writing new business, any stock company organized under the provisions of sections 376.010 to 376.670, or the laws of this state, for any purpose mentioned in section 376.010, shall maintain an actual capital and surplus in the amount required to commence business.

3. Any other provision of this section notwithstanding, a joint stock or stock and mutual company licensed to do business in this state on August 13, 1982, may renew its license for business specified therein until December 31, 1984, by maintaining in lieu of the capital and surplus requirements an actual capital and surplus of at least nine hundred thousand dollars.

4. No mutual company formed under the provisions of sections 376.010 to 376.670, or of the laws of this state, shall commence or continue to do any business mentioned in section 376.010 until agreement, in writing, with such company shall have been entered into by not less than one hundred persons for assurance upon their own lives, or the lives of other persons for their benefit, nor until it shall have received premiums on the same in cash, to an aggregate amount of not less than six hundred thousand dollars and in addition shall have a surplus of six hundred thousand dollars; provided further, that nothing herein contained shall be so construed as to prohibit any such company from complying with the provisions of sections 362.180 to 362.195.

5. Any other provision of this section notwithstanding, a mutual company licensed to do business in this state on August 13, 1982, may renew its license for business specified therein until December 31, 1984, by maintaining in lieu of the surplus requirement paid-in premiums in an aggregate amount of not less than nine hundred thousand dollars.

6. Violation of any of the provisions of this section by any insurer is grounds for the revocation of its certificate of authority by the director.

(RSMo 1939 § 5826, A.L. 1963 p. 485, A.L. 1977 S.B. 368, A.L. 1982 S.B. 729, A.L. 2007 S.B. 66)

Prior revisions: 1929 § 5715; 1919 § 6126; 1909 § 6920

376.290. No existing company organized under any general or special law of this state, and transacting business of the character designated in section 376.010, nor any company organized under sections 376.010 to 376.670, shall commence, continue or carry on business until the company has transferred to and deposited with the director of the department of insurance, financial institutions and professional registration, for the security of its policyholders, the sum of six hundred thousand dollars in notes or bonds secured by mortgages or deeds of trust of the description mentioned in section 376.280, or bonds or treasury notes of the United States, or bonds of the state of Missouri, or funded bonds of any county or municipal township of this state, and in all cases not to be received at a rate above their par value, nor above their current market value.

(RSMo 1939 § 5828, A.L. 1967 p. 516, A.L. 1982 S.B. 729)

Prior revisions: 1929 § 5717; 1919 § 6128; 1909 § 6922

376.291. Sections 376.291 to 376.307 shall apply only to investments and investment practices of domestic insurers organized under the provisions of this chapter. Sections 376.291 to 376.307 shall not apply to separate accounts of an insurer except to the extent that the provisions of section 376.309 so provide.

(L. 2007 S.B. 66)

376.292. As used in sections 376.291 to 376.307, the following terms mean:

(1) "Acceptable collateral", as to securities lending repurchase and reverse repurchase transactions, any financial assets of a type for which, when taken as collateral by an insurer in such transactions, would permit the subject securities or repurchase agreements, as the case may be, to constitute admitted assets of the insurer under the relevant statutory accounting principles promulgated from time to time by the NAIC as adopted by the director;

(2) "Acceptable private mortgage insurance", insurance written by a private insurer protecting a mortgage lender against loss occasioned by a mortgage loan default and issued by a licensed mortgage insurance company with an SVO "1" designation or a rating issued by a nationally recognized statistical rating organization equivalent to an SVO "1" designation that covers losses to an eighty percent loan-to-value ratio;

(3) "Accident and health insurance", protection that provides payment of benefits for covered sickness or accidental injury, excluding credit insurance, disability insurance, accidental death and dismemberment insurance, and long-term care insurance;

(4) "Accident and health insurer", a licensed life or health insurer or health service corporation whose insurance premiums and required statutory reserves for accident and health insurance constitute at least ninety-five percent of total premium considerations or total statutory required reserves, respectively;

(5) "Admitted assets", assets permitted to be reported as admitted assets on the statutory financial statement of the insurer most recently required to be filed with the director but excluding assets of separate accounts;

(6) "Affiliate", as to any person, another person that, directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with the person;

(7) "Asset-backed security", a security or other instrument, excluding shares in a mutual fund, evidencing an interest in or the right to receive payments from, or payable from distributions on an asset, a pool of assets, or specifically divisible cash flows which are legally transferred to a trust or another special purpose bankruptcy-remote business entity on the following conditions:

(a) The trust or other business entity is established solely for the purpose of acquiring specific types of assets or rights to cash flows, issuing securities and other instruments representing an interest in or right to receive cash flows from those assets or rights, and engaging in activities required to service the assets or rights and any credit enhancement or support features held by the trust or other business entity; and

(b) The assets of the trust or other business entity consist solely of interest-bearing obligations or other contractual obligations representing the right to receive payment from the cash flow from the assets. However, the existence of credit enhancements, such as letters of credit or guarantees or support features, such as swap agreements, shall not cause a security or other instrument to be ineligible as an asset-backed security;

(8) "Business entity", a sole proprietorship, limited liability company, association, partnership, joint stock company, joint venture, mutual fund, trust, joint tendency, or other similar form of business organization, whether organized for profit or not for profit;

(9) "Capital and surplus", the sum of the capital and surplus of the insurer required to be shown on the statutory financial statement of the insurer most recently required to be filed with the director;

(10) "Cash equivalents", short-term, highly rated, and highly liquid investments or securities readily convertible to known amounts of cash without penalty and so near maturity that they present insignificant risk of change in value. Cash equivalents include government money market mutual funds and class one money market mutual funds. For purposes of this subdivision:

(a) "Short-term" means investments with a remaining term to maturity of ninety days or less; and

(b) "Highly rated" means an investment rated "P-1" by Moody's Investors Service, Inc., or "A-1" by Standard and Poor's division of The McGraw Hill Companies, Inc., or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO;

(11) "Class one bond mutual fund", a mutual fund that at all times qualifies for investment using the bond class one reserve factor under the Purpose and Procedures of the Securities Valuation Office or any successor publication;

(12) "Class one money market mutual fund", a money market mutual fund that at all times qualifies for investment using the bond class one reserve factor under the Purpose and Procedures of the Securities Valuation Office or any successor publication;

(13) "Code", this chapter and chapters 374, 375, and 382;

(14) "Commercial mortgage loan", a loan secured by a mortgage other than a residential mortgage loan;

(15) "Construction loan", a loan less than three years in term made for financing the cost of construction of a building or other improvement to real estate that is secured by the real estate;

(16) "Control", the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, other than a commercial contract for goods or nonmanagement service, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if a person, directly or indirectly, owns, controls, holds with power to vote, or holds proxies representing ten percent or more of the voting securities of another person. This presumption may be rebutted by a showing that control does not exist in fact. The director may determine after furnishing all interested persons notice and an opportunity to be heard and making specific findings of fact to support the determination that control exists in fact, notwithstanding the absence of a presumption to that effect;

(17) "Credit tenant loan", a mortgage loan which is made primarily in reliance on the credit standing of a major tenant, structured with an assignment of the rental payments to the lender with real estate pledged as collateral in the form of a first lien;

(18) "Direct" or "directly", in connection with an obligation, the designated obligor primarily liable on the instrument representing the obligation;

(19) "Dollar-roll transaction", two simultaneous transactions with different settlement dates no more than ninety-six days apart so that in the transaction with the earlier settlement date an insurer sells to a business entity, and in the other transaction the insurer is obligated to purchase, from the same business entity, substantially similar securities of the following types:

(a) Asset-backed securities issued, assumed or guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation or their respective successors; and

(b) Other asset-backed securities referred to in section 106 of Title I of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-1), as amended;

(20) "Domestic jurisdiction", the United States, Canada, any state, any province of Canada, or any political subdivision of the foregoing;

(21) "Equity interest", any of the following that are not rated credit instruments:

(a) Common stock;

(b) Preferred stock;

(c) Trust certificate;

(d) Equity investment in an investment company other than a money market mutual fund or a class one bond mutual fund;

(e) Investment in a common trust fund of a bank regulated by a federal or state agency;

(f) An ownership interest in mineral, oil, or gas to which the rights have been separated from the underlying fee interest in the real estate where the mineral, oil, or gas are located;

(g) Instruments which are mandatorily, or at the option of the issuer, convertible to equity;

(h) Limited partnership interests and those general partnership interests authorized under subdivision (4) of section 376.294;

(i) Member interests in limited liability companies;

(j) Warrants or other rights to acquire equity interests that are created by the person that owns or would issue the equity to be acquired; or

(k) Instruments that would be rated credit instruments except for the provisions under subdivision (47) of this section;

(22) "Foreign currency", currency other than that of a domestic jurisdiction;

(23) (a) "Foreign investment", an investment in a foreign jurisdiction or an investment in a person, real estate, or asset domiciled in a foreign jurisdiction that is substantially of the same type as those eligible for investment under this chapter other than under section 376.304. An investment shall not be deemed foreign if the issuing person, qualified primary credit source, or qualified guarantor is a domestic jurisdiction or a person domiciled in a domestic jurisdiction unless:

a. The issuing person is a shell business entity; and

b. The investment is not assumed, accepted, guaranteed, or insured or otherwise backed by a domestic jurisdiction, or a person that is not a shell business entity domiciled in a domestic jurisdiction;

(b) For purposes of this definition:

a. "Shell business entity" means a business entity having no economic substance except as a vehicle for owning interests in assets issued, owned, or previously owned by a person domiciled in a foreign jurisdiction;

b. "Qualified guarantor" means a guarantor against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction;

c. "Qualified primary credit score" means the credit score to which an insurer looks for payment as to an investment and against which an insurer has a direct claim for full and timely payment evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction;

(24) "Foreign jurisdiction", a jurisdiction other than a domestic jurisdiction;

(25) "Government money market mutual fund", a money market mutual fund that at all times:

(a) Invests only in obligations issued, guaranteed, or insured by the federal government of the United States or collateralized repurchase agreements composed of these obligations; and

(b) Qualifies for investment without a reserve under the Purposes and Procedures of the Securities Valuation Office or any successor publication;

(26) "Government sponsored enterprise", a:

(a) Government agency; or

(b) Corporation, limited liability company, association, partnership, joint stock company, joint venture, trust, or other entity or instrumentality organized under the laws of any domestic jurisdiction to accomplish a public policy or other governmental purpose;

(27) "Guaranteed" or "insured", in connection with an obligation acquired under this chapter, the guarantor or insurer has agreed to:

(a) Perform or insure the obligation of the obligor or purchase the obligation; or

(b) Be unconditionally obligated until the obligation is repaid to maintain in the obligor a minimum net worth, fixed charge coverage, stockholders' equity or sufficient liquidity to enable the obligor to pay the obligation in full;

(28) "High-grade investment", a rated credit instruments rated "1", "2", "P1", "P2", "PSF1", or "PSF2" by the SVO;

(29) "Investment company", an investment company as defined in Section 3(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-1), as amended, and a person described in Section 3(c) of that act;

(30) "Investment company series", an investment portfolio of an investment company that is organized as a series company and to which assets of the investment company have been specifically allocated;

(31) "Investment subsidiary", a subsidiary of an insurer engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer if such subsidiary limits its investment in any asset so that its investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitation or avoid any other provisions of this chapter applicable to the insurer. As used in this subdivision, the total investment insurer shall include:

(a) Direct investment by the insurer in an asset; and

(b) The insurer's proportionate share of an investment in an asset by an investment subsidiary of the insurer which shall be calculated by multiplying the amount of the subsidiary's investment by the percentage of the insurer's ownership interest in the subsidiary;

(32) "Investment strategy", the techniques and methods used by an insurer to meet its investment objectives, such as active bond portfolio management, passive bond portfolio management, interest rate anticipation, growth investing, and value investing;

(33) "Letter of credit", a clean, irrevocable, and unconditional letter of credit issued or confirmed by and payable and presentable at a financial institution on the list of financial institutions meeting the standards for issuing letters of credit under the Purposes and Procedures of the Securities Valuation Office or any successor publication. To constitute applicable collateral for the purposes of section 376.303, a letter of credit shall have an expiration date beyond the term of the subject transaction;

(34) "Limited liability company", a business organization, excluding partnerships and ordinary business corporations, organized or operating under the laws of the United States or any state thereof that limits the personal liability of investors to the equity investment of the investor in the business entity;

(35) "Lower grade investment", a rated credit instrument rated "4", "5", "6", "P4", "P5", "P6", "PSF4", "PSF5", or "PSF6" by the SVO;

(36) "Market value":

(a) As to cash and credit, the amounts thereof; and

(b) As to a security as of any date, the price for the security in that date obtained from a generally recognized source or the most recent quotation from a source, or to the extent no generally recognized source exists, the price for the security reasonably as determined by the insurer plus accrued but unpaid income thereon to the extent not included in the price as of that date;

(37) "Medium grade investment", a rated credit instrument rated "3", "P3", or "PSF3" by the SVO;

(38) "Money market mutual fund", a mutual fund that meets the conditions of 17 C.F.R. 270.2a-7 under the Investment Company Act of 1940 (15 U.S.C. 80a-1, et seq.), as amended or renumbered;

(39) "Mortgage loan", an obligation secured by a mortgage, deed of trust, trust deed, or other consensual lien on real estate;

(40) "Multilateral development bank", an international development organization of which the United States is a member;

(41) "Mutual fund", an investment company or in the case of an investment company that is organized as a series company, an investment company series, that in either case is registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1, et seq.), as amended;

(42) "NAIC", the National Association of Insurance Commissioners;

(43) "Obligation", a bond, note, debenture, trust certificate, including an equipment trust certificate, production payment, negotiable bank certificate of deposit, bankers' acceptance, credit tenant loan, loan secured by financing net leases, and other evidence of indebtedness for the payment of money, or participations, certificates, or other evidence of an interest in any of the foregoing, whether constituting a general obligation of the issuer or payable only out of certain revenues or certain funds pledged or otherwise dedicated for payment;

(44) "Person", an individual, a business entity, a multilateral development bank, or a government or quasigovernment body, such as a political subdivision or a government sponsored enterprise;

(45) "Preferred stock", preferred, preference, or guaranteed stock of a business entity authorized to issue the stock that has a preference in liquidation over the common stock of the business entity;

(46) "Qualified business entity", a business entity that is:

(a) An issuer of obligations or preferred stock that are rated "1" or "2" by the SVO or an issuer of obligations, preferred stock, or derivative instruments that are rated the equivalent of "1" or "2" by the SVO or the equivalent by a nationally recognized statistical rating organization recognized by the SVO;

(b) A primary dealer in the United States government securities recognized by the Federal Reserve Bank of New York; or

(c) With respect to section 376.303, an affiliate of an entity that is a qualified business entity under paragraph (a) or (b) of this subdivision whose arrangement with the insurer is guaranteed by the affiliated entity that is a qualified business entity under paragraph (a) or (b) of this subdivision;

(47) "Rated credit instrument":

(a) An obligation or other instrument which gives its holder a contractual right to receive cash or another rated credit instrument from another entity if the instrument:

a. Is rated or required to be rated by the SVO;

b. In the case of an instrument with a maturity of three hundred ninety-seven days or less, is issued, guaranteed, or insured by an entity that is rated by or another instrument of such entity is rated by the SVO or by a nationally recognized statistical rating organization recognized by the SVO;

c. In the case of an instrument with a maturity of ninety days or less, is issued, assumed, accepted, guaranteed, or insured by a qualified bank;

d. Is a share of a class one bond mutual fund; or

e. Is a share of a money market mutual fund;

(b) "Rated credit instrument" shall not mean:

a. An instrument that is mandatorily, or at the option of the issuer, convertible to an equity interest; or

b. A security that has a par value and whose terms provide that the issuer's net obligation to repay all or part of the security's par value is determined by reference to the performance of an equity, a commodity, a foreign currency, or an index of equities, commodities, foreign currencies, or combination thereof;

(48) "Real estate":

(a) Real property;

(b) Interests in real property, such as leaseholds, mineral, oil, and gas that have not been separated from the underlying fee interest;

(c) Improvements and fixtures located on or in real property; and

(d) The seller's equity in a contract providing for a deed of real estate;

As to a mortgage on a leasehold estate, real estate shall include the leasehold estate only if it has an unexpired term, including renewal options exercisable at the option of the lessee extending beyond the scheduled maturity date of the obligation that is secured by a mortgage on a leasehold estate by a period equal to at least twenty percent of the original term of the obligation or ten years, whichever is greater;

(49) "Repurchase transaction", a transaction in which an insurer purchases securities from a business entity that is obligated to repurchase the purchased securities or substantially the same securities from the insurer at a specified price within a specified period of time or on demand;

(50) "Required liabilities", total liabilities required to be reported on the statutory financial statement of the insurer most recently required to be filed with the director;

(51) "Residential mortgage loan", a loan primarily secured by a mortgage on real estate improved with a one-to-four family residence;

(52) "Reverse repurchase transaction", a transaction in which an insurer sells substantially the same securities to a business entity and is obligated to repurchase the sold securities or substantially the same securities from the business entity at a specified price within a specified period of time or upon demand;

(53) "Secured location", the contiguous real estate owned by one person;

(54) "Securities lending transaction", a transaction in which securities are loaned by an insurer to a business entity that is obligated to return the loaned securities or substantially the same securities to the insurer within a specified period of time or upon demand;

(55) "Series company", an investment company that is organized as series company, as defined in Rule 18f-2 under the Investment Company Act of 1940 (15 U.S.C. 80a-1, et seq.), as amended;

(56) "Sinking fund stock", preferred stock that:

(a) Is subject to a mandatory sinking fund or similar arrangement that will provide for the redemption or open market purchase of the entire issue over a period not longer than forty years from the date of acquisition; and

(b) Provides for mandatory sinking fund installments or open market purchases commencing not more than ten and one-half years from the date of issue with the sinking fund installments providing for the purchase or redemption on a cumulative basis commencing ten years from the date of issue of at least two and one-half percent per year of the original number of shares of that issue of preferred stock;

(57) "Special rated credit instrument", a rated credit instrument that is:

(a) Structured so that if it is held until retired by or on behalf of the issuer, its rate of return based on its purchase cost and any cash flow stream possible under the structure of the transaction may become negative due to reasons other than the credit risk associated with the issuer of the instrument; however, a rated credit instrument shall not be a special rated credit instrument under this paragraph if it is:

a. A share in a class one bond mutual fund;

b. An instrument other than an asset-backed security with payments of par value fixed as to an amount and timing or callable but in any event payable only at par value or greater and interest or dividend cash flows that are based on a fixed or variable rate determined by reference to a specified rate or index;

c. An instrument other than an asset-backed security that has a par value and is purchased at a price no greater than one hundred ten percent of par;

d. An instrument, including an asset-backed security, whose rate of return would become negative only as a result of prepayment due to casualty, condemnation, or economic obsolescence of collateral or change of law;

e. An asset-backed security that relies on collateral that meets the requirements of subparagraph b. of this paragraph and the par value of which collateral:

(i) Is not permitted to be paid sooner than one-half of the remaining term to maturity from the date of acquisition;

(ii) Is permitted to be paid prior to maturity only at a premium sufficient to provide a yield to maturity for the investment, considering the amount of prepaid and reinvestment rates at the time of early repayment, at least equal to the yield to maturity of the initial investment; or

(iii) Is permitted to be paid prior to maturity at a premium at least equal to the yield of a treasury issue of comparable remaining life; or

f. An asset-backed security that relies on cash flow from assets that are not prepayable at any time at par but is not otherwise governed by subparagraph e. of this paragraph if the asset-backed security has a par value reflecting principal payments to be received if held until retired by or on behalf of the issuer and is purchased at a price no greater than one hundred five percent of such par amount;

(b) An asset-backed security that:

a. Relies on cash flow from assets that are prepayable at par at any time;

b. Does not make payments of par that are fixed as to amount and timing; and

c. Has a negative rate of return at the time of acquisition if a prepayment threshold assumption is used with such prepayment threshold assumption defined as either:

(i) Two times the prepayment expectation reported by a recognized publicly available source as being the median of expectations contributed by broker dealers or other entities except insurers engaged in the business of selling or evaluating such securities or assets. At the insurer's election, the prepayment expectation used in this calculation shall be the prepayment expectation for pass-through securities of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, or for other assets of the same type of assets that underlie the asset-backed security in a gross weighted average coupon comparable to the gross weighted average coupon of the assets that underlie the asset-backed security; or

(ii) Another prepayment threshold assumption specified by the director by regulation;

(c) For purposes of paragraph (b) of this subdivision, if the asset-backed security is purchased in combination with one or more other asset-backed securities that are supported by identical underlying collateral, the insurer may calculate the rate of return for these specific combined asset-backed securities in combination. The insurer shall maintain documentation demonstrating that such securities were acquired and are continuing to be held in combination;

(58) "State", a state, territory, or possession of the United States, District of Columbia, or the Commonwealth of Puerto Rico;

(59) "Substantially the same securities", securities that meet all criteria for substantially the same securities specified in the NAIC Accounting Practices and Procedures Manual, as amended, as adopted by the director;

(60) "Subsidiary", as to any person, an affiliate controlled by such person, directly or indirectly, through one or more intermediaries;

(61) "SVO", the Securities Valuation Office of the NAIC or any successor office established by the NAIC;

(62) "Unrestricted surplus", the amount by which total admitted assets exceed one hundred and twenty-five percent of the insurer's required liabilities.

(L. 2007 S.B. 66)

376.293. 1. (1) Insurers may acquire, hold, or invest in investments or engage in investment practices as set forth in this chapter or section 375.345. Insurers may also acquire, hold, or invest in investments not conforming to the requirements of this section that are not otherwise prohibited by this chapter or section 375.345, provided however, that investments not conforming to this section shall not be admitted assets. The provisions and definitions of terms of section 375.345 related to derivative transactions shall also apply to investments under this chapter.

(2) Subject to subdivision (3) of this subsection, an insurer shall not acquire or hold an investment as an admitted asset unless at the time of acquisition:

(a) It is eligible for the payment or accrual of interest or discount, whether in cash or other forms of income or securities, eligible to receive dividends or other distributions or is otherwise income producing; or

(b) It is acquired under section 375.345, subsection 3 of section 376.302, section 376.303 or 376.307 or under the authority of sections of the code other than sections 376.291 to 376.307.

(3) An insurer may acquire or hold as admitted assets investments that do not otherwise qualify, as provided in sections 376.291 to 376.307, if this insurer has not acquired the assets investments for the purpose of circumventing any limitations contained in sections 376.291 to 376.307 and if the insurer acquires the investments in the following circumstances and complies with the provisions of sections 376.291 to 376.307 as to the investments:

(a) As a payment on account of existing indebtedness or in connection with the refinancing, restructuring, or workout of existing indebtedness, if taken to protect the insurer's interest in that investment;

(b) As realization of collateral for indebtedness;

(c) In connection with an otherwise qualified investment or investment practice as interest on, or a dividend, or other distribution related to the investment or investment practice or in connection with the refinancing of the investment. In each case, no additional or only nominal consideration is necessary;

(d) Under lawful and bona fide agreement of recapitalization or voluntary or involuntary reorganization in connection with an investment held by the insurer; or

(e) Under a bulk reinsurance, merger, or consolidation transaction approved by the director if the assets constitute admissible investments for the ceding, merged, or consolidated companies.

(4) An investment or portion of an investment acquired by an insurer under subdivision (3) of this subsection shall become a nonadmitted asset three years, or five years in the case of mortgage loans and real estate, from the date of its acquisition unless within that period the investment has become a qualified investment under a section of this chapter other than subdivision (3) of this subsection, but an investment acquired under an agreement of bulk reinsurance, merger, or consolidation may be qualified for a longer period if so provided in the plan for reinsurance, merger, or consolidation as approved by the director. Upon application by the insurer and a showing that the nonadmission of an asset held under subdivision (3) of this subsection would materially injure the interests of the insurer, the director may extend the period of admissibility for an additional, reasonable period of time.

(5) Except as provided in subdivisions (6) and (8) of this subsection, an investment shall qualify under this chapter if on the date the insurer committed to acquire the investment or on the date of its acquisition it would have qualified under this chapter. For the purposes of determining limitations contained in this chapter, an insurer shall give appropriate recognition to any commitments to acquire investments.

(6) (a) An investment held as an admitted asset by an insurer on August 28, 2007, which qualified under this chapter, or chapter 375, shall remain qualified as an admitted asset.

(b) Each specific transaction constituting an investment practice of the type described in this chapter that was lawfully entered into by an insurer and was in effect on August 28, 2007, shall continue to be permitted under this chapter until its expiration or termination under its terms, including any expiration or termination after an extension under its terms.

(7) Unless otherwise specified, an investment limitation computed on the basis of an insurer's admitted assets or capital and surplus shall relate to the amount required to be shown on the statutory balance sheet of the insurer most recently required to be filed, annual or last quarter, with the director. Solely for the purposes of computing any limitation based upon admitted assets, the insurer shall deduct from the amount of its admitted assets the amount of the liability recorded on such statutory balance sheet for:

(a) The return of acceptable collateral received in a reverse repurchase transaction or a securities lending transaction;

(b) Cash received in a dollar-roll transaction; and

(c) The amount reported as borrowed money in such statutory balance sheet to the extent not included in paragraph (b) and this paragraph of this subdivision.

(8) An investment qualified, in whole or in part, for acquisition or holding as an admitted asset may be qualified or requalified at the time of acquisition or a later date, in whole or in part, under any section if the relevant conditions contained in the other section are satisfied at the time of the qualification or requalification.

(9) An insurer shall maintain documentation demonstrating that investments were acquired in accordance with this chapter.

(10) An insurer shall not enter into an agreement to purchase securities in advance of their issuance for resale to the public as part of a distribution of the securities by the issuer or otherwise guarantee the distribution, except that an insurer may acquire privately placed securities with registration rights.

(11) Notwithstanding the provisions of this chapter, the director, for good cause, may order an insurer to nonadmit, limit, dispose of, withdraw from, or discontinue an investment or investment practice. The authority of the director under this subsection is in addition to any other authority of the director.

2. (1) Within three months after August 28, 2007, an insurer's board of directors shall adopt a written plan for acquiring and holding investments and for engaging in investment practices that specifies guidelines as to the quality, maturity, and diversification of the investments and other specifications, including investment strategies intended to assure that the investments and investment practices are appropriate for the business conducted by the insurer, its liquidity needs, and its capital and surplus. The board shall review and assess the insurer's technical investment and administrative capabilities and expertise before adopting a written plan concerning an investment strategy or investment practice.

(2) Investments acquired and held under this chapter and section 375.345 shall be acquired and held under the supervision and direction of the board of directors of the insurer. The board of directors shall evidence by formal resolution at least annually that it has determined whether all investments have been made in accordance with delegations, standards, limitations, and investment objectives prescribed by the board or a committee of the board charged with the responsibility to direct its investments.

(3) On no less than a quarterly basis and more often if deemed appropriate, an insurer's board of directors or committee of the board of directors shall:

(a) Receive and review a summary report on the insurer's investment portfolio, its investment activities, and investment practices engaged in under delegated authority in order to determine whether the investment activity of the insurer is consistent with its written plan; and

(b) Review and revise, as appropriate, the written plan.

(4) In discharging its duties under this section, the board of directors shall require that records of any authorization or approvals, other documentation as the board may require, and reports of any action taken under authority delegated under the plan referred to in subsection 1 of this section shall be made available on a regular basis to the board of directors.

(5) In discharging their duties under this section, the directors of an insurer shall perform their duties in good faith and with that degree of care that ordinarily prudent individuals in like positions would use under similar circumstances.

(6) If an insurer does not have a board of directors, all references to the board of directors in sections 376.291 to 376.307 shall be deemed to be references to the governing body of the insurer having authority equivalent to that of a board of directors.

(L. 2007 S.B. 66)

376.294. 1. An insurer shall not directly or indirectly:

(1) Invest in an obligation or security or make a guarantee for the benefit of or in favor of an officer or director of the insurer except as provided in section 376.295;

(2) Invest in an obligation or security, make a guarantee for the benefit of or in favor of, or make other investments in a business entity of which ten percent or more of the voting securities or equity interests are owned directly or indirectly by or for the benefit of one or more officers or directors in the insurer except under a transaction entered into in compliance with section 382.195 or provided in section 376.295;

(3) Engage on its own behalf or through one or more affiliates in a transaction or series of transactions designed to evade the prohibitions of section 375.345 and sections 376.291 to 376.307, or section 376.311;

(4) Invest in a partnership as a general partner, except that an insurer may make an investment as a general partner:

(a) If all other partners in the partnership are subsidiaries of the insurer or other insurance company affiliates of the insurer;

(b) For the purpose of:

a. Meeting cash calls committed to prior to August 28, 2007;

b. Completing those specific projects or activities of the partnership in which the insurer was a general partner as of August 28, 2007, that had been undertaken as of that date; or

c. Making capital improvements to property owned by the partnership on August 28, 2007, if the insurer was a general partner as of that date; or

(c) In accordance with subdivision (3) of subsection 1 of section 376.293; or

(5) Invest or lend its funds upon the security of shares of its own stock, except as authorized by other provisions of this chapter. However, no such shares shall be admitted assets of the insurer.

2. Subdivision (4) of subsection 1 of this section shall not prohibit a subsidiary or other affiliate of the insurer from becoming a general partner.

(L. 2007 S.B. 66)

376.295. 1. (1) Except as provided in subsection 2 of this section, an insurer shall not without written approval of the director, directly or indirectly:

(a) Make a loan to or other investment in an officer or director of the insurer or a person in which the officer has any direct or indirect financial interest;

(b) Make a guarantee for the benefit of or in favor of an officer or director of the insurer or a person in which the officer or director has any direct or indirect financial interest; or

(c) Enter into an agreement for the purchase or sale of property from or to an officer or director of the insurer or a person in which the officer or director has any direct or indirect financial interest.

(2) For purposes of this section, an officer or director shall not be deemed to have a financial interest by reason of an interest that is held directly or indirectly through the ownership of equity interests representing less than two percent of all outstanding equity interest issued by a person that is a party to the transaction or solely by reason of that individual's position as a director or officer of a person that is a party to the transaction.

(3) This subsection shall not permit an investment that is prohibited by section 376.294.

(4) This subsection shall not apply to a transaction between an insurer and any of its subsidiaries or affiliates that is entered into in compliance with chapter 382, other than a transaction between an insurer and its officer or director.

2. An insurer may, without the prior written approval of the director make:

(1) Policy loans in accordance with the terms of the policy or contract and section 376.306;

(2) Advances to officers or directors for expenses reasonably expected to be incurred in the ordinary course of the insurer's business or guarantees associated with credit or charge cards issued or credit extended for the purpose of financing these expenses;

(3) Loans secured by the principal residence of an existing or new officer of the insurer made in connection with the officer's relocation at the insurer's request if the loans comply with the requirements of section 376.302 and the terms and conditions otherwise are the same as those generally available from unaffiliated third parties;

(4) Loans and advances to officers or directors made in compliance with state or federal law specifically related to the loans and advances by a regulated noninsurance subsidiary or affiliate of the insurer in the ordinary course of business and on terms no more favorable than available to other customers of the entity; and

(5) Secured loans to an existing or new officer of the insurer made in connection with the officer's relocation at the insurer's request, if the loans:

(a) Do not have a term exceeding two years;

(b) Are required to finance mortgage loans outstanding at the same time on the prior and new residences of the officer;

(c) Do not exceed an amount equal to the equity of the officer in the prior residence;

(d) Are required to be fully repaid upon the earlier of the end of the two-year period or the sale of the prior residence.

(L. 2007 S.B. 66)

376.296. The value or amount of an investment acquired or held or an investment practice engaged in under this chapter, unless otherwise specified in this code, shall be the value at which assets of an insurer are required to be reported for statutory accounting purposes as determined in accordance with procedures prescribed in published accounting and valuation standards of the NAIC, including the Purposes and Procedures of the Securities Valuation Office, the Valuation of Securities Manual, the Accounting Practices and Procedures Manual, the Annual Statement Instructions, or any successor valuation procedures officially adopted by the NAIC.

(L. 2007 S.B. 66)

376.297. 1. (1) Except as otherwise specified in this chapter, an insurer shall not acquire an investment directly or indirectly through an investment subsidiary if, as a result of and after giving effect to the investment, the insurer would hold more than three percent of its admitted assets in the investments of all kinds issued, assumed, accepted, insured, or guaranteed by a single person, or five percent of its admitted assets in investments in the voting securities of a depository institution or any company that controls the institution.

(2) The three percent limitation described in subdivision (1) of this subsection shall not apply to the aggregate amounts insured by a single financial guaranty insurer with the highest generic rating issued by a nationally recognized statistical rating organization.

(3) Asset-backed securities shall not be subject to the limitations of subdivision (1) of this subsection; however, an insurer shall not acquire an asset-backed security if as a result of and after giving effect to the investment the aggregate amount of asset-backed securities secured by or evidencing an interest in a single asset or single pool of assets held by a trust or other business entity then held by the insurer would exceed three percent of its admitted assets.

2. (1) An insurer shall not acquire directly or indirectly through an investment subsidiary an investment under sections 376.298, 376.301, and 376.304, or counterparty exposure under subdivision (6) of subsection 2 of section 375.345, if as a result of and after giving effect to the investment:

(a) The aggregate amount of medium and lower grade investments then held by the insurer would exceed twenty percent of its admitted assets;

(b) The aggregate amount of lower grade investments then held by the insurer would exceed ten percent of its admitted assets;

(c) The aggregate amount of investments rated "5" or "6" by the SVO then held by the insurer would exceed three percent of its admitted assets;

(d) The aggregate amount of investments rated "6" by the SVO then held by the insurer would exceed one percent of its admitted assets; or

(e) The aggregate amount of lower grade investments then held by the insurer that receive cash income less than the equivalent yield for treasury issues with a comparative average life would exceed one percent of its admitted assets.

(2) An insurer shall not acquire directly or indirectly through an investment subsidiary an investment under sections 376.298, 376.301, and 376.304, or counterparty exposure under subdivision (6) of subsection 2 of section 375.345, if as a result of and after giving effect to the investment:

(a) The aggregate amount of medium and lower grade investments issued, assumed, accepted, guaranteed, or insured by any one person or as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets then held by the insurer would exceed one percent of its admitted assets; or

(b) The aggregate amount of lower grade investments issued, assumed, accepted, guaranteed, or insured by any one person or as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets then held by the insurer would exceed one-half of one percent of its admitted assets.

(3) If an insurer attains or exceeds the limit of any one rating category referred to in this subsection, the insured shall not thereby be precluded from acquiring investments in other rating categories subject to the specific and multicategory limits applicable to those investments.

3. An insurer shall not acquire directly or indirectly through an investment subsidiary a Canadian investment authorized by this chapter, if as a result of and after giving effect to the investment, the aggregate amount of these investments then held by the insurer would exceed forty percent of its admitted assets or if the aggregate amount of Canadian investments not acquired under subsection 2 of section 376.298 then held by the insurer would exceed twenty-five percent of its admitted assets. However, as to an insurer that is authorized to do business in Canada or that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, the limitations of this section shall be increased by the greater of:

(1) The amount the insurer is required by Canadian law to invest in Canada or to be denominated in Canadian currency; or

(2) One hundred fifteen percent of the amount of its reserves and other obligations under contracts on lives or risks resident or located in Canada.

(L. 2007 S.B. 66)

376.298. 1. Subject to the limitations of subsection 6 of this section and subsection 2 of section 376.297, an insurer may acquire rated credit instruments issued, assumed, guaranteed or issued by:

(1) The United States; or

(2) A government-sponsored enterprise of the United States if the instruments of the government-sponsored enterprise are assumed, guaranteed, or insured by the United States or are otherwise backed or supported by the full faith and credit clause of the United States.

2. Subject to the limitations of subsection 6* of this section and subsection 2 of section 376.297, an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by:

(1) Canada; or

(2) A government-sponsored enterprise of Canada if the instruments of the government-sponsored enterprise are assumed, guaranteed, or insured by Canada or are otherwise backed or supported by the full faith and credit clause of Canada.

An insurer shall not acquire an instrument under this subsection if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer under this subsection would exceed forty percent of its admitted assets.

3. Subject to the limitations of subsection 6 of this section and subsection 2 of section 376.297, an insurer may acquire rated credit instruments excluding asset-backed securities:

(1) Issued by a government money market mutual fund, a class one money market mutual fund, or a class one bond mutual fund;

(2) Issued, assumed, guaranteed, or insured by a government-sponsored enterprise of the United States other than those eligible under subsection 1 of this section;

(3) Issued, assumed, guaranteed, or insured by a state if the instruments are general obligations of the state; or

(4) Issued by a multilateral development bank.

An insurer shall not acquire an instrument of any one fund, any one enterprise or entity, or any one state under this subsection if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer in any one fund, enterprise, entity, or state under this subsection would exceed ten percent of its admitted assets.

4. Subject to the limitations of subsection 6 of this section and section 376.297, an insurer may acquire preferred stocks that are not foreign investments and that meet the requirement of rated credit instruments if as a result of and after giving effect to the investment:

(1) The aggregate amount of preferred stocks then held by the insurer under this subsection does not exceed twenty percent of its admitted assets; and

(2) The aggregate amount of preferred stocks then held by the insurer under this subsection which are not sinking fund stocks or rated "P1" or "P2" by the SVO does not exceed ten percent of its admitted assets.

5. Subject to the limitations of subsection 6 of this section and section 376.297, in addition to those investments eligible under subsections 1 to 4 of this section, an insurer may acquire rated credit instruments that are not foreign investments.

6. An insurer shall not acquire special rated credit instruments under this section if as a result of and after giving effect to the investment the aggregate amount of special rated credit instruments then held by the insurer would exceed five percent of its admitted assets. The director may by rule under section 376.305 identify certain special rated credit instruments that will be exempt from the limitation imposed by this subsection.

(L. 2007 S.B. 66)

*Words "subdivision (6)" appear in original rolls.

376.300. 1. Subject to the limitations of section 376.297, an insurer may acquire equity interests in business entities organized under the laws of any domestic jurisdiction.

2. An insurer shall not acquire an investment under this section if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer under this section would exceed twenty percent of its admitted assets, or except for mutual funds, the amount of equity interests then held by the insurer that are not listed on a qualified exchange would exceed five percent of its admitted assets.

3. An insurer shall not acquire under this section any investment that the insurer may acquire under section 376.302.

4. An insurer shall not short sell equity interests unless the insurer covers the short sale by owning the equity interest or an unrestricted right to the equity interest exercisable within six months of the short sale.

(RSMo 1939 § 6032, A.L. 1943 p. 608, A.L. 1945 p. 995, A.L. 1945 p. 1004, A.L. 1949 p. 305, A.L. 1953 p. 235, A.L. 1961 p. 171, A.L. 1963 p. 492, A.L. 1973 H.B. 111, A.L. 1979 S.B. 322, A.L. 1982 S.B. 726, A.L. 1985 H.B. 823, A.L. 1995 S.B. 170, A.L. 2000 H.B. 1739, A.L. 2005 H.B. 69 merged with S.B. 131, A.L. 2007 S.B. 66)

Prior revision: 1929 § 5921

376.301. 1. (1) Subject to the limitations of section 376.297, an insurer may acquire tangible personal property or equity interest therein located or used wholly or in part within a domestic jurisdiction directly or indirectly through limited partnership interest and general partnership interest not otherwise prohibited by subsection 4 of section 376.294, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments.

(2) Investments acquired under subdivision (1) of this subsection shall be eligible only if:

(a) The property is subject to a lease or other agreement with a person whose rated credit instruments in the amount of the purchase prices of the personal property the insurer could then acquire under section 376.298; and

(b) The lease or other agreement provides the insurer the right to receive rental, purchase, or other fixed payments for this use or purchase of the property and the aggregate value of the payments, together with the estimated residual value of the property at the end of its useful life and the estimated tax benefits to the insurer resulting from ownership of the property shall be adequate to return the cost of the insurer's investment in the property plus a return deemed adequate by the insurer.

2. An insurer shall compute the amount of each investment under this section on the basis of the out-of-pocket purchase price and applicable related expenses paid by the insurer for the investment, net of each borrowing made to finance the purchase price, and expenses to the extent the borrowing is without recourse to the insurer.

3. An insurer shall not acquire an investment under this section if as a result of and after giving effect to the investment the aggregate amount of all investments then held by the insurer under this section would exceed:

(1) Two percent of its admitted assets; or

(2) One-half of one percent of its admitted assets as to any single item of tangible personal property.

4. For purposes of determining compliance with the limitations of section 376.297, investments acquired by an insurer under this section shall be aggregated with those acquired under section 376.298 and each lessee of the property under a lease referred to in this section shall be deemed the issuer of an obligation in the amount of the investment of the insurer in the property determined as provided in subsection 2 of this section.

5. Nothing in this section shall be applicable to tangible personal property lease arrangements between an insurer and its subsidiaries and affiliates under a cost-sharing arrangement or agreement permitted under chapter 382.

(L. 1953 p. 234 §§ 1, 2, A.L. 1967 p. 516, A.L. 2007 S.B. 66)

376.302. 1. (1) Subject to the limitations of section 376.297, an insurer may acquire directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by subsection 4 of section 376.294, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments or obligations secured by mortgages on real estate situated within a domestic jurisdiction, but a mortgage loan which is secured by other than a first lien shall not be acquired under this subdivision unless the insurer is the holder of the first lien. The obligations held by the insurer and any obligations with an equal lien priority shall not at the time of acquisition of the obligation exceed:

(a) Ninety percent of the fair market value of the real estate if the mortgage loan is secured by a purchase money mortgage or like security received by the insurer upon disposition of the real estate;

(b) Eighty percent of the fair market value of the real estate if the mortgage requires immediate scheduled payment in periodic installments of principal and interest and has an amortization period of thirty years or less and periodic payments not less than annually. Each periodic payment shall be sufficient to assure that at all times:

a. The outstanding principal balance of the mortgage loan is not greater than the outstanding principal balance that would be outstanding under a mortgage loan with the same original principal balance and interest rate; and

b. There are equal payments of principal and interest with the same frequency over the same amortization period.

Mortgage loans permitted under this subsection are permitted notwithstanding the fact that they provide for a payment of the principal balance prior to the end of the period of the amortization of the loan. For residential mortgage loans, the eighty percent limitation may be increased to ninety-seven percent if acceptable private mortgage insurance has been obtained; or

(c) Seventy-five percent of the fair market value of the real estate for mortgage loans that do not meet the requirements of paragraph (a) or (b) of this subdivision.

(2) For purposes of subdivision (1) of this subsection, the amount of an obligation required to be included in the calculation of the loan-to-value ratio may be reduced to the extent the obligation is insured by the Federal Housing Administration or guaranteed by the Administrator of Veterans' Affairs, or their successor.

(3) Subject to the limitations of section 376.297, an insurer may acquire directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by subsection 4 of section 376.294, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments or obligations secured by a second mortgage on real estate situated within a domestic jurisdiction other than as authorized in subdivision (1) of this subsection. The obligation held by the insurer shall be the sole second lien priority obligation and shall not at the time of acquisition of the obligation exceed seventy percent of the amount by which the fair market value of the real estate exceeds the amount outstanding under the first mortgage.

(4) A mortgage loan that is held by an insurer under subdivision (6) of subsection 1 of section 376.293 or acquired under this section and is restructured in a manner that meets the requirements of a restructured mortgage loan in accordance with the NAIC Accounting Practices and Procedures Manual or its successor publication shall continue to qualify as a mortgage loan.

(5) Subject to the limitations of section 376.297, credit lease transactions that do not qualify for investment under section 376.298 with the following characteristics shall be exempt from the provisions of subdivision (1) of this subsection:

(a) The loan amortizes over the initial fixed lease term at least in an amount sufficient so that the loan balance at the end of the lease term does not exceed the original appraised value of the real estate;

(b) The lease payments cover or exceed the total debt service over the life of the loan;

(c) A tenant or its affiliated entity whose rated credit instruments have a SVO "1" or "2" designation or a comparable rating from a nationally recognized statistical rating organization recognized by the SVO has a full faith and credit obligation to make the lease payments;

(d) The insurer holds or is the beneficial holder of a first lien mortgage on the real estate;

(e) The expenses of the real estate are passed through to the tenant, excluding exterior structural, parking and heating, ventilation and air conditioning replacement expenses, unless annual escrow contributions from cash flows derived from the lease payments cover the expense shortfall; and

(f) There is a perfected assignment of the rents due under the lease to or for the benefit of the insurer.

2. (1) An insurer may acquire, manage, and dispose of real estate situated in a domestic jurisdiction directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by subsection 4 of section 376.294, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments. The real estate shall be income producing or intended for improvement or development for investment purposes under an existing program in which case the real estate shall be deemed to be income producing.

(2) The real estate may be subject to mortgages, liens, or other encumbrances, and the amount of which shall, to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with subdivisions (2) and (3) of subsection 4 of this section.

3. An insurer may acquire, manage, and dispose of real estate for the convenient accommodation of the insurer's (which may include its affiliates) business operations, including home office, branch office, and field office operations. Such real estate acquired may:

(1) Include excess space for rent to others if the excess space at its fair market value would otherwise be a permitted investment under subsection 2 of this section and is so qualified by the insurer; or

(2) Be subject to one or more mortgage, lien, or other encumbrance, and the amount of which shall, to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with subsection 4 of this section.

For purposes of this subsection, business operations shall not include that portion of real estate used for the direct provision of health care services by an accident and health insurer for its insureds. An insurer may acquire real estate used for these purposes under subsection 2 of this section.

4. An insurer may not acquire an investment:

(1) Under subsection 1 of this section, if as a result of, and after giving effect to the investment, the aggregate amount of all investments then held by the insurer under subsection 1 of this section would not exceed:

(a) One percent of its admitted assets in mortgage loans covering any one secured location;

(b) One-fourth of one percent of its admitted assets in construction loans covering any one secured location; or

(c) Two percent of its admitted assets in construction loans in the aggregate;

(2) Under subsection 2 of this section if as a result of and after giving effect to the investment and any outstanding guarantees made by the insurer in connection with the investment the aggregate amount of investments then held by the insurer under subsection 2 of this section plus the guarantees then outstanding would exceed:

(a) One percent of its admitted assets in one parcel or group of contiguous parcels of real estate, except that this limitation shall not apply to that portion of real estate used for the direct provision of health care services by an accident and health insurer for its insureds, such as hospitals, medical clinics, medical professional buildings, or other health facilities for the purposes of providing health services; or

(b) Fifteen percent of its admitted assets in the aggregate but not more than five percent of its admitted assets in real estate to be improved or developed;

(3) Under subsection 1 or 2 of this section if as a result of and after giving effect to the investment and any guarantees made by the insurer in connection with the investment the aggregate amount of all investments then held by the insurer under subsections 1 and 2 of this section plus the guarantees then outstanding would exceed forty-five percent of its admitted assets. However, an insurer may exceed this limitation by no more than thirty percent of its admitted assets if:

(a) This increased amount is invested only in residential mortgage loans;

(b) The insurer has no more than ten percent of its admitted assets invested in mortgage loans other than residential mortgage loans;

(c) The loan-to-value ratio of each residential mortgage loan does not exceed sixty percent at the time the mortgage loan is qualified under this increased authority and the fair market value is supported by an appraisal no more than two years old prepared by an independent appraiser;

(d) A single mortgage loan qualified under this increased authority does not exceed one-half of one percent of its admitted assets;

(e) The insurer files with the director and receives approval from the director for a plan that is designed to result in a portfolio of residential mortgage loans that is geographically diversified; and

(f) The insurer agrees to file annually with the director records that demonstrate that its portfolio of residential mortgage loans is geographically diversified in accordance with the plan.

The limitations of section 376.297 shall not apply to an insurer's acquisition of real estate under subsection 3 of this section. An insurer shall not acquire real estate under subsection 3 of this section if as a result of and after giving effect to the acquisition the aggregate amount of real estate then held by the insurer under subsection 3 of this section would exceed ten percent of its admitted assets. With the permission of the director, additional amounts of real estate may be acquired under subsection 3 of this section.

(L. 2007 S.B. 66)

376.303. An insurer may enter into securities lending, repurchase, reverse repurchase, and dollar-roll transactions with business entities subject to the following requirements:

(1) The insurer's board of directors shall adopt a written plan that is consistent with the requirements of the written plan under subdivision (1) of subsection 2 of section 376.293 that specifies guidelines and objectives to be followed, such as:

(a) A description of how cash received will be invested or used for general corporate purposes of the insurer;

(b) Operational procedures to manage interest rate risk, counterparty default risk, the conditions under which proceeds from reverse repurchase transactions may be used in the ordinary course of business, and use of acceptable collateral in a manner that reflects the liquidity needs of the transaction; and

(c) The extent to which the insurer may engage in these transactions;

(2) The insurer shall enter into a written agreement for all transactions authorized in this section other than dollar-roll transactions. The written agreement shall require that each transaction terminate no more than one year from its inception or upon the earlier demand of the insurer. The agreement shall be with the business entity counterparty and the agreement may be with an agent acting on behalf of the insurer if the agent is a qualified business entity and if the agreement:

(a) Requires the agent to enter into separate agreements with each counterparty that are consistent with the requirements of this section; and

(b) Prohibits securities lending transactions under the agreement with the agent or its affiliates;

(3) Cash received in a transaction under this section shall be invested in accordance with this chapter and in a manner that recognizes the liquidity needs of the transaction or used by the insurer for its general corporate purpose. So long as the transaction remains outstanding, the insurer, its agent, or custodian shall maintain as to acceptable collateral received in a transaction under this section either physically or through the book entry systems of the Federal Reserve, Depository Trust Company, Participants Trust Company, or other securities depositories approved by the director:

(a) Possession of the acceptable collateral;

(b) A perfected security interest in the acceptable collateral; or

(c) In the case of a jurisdiction outside of the United States, title to or rights of a secured creditor to the acceptable collateral;

(4) The limitations of sections 376.297 and 376.304 shall not apply to the business entity counterparty exposure created by transactions under this section. For purposes of calculations made to determine compliance with this subsection, no effect will be given to the insurer's future obligation to resell securities in the case of a repurchase transaction or to repurchase securities in the case of a reverse repurchase transaction. An insurer shall not enter into a transaction under this section if as a result of and after giving effect to the transaction:

(a) The aggregate amount of securities then loaned, sold to, or purchased from any one business entity counterparty under this section would exceed five percent of its admitted assets. In calculating the amount sold to or repurchased from a business entity counterparty under repurchase or reverse repurchase transactions, effect may be given to netting provisions under a master written agreement; or

(b) The aggregate amount of all securities then loaned, sold to, or purchased from all business entities under this section would exceed forty percent of its admitted assets;

(5) In a dollar-roll transaction, the insurer shall receive cash in an amount at least equal to the market value of the securities transferred by the insurer in the transaction as of the transaction date.

(L. 1955 p. 271 § 1, A.L. 1967 p. 516, A.L. 1971 H.B. 331, A.L. 1985 H.B. 589, A.L. 2007 S.B. 66)

376.304. 1. Subject to the limitations of section 376.297, an insurer may acquire foreign investments or engage in investment practices with persons of or in foreign jurisdictions of substantially the same types as those that an insurer is permitted to acquire under this chapter, other than the type permitted under section 376.311 if as a result and after giving effect to the investment:

(1) The aggregate amount of foreign investments then held by the insurer under this subsection does not exceed twenty percent of the admitted assets; and

(2) The aggregate amount of foreign investments then held by the insurer under this subsection in a single foreign jurisdiction does not exceed ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO "1" or three percent of its admitted assets as to any other foreign jurisdiction.

2. Subject to the limitations of section 376.297, an insurer may acquire investments or engage in investment practice denominated in foreign currencies whether or not they are foreign investments acquired under subsection 1 of this section or additional foreign currency exposure as a result of the termination or expiration of a hedging transaction with respect to investments denominated in a foreign currency if as a result of and after giving effect to the transaction:

(1) The aggregate amount of investments then held by the insurer under this subsection denominated in foreign currencies does not exceed ten percent of its admitted assets; and

(2) The aggregate amount of investments then held by the insurer under this subsection denominated in the foreign currency of a single foreign jurisdiction does not exceed ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO "1" or three percent of its admitted assets as to any other foreign jurisdiction.

3. An investment shall not be considered denominated in a foreign currency if the acquiring insurer enters into one or more contracts in transactions permitted under section 375.345 in which the business entity counterparty agrees to exchange or grants to the insurer the option to exchange all payments made on the foreign currency denominated investment, or amounts equivalent to the payments that are or will be due to the insurer in accordance with the terms of such investment, for United States currency during the period the contract or contracts are in effect to insulate the insurer from loss caused by diminution of the value of payments owed to the insurer due to future changes in currency exchange rates.

4. In addition to investments permitted under subsections 1 to 3 of this section, an insurer that is authorized to do business in a foreign jurisdiction and that has an outstanding insurance, annuity, or reinsurance contract on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction may acquire investments denominated in the currency of that jurisdiction subject to the limitations of section 376.297. However, investments made under this subsection in obligations of foreign governments, their political subdivisions, and government-sponsored enterprises shall not be subject to the limitations of section 376.297 if those investments carry an SVO rating of "1" or "2". The aggregate amount of investments acquired by the insurer under this subsection shall not exceed the greater of:

(1) The amount the insurer is required by the law of the foreign jurisdiction to invest in the foreign jurisdiction; or

(2) One hundred fifteen percent of the amount of its reserves, net of reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.

5. In addition to investments permitted under subsections 1 to 3 of this section, an insurer that is not authorized to do business in a foreign jurisdiction but which has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction may acquire foreign investments respecting that foreign jurisdiction and may acquire investments denominated in the currency of that jurisdiction, subject to the limitations of section 376.297. However, investments made under this subsection in obligations of foreign governments, their political subdivisions, and government sponsored enterprises shall not be subject to the limitations of section 376.297 if those investments carry an SVO rating of "1" or "2". The aggregate amount of investments acquired by the insurer under this subsection shall not exceed one hundred five percent of the amount of its reserves, net of reinsurance, and other obligations under the contracts on lives and risks resident or located in the foreign jurisdiction.

6. Investments acquired under this section shall be aggregated with investments of the same type made under this chapter and in a similar manner for purposes of determining compliance with the limitations, if any, contained in this chapter. Investments in obligations of foreign governments, their political subdivisions, and government sponsored enterprises of these persons, except for those exempted under subsections 4 and 5 of this section, shall be subject to the limitations of section 376.297.

(L. 2007 S.B. 66)

376.305. The director may promulgate rules to implement the provisions of sections 376.291 to 376.307. Any rule or portion of a rule, as that term is defined in section 536.010, that is created under the authority delegated in this section shall become effective only if it complies with and is subject to all of the provisions of chapter 536 and, if applicable, section 536.028. This section and chapter 536 are nonseverable and if any of the powers vested with the general assembly under chapter 536 to review, to delay the effective date, or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2007, shall be invalid and void.

(L. 1957 p. 222 §§ 1, 2, A.L. 1969 H.B. 296, A.L. 1985 H.B. 823, A.L. 2007 S.B. 66)

376.306. A life insurer may lend to a policyholder on the security of the cash surrender value of the policyholder's policy a sum not to exceed the legal reserve that the insurer is required to maintain on the policy.

(L. 2007 S.B. 66)

376.307. 1. Solely for the purpose of acquiring investments that exceed the quantitative limitations of sections 376.297 to 376.304, an insurer may acquire under this subsection an investment or engage in investment practices described in section 376.303, but an insurer shall not acquire an investment, or engage in investment practices described in section 376.303, under this subsection if as a result of and after giving effect to the transaction:

(1) The aggregate amount of investments then held by an insurer under this subsection would exceed three percent of its admitted assets; or

(2) The aggregate amount of investments as to one limitation in sections 376.297 to 376.304 then held by the insurer under this subsection would exceed one percent of its admitted assets.

2. In addition to the authority provided in subsection 1 of this section, an insurer may acquire under this subsection an investment of any kind or engage in investment practices described in section 376.303 that are not specifically prohibited by this chapter without regard to the categories, conditions, standards, or other limitations of sections 376.297 to 376.304 if as a result of and after giving effect to the transaction the aggregate amount of investments then held under this subsection would not exceed the lesser of:

(1) Ten percent of its admitted assets; or

(2) Seventy-five percent of its capital and surplus.

An insurer shall not acquire any investment or engage in any investment practice under this subsection if as a result of and after giving effect to the transaction the aggregate amount of all investments in any one person then held by the insurer under this subsection would exceed three percent of its admitted assets.

3. In addition to the investments acquired under subsections 1 and 2 of this section, an insurer may acquire under this subsection an investment of any kind or engage in investment practices described in section 376.303 that are not specifically prohibited by this chapter without regard to any limitations of sections 376.297 to 376.304 if:

(1) The director grants prior approval;

(2) The insurer demonstrates that its investments are being made in a prudent manner and that the additional amounts will be invested in a prudent manner; and

(3) As a result of and after giving effect to the transaction, the aggregate amount of investments then held by the insurer under this subsection does not exceed the greater of:

(a) Twenty-five percent of its capital and surplus; or

(b) One hundred percent of its capital and surplus less ten percent of its admitted assets.

4. Under this section, an insurer shall not acquire or engage in an investment practice prohibited under section 376.294 or an investment that is a derivative transaction.

(L. 1961 p. 175 § 1, A.L. 1982 S.B. 726, A.L. 2002 H.B. 1518 merged with S.B. 1009, A.L. 2007 S.B. 66)

376.308. No requirement for the making of any investment or holding any asset by an insurer, health services corporation, health maintenance organization or other entity regulated by the department of insurance, financial institutions and professional registration pursuant to chapter 354 or chapters 374 to 385 shall be preempted by the provisions of section 106 of Title I of the federal Secondary Mortgage Market Act of 1984, as codified and may be amended from time to time.

(L. 1991 H.B. 385, et al. § 115)

376.309. 1. As used in this section, "separate account" means an account established by an insurance company, into which any amounts paid to or held by such company under applicable contracts are credited and the assets of which, subject to the provisions of this section, may be invested in such investments as shall be authorized by a resolution adopted by such company's board of directors. The income, if any, and gains and losses, realized or unrealized, on such account shall be credited to or charged against the amounts allocated to such account without regard to other income, gains or losses of the company. If and to the extent so provided under the applicable contracts, that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the company may conduct.

2. Any domestic life insurance company may, after adoption of a resolution by its board of directors, establish one or more separate accounts, and may allocate to such account or accounts any amounts paid to or held by it which are to be applied under the terms of an individual or group contract to provide benefits payable in fixed or in variable dollar amounts or in both.

3. To the extent it deems necessary to comply with any applicable federal or state act, the company may, with respect to any separate account or any portion thereof, provide for the benefit of persons having beneficial interests therein special voting and other rights and special procedures for the conduct of the business and affairs of such separate account or portion thereof, including, without limitation, special rights and procedures relating to investment policy, investment advisory services, selection of public accountants, and selection of a committee, the members of which need not be otherwise affiliated with the company, to manage the business and affairs of such separate account or portion thereof; and the corporate charter of such company shall be deemed amended to authorize the company to do so. The provisions of this section shall not affect existing laws pertaining to the voting rights of such company's policyholders.

4. The amounts allocated to any separate account and the accumulations thereon may be invested and reinvested without regard to any requirements or limitations prescribed by the laws of this state governing the investments of life insurance companies, and the investments in such separate account or accounts shall not be taken into account in applying the investment limitations, including but not limited to quantitative restrictions, otherwise applicable to the investments of the company, except that to the extent that the company's reserve liability with regard to benefits guaranteed as to principal amount and duration, and funds guaranteed as to principal amount or stated rate of interest, is maintained in any separate account, a portion of the assets of such separate account at least equal to such reserve liability shall be, except as the director might otherwise approve, invested in accordance with the laws of this state governing the general investment account of any company. As used herein, the expression "general investment account" shall mean all of the funds, assets and investments of the company which are not allocated in a separate account. The provisions of section 376.170 relating to deposits for registered policies shall not be applicable to funds and investments allocated to separate accounts. No investment in the separate account or in the general investment account of a life insurance company shall be transferred by sale, exchange, substitution or otherwise from one account to another unless, in case of a transfer into a separate account, the transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made or unless the transfer, whether into or from a separate account, is made by a transfer of cash, or by a transfer of other assets having a readily determinable market value, provided that such transfer of other assets is approved by the director and is for assets of equivalent value. Such transfer shall be deemed approved to the extent the assets of a separate account so transferred have been paid to or are being held by the company in connection with a pension, retirement or profit-sharing plan subject to the provisions of the Internal Revenue Code, as amended, and the Employee Retirement Income Security Act of 1974, as amended. The director may withdraw such deemed approval by providing written notice to the company that its financial condition or past practices require such withdrawal. The director may approve other transfers among such accounts if the director concludes that such transfers would be equitable.

5. Unless otherwise approved by the director, assets allocated to a separate account shall be valued at their market value on the date of valuation, or if there is no readily available market, then as provided under the terms of the contract or the rules or other written agreement applicable to such separate account; provided, that the portion of the assets of such separate account at least equal to the company's reserve liability with regard to the guaranteed benefits and funds referred to in subsection 4 of this section, if any, shall be valued in accordance with the rules otherwise applicable to the company's assets.

6. The director shall have the sole and exclusive authority to regulate the issuance and authority to regulate the sale of contracts under which amounts are to be allocated to one or more separate accounts as provided herein, and to issue such reasonable rules, regulations and licensing requirements as the director shall deem necessary to carry out the purposes and provisions of this section; and the companies that issue such contracts shall not be subject to registration with the commissioner of securities. The director may, subject to the provisions of section 374.185, consult and cooperate with the commissioner of securities in investigations arising from the offer and sale of contracts regulated under this section and may request assistance from the commissioner of securities in any proceeding arising from the offer and sale of any such contracts.

7. No domestic life insurance company, and no other life insurance company admitted to transact business in this state, shall be authorized to deliver within this state any contract under which amounts are to be allocated to one or more separate accounts as provided herein until said company has satisfied the director that its condition or methods of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this state. In determining the qualifications of a company requesting authority to deliver such contracts within this state, the director shall consider, among other things:

(1) The history and financial condition of the company;

(2) The character, responsibility and general fitness of the officers and directors of the company; and

(3) In the case of a company other than a domestic company, whether the statutes and regulations of the jurisdiction of its incorporation provide a degree of protection to policyholders and the public which is substantially equal to that provided by this section and the rules and regulations issued thereunder.

8. An authorized life insurance company, whether domestic, foreign or alien, which issues contracts under which amounts are to be allocated to one or more separate accounts as provided herein, and which is a subsidiary of or affiliated through common management or ownership with another life insurance company authorized to do business in this state, may be deemed to have met the provisions of subsection 7 of this section if either it or the parent or affiliated company meets the requirements thereof.

9. If the contract provides for payment of benefits in variable amounts, it shall contain a statement of the essential features of the procedure to be followed by the company in determining the dollar amount of such variable benefits. Any such contract, including a group contract, and any certificate issued thereunder, shall state that such dollar amount may decrease or increase and shall contain on its first page a statement that the benefits thereunder are on a variable basis.

10. Except as otherwise provided in this section, all pertinent provisions of the insurance laws of this state shall apply to separate accounts and contracts relating thereto.

(L. 1963 p. 496 §§ 1 to 4, A.L. 1969 S.B. 42, A.L. 1983 S.B. 42, A.L. 1992 S.B. 831, A.L. 1993 H.B. 709, A.L. 2007 S.B. 66)

376.310. Any life insurance company organized under the laws of another state, and admitted to do business in the state of Missouri, shall have power to invest its capital, reserve and surplus funds in the same manner, to the same extent and in the same investments as are permitted to domestic life insurance companies organized under the laws of this state; provided, that nothing herein contained shall be so construed as to prohibit any such foreign company from investing its capital, reserve and surplus funds as permitted by its charter and the laws of its domiciliary state.

(L. 1945 p. 1012 § 6032A)

376.311. 1. In addition to the investments permitted by other provisions of the laws, the capital reserve and surplus of all life insurance companies of whatever kind and character, organized or doing business pursuant to this chapter, may be invested in an investment pool meeting the requirements set out below, and any other provision of law relating to investments made by life insurance companies.

2. As used in this section, the following terms mean:

(1) "Business entity", a corporation, limited liability company, association, partnership, joint stock company, joint venture, mutual fund trust, or other similar form of business organization, including such an entity when organized as a not-for-profit entity;

(2) "Qualified bank", a national bank, state bank or trust company that at all times is no less than adequately capitalized as determined by the standards adopted by the United States banking regulators and that is either regulated by state banking laws or is a member of the Federal Reserve System.

3. (1) Qualified investment pools shall invest only in investments which an insurer may acquire pursuant to this chapter and other provisions of law. The insurer's proportionate interest in these investments may not exceed the applicable limits of this section and other provisions of law.

(2) An insurer shall not acquire an investment in an investment pool pursuant to this subsection if, after giving effect to the investment, the aggregate amount of investments in all investment pools then held by the insurer would exceed thirty percent of its assets.

(3) For an investment in an investment pool to be qualified pursuant to this chapter, the investment pool shall not:

(a) Acquire securities issued, assumed, guaranteed or insured by the insurer or an affiliate of the insurer;

(b) Borrow or incur any indebtedness for borrowed money, except for securities lending and reverse repurchase transactions;

(c) Lend money or other assets to participants in the pool.

(4) For an investment pool to be qualified pursuant to this chapter, the manager of the investment pool shall:

(a) Be organized pursuant to the laws of the United States or a state and designated as the pool manager in a pooling agreement;

(b) Be the insurer; an affiliated insurer; a business entity affiliated with the insurer; a qualified bank; a business entity registered pursuant to the Investment Advisors Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.) as amended; or, in the case of a reciprocal insurer or interinsurance exchange, its attorney-in-fact.

(5) The pool manager, or an agent designated by the pool manager, shall compile and maintain detailed accounting records setting forth:

(a) The cash receipts and disbursements reflecting each participant's proportionate investment in the investment pool;

(b) A complete description of all underlying assets of the investment pool including amount, interest rate, maturity date (if any) and other appropriate designations; and

(c) Other records which, on a daily basis, allow third parties to verify each participant's investments in the investment pool.

(6) The pool manager shall maintain the assets of the investment pool in one or more custody accounts, in the name of or on behalf of the investment pool, under one or more custody agreements with a qualified bank. Each custody agreement shall:

(a) State and recognize the claims and rights of each participant;

(b) Acknowledge that the underlying assets of the investment pool are held solely for the benefit of each participant in proportion to the aggregate amount of its investments in the investment pool; and

(c) Contain an agreement that the underlying assets of the investment pool shall not be commingled with the general assets of the qualified bank or any other person.

(7) The pooling agreement for each investment pool shall be in writing and shall provide that:

(a) An insurer and its affiliates shall, at all times, hold one hundred percent of the interests in the investment pool;

(b) The underlying assets of the investment pool shall not be commingled with the general assets of the pool manager or any other person;

(c) The aggregate amount of each pool participant's interest in the investment pool shall be in proportion to:

a. Each participant's undivided interest in the underlying assets of the investment pool; and

b. The underlying assets of the investment pool held solely for the benefit of each participant;

(d) A participant or, in the event of the participant's insolvency, bankruptcy or receivership, its trustee, receiver, conservator or other successor-in-interest may withdraw all or any portion of its investment from the investment pool under the terms of the pooling agreement;

(e) Withdrawals may be made on demand without penalty or other assessment on any business day, but settlement of funds shall occur within a reasonable and customary period thereafter, provided:

a. In the case of publicly traded securities, settlement shall not exceed five business days; and

b. In the case of all other securities and investments, settlement shall not exceed ten business days.

Distributions pursuant to this paragraph shall be calculated in each case net of all then applicable fees and expenses of the investment pool.

(8) The pooling agreement shall provide that the pool manager shall distribute to a participant, at the discretion of the pool manager:

(a) In cash, the then fair market value of the participant's pro rata share of each underlying asset of the investment pool; or

(b) In-kind, a pro rata share of each underlying asset; or

(c) In a combination of cash and in-kind distributions, a pro rata share in each underlying asset;

(9) The pool manager shall make the records of the investment pool available for inspection by the director.

4. The pooling agreement and any other arrangements or agreements relating to an investment pool, and any amendments thereto, shall be submitted to the department of insurance, financial institutions and professional registration for prior approval pursuant to section 382.195. Individual financial transactions between the pool and its participants in the ordinary course of the investment pool's operations shall not be subject to the provisions of section 382.195. Investment activities of pools and transactions between pools and participants shall be reported annually in the registration statement required by section 382.100.

(L. 1997 H.B. 793, A.L. 2002 H.B. 1568 merged with S.B. 1009)

376.330. Any company organized under the laws of this state, or doing in this state any business mentioned in section 376.010, may at any time change the securities in which its capital or any part thereof is invested, whether the same are deposited with the director of the department of insurance, financial institutions and professional registration or elsewhere, for any other securities; provided, that the amount or value of the securities required by sections 376.010 to 376.670 to be deposited with said director shall in no case be diminished or impaired.

(RSMo 1939 § 5827)

Prior revisions: 1929 § 5716; 1919 § 6127; 1909 § 6921

376.350. 1. It shall be the duty of the president or vice president and secretary or actuary, or a majority of the directors, of every life assurance company organized pursuant to sections 376.010 to 376.670 or pursuant to the laws of this state, or any such company incorporated by or organized pursuant to the laws of the United States or any other state, and doing business in this state, annually, on the first day of January, or within sixty days thereafter, to prepare under oath, and deposit in the office of the director of the department of insurance, financial institutions and professional registration, a statement made up for the year ending the thirty-first day of December next preceding, showing:

(1) The number of policies issued during the year;

(2) The amount of assurance effected thereby;

(3) The amount of premiums received during the year;

(4) The amount received for interest, and all other receipts during the year, classifying the items;

(5) The amount of losses paid during the year;

(6) The amount of losses unpaid, giving the reason for such nonpayment;

(7) The amount of expenses, classifying the items;

(8) The whole number of policies in force, specifying the description;

(9) The amount of liabilities or risks thereon, and of all other liabilities;

(10) The amount of capital stock and how invested;

(11) The amount of assets other than capital, specifying the particular sources from whence they have been derived, and the manner in which they are invested, and what amount is invested in real estate, in stocks, promissory notes and other securities, and what amount is loaned on bonds and mortgages, or deeds of trust, stocks, policies of the company and other securities, specifying the kinds and amounts;

(12) The amount of dividend declared to stockholders and policyholders, respectively, and how much remains unpaid; and

(13) A statement of any other facts or information concerning the affairs of said company which may be required by the director.

2. Notwithstanding any other provision of law to the contrary, information regarding compensation of any employee or officer contained within a statement required to be filed pursuant to this section shall not be subject to disclosure to any person other than employees of the department.

(RSMo 1939 § 5829, A.L. 2000 S.B. 896)

Prior revisions: 1929 § 5718; 1919 § 6129; 1909 § 6923

376.360. 1. All life insurance companies organized under the laws of this state shall ascertain and distribute annually, and not otherwise, beginning not later than the end of the third policy year, the proportion of any surplus accruing upon every participating policy or contract issued on or after January 1, 1946, entitled as herein provided to share in such surplus. Upon the thirty-first day of December of each year, or as soon thereafter as may be practicable, every such company shall well and truly ascertain the surplus earned by it during the year.

2. After setting aside from such surplus such sums as may be required for the payment of authorized dividends upon the capital stock, if any, such sums as may properly be held for account of outstanding deferred dividend policies, if any, and such sums as may be deemed advisable for the accumulation of a surplus in an amount not exceeding five hundred thousand dollars, or ten percent of its policy reserves and policy liabilities, whichever shall be greater, every such company shall thereupon apportion the remainder of such surplus earnings, if any, derived from participating policies or contracts, as the board of directors charged with the management of the company's affairs may determine, to all policies or contracts entitled to share therein during the full dividend year adopted by the company for such purpose beginning not later than the following July first.

3. Dividends apportioned as aforesaid in the case of a policy or contract, other than an industrial life insurance policy, issued on or after the first day of January, 1946, shall, unless otherwise provided in the policy or contract, be payable upon the anniversary of the policy or contract occurring within the dividend year selected by the company, as aforesaid; and in every case after the first policy or contract year such dividend shall be payable upon the sole condition that the premium payments of the policy or contract year current upon the first day of the dividend year selected by the company, as aforesaid, shall have been completed. Such apportionment in the case of any policy or contract shall not, after the first policy year, be made contingent upon the payment of the whole or any part of the premium for any subsequent year.

4. (1) Except as herein provided, the dividend so apportioned in the case of any participating policy issued on or after the first day of January, 1946, shall, at the option of the person entitled to elect such option, be either

(a) Payable in cash; or

(b) Applicable to the payment of any premium or premiums upon said policy; or

(c) Permitted to accumulate to the credit of the policy or contract at such rate of interest as may be allowed by the company, and with such interest shall be payable upon the maturity of the policy or shall be withdrawable in cash on any anniversary of the date of issue thereof; or

(d) If so provided in the policy, applicable to any paid-up addition thereto.

(2) Unless the insured or owner of the policy notifies the company in writing of his election of one of the foregoing options within the time allowed by the policy, which shall not, in any event, be a period of less than thirty-one days after the dividend apportioned thereto is payable, the effective option shall be that stated in the policy.

5. In case of any extended term or reduced paid-up insurance, the dividends so apportioned, if any, shall be applicable as provided in the policy with the approval of the director of the department of insurance, financial institutions and professional registration. In the case of an individual participating term policy issued on or after the first day of January, 1946, the dividend so apportioned shall, at the option of the policyholder, be paid or applied pursuant to paragraph (a) or (b) of subdivision (1) of subsection 4, or, if the policy so provides, pursuant to paragraph (c) of subdivision (1) of subsection 4. In the case of every individual participating annuity or pure endowment contract the dividend so apportioned shall be applicable, at the election of the holder of such contract, in accordance with the options specified in paragraph (a) or (b) of subdivision (1) of subsection 4, or, if the contract so provides, paragraph (c) of subdivision (1) of subsection 4, if such option is applicable to the type of contract in question. In the case of every individual participating accident or health insurance policy, the dividend so apportioned shall be applicable in accordance with the option specified in paragraph (a) of subdivision (1) of subsection 4. In the case of any participating group insurance policy or of any participating group annuity contract, the dividend so apportioned shall, at the option of the policyholder or holder of the master contract, be applied pursuant to paragraph (a) or (b) of subdivision (1) of subsection 4 above. In the case of participating industrial life insurance policies, paragraphs (a), (b), (c) and (d) of subdivision (1) of subsection 4 shall not be applicable, but the dividends apportioned on such policies shall be distributed annually in such manner as may be determined by the company with the approval of the director of the department of insurance, financial institutions and professional registration.

6. No stock or stock and mutual life insurance company organized under the laws of this state shall issue, on or after January 1, 1946, any participating policy or contract which does not by its terms give the right to participate in the divisible surplus earnings of such company as provided herein. No mutual life insurance company organized under the laws of this state shall issue, on or after January 1, 1946, any policy or contract, except as herein provided, which does not by its terms give the right to participate in the divisible surplus earnings of such company as provided herein.

7. Both participating and nonparticipating policies or contracts may provide that in addition to any rate of interest guaranteed by the issuing company to be paid on deferred payments of the proceeds thereof, additional interest may be paid thereon at such rate as the company may annually declare; and the inclusion of such provision in any nonparticipating policy shall not be deemed to make the policy participating. With this exception, the inclusion in any policy or contract of any provision to the effect that the owner thereof shall participate in the surplus of the company issuing such policy or contract, shall be deemed to make such policy or contract a participating one, except, that nonparticipating policies, which provide that they may be exchanged for or converted to paid-up participating policies after the completion of premium payments of a given term of years, shall not be deemed to be participating policies until participation begins according to the terms of the policy.

8. This section shall not be deemed to require the apportionment or distribution of dividends on any immediate annuity contract, nor on any deferred annuity contract for the period following the period of deferment of annuity payments, in accordance with the provisions of such contract, nor on any policy of accident or health insurance, nor on extended term insurance, or pure endowment or reduced paid-up life or endowment insurance which take effect in the event of default in the payment of a premium on any policy or contract, nor on any paid-up additions purchased by dividends, nor on any contract or agreement of reinsurance.

(RSMo 1939 § 5830, A.L. 1945 p. 1001)

Prior revisions: 1929 § 5719; 1919 § 6130; 1909 § 6924

376.370. 1. The director of the department of insurance, financial institutions and professional registration shall annually value, or cause to be valued, the reserve liabilities, herein called "reserves", for all outstanding life insurance policies and annuities and pure endowment contracts of every life insurance company doing business in this state, and may certify the amount of any such reserves, specifying the mortality table or tables, rate or rates of interest and methods, net level premium method or other, used in the calculation of such reserves. In calculating such reserves, he may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves herein required of any foreign or alien company, he may accept any valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standard herein provided and if the official of such state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the director when such certificate states the valuation to have been made in a specified manner according to which the aggregate reserves would be at least as large as if they had been computed in the manner prescribed by the law of that state or jurisdiction.

2. Reserves for all policies and contracts issued prior to August 28, 1993, may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by the laws in effect immediately prior to such date. Reserves for any category of policies, contracts or benefits as established by the director, issued on or after August 28, 1993, may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard herein provided, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided therein. Any such company which at any time shall have adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard herein provided may, with the approval of the director, adopt any lower standard of valuation, but not lower than the minimum herein provided; however, for purposes of this subsection, the holding of additional reserves previously determined by a qualified actuary to be necessary to render the opinion required by subsection 4 of section 376.380 shall not be deemed to be the adoption of a higher standard of valuation.

(RSMo 1939 § 5831, A.L. 1943 p. 596, A.L. 1947 V. I p. 335, A.L. 1961 p. 176, A.L. 1993 H.B. 709)

Prior revisions: 1929 § 5720; 1919 § 6131; 1909 § 6925

376.380. 1. The legal minimum standard for valuation of policies and contracts and the reserves to be maintained thereon shall be as follows:

(1) For those policies and contracts issued prior to the operative date provided in subsection 14 of section 376.670:

(a) Except as otherwise provided in subdivision (3) of this subsection, the legal minimum standard for valuation of policies of life insurance or annuity contracts issued prior to April 13, 1934, shall be the Actuaries' or Combined Experience Table of Mortality, with interest at the rate of five percent per annum for group annuity contracts and four percent per annum for all other policies and contracts; and for policies of life insurance and annuity contracts issued on and after April 13, 1934, such minimum standard shall be the American Experience Table of Mortality with interest at the rate of five percent per annum for group annuity contracts and three and one-half percent per annum for all other policies and contracts;

(b) The director may vary the legal minimum standards of interest and mortality for annuity contracts and in particular cases of invalid or substandard lives and other extra hazards, and shall have the right and authority to designate the legal minimum standard for valuation of total and permanent disability benefits and additional accidental death benefits;

(c) Policies issued by companies doing business in this state may provide for not more than one year preliminary term insurance by incorporating in the provisions thereof, specifying the premium consideration to be received, a clause plainly showing that the first year's insurance under such policies is term insurance, purchased by the whole or a part of the premium to be received during the first policy year and shall be valued accordingly; provided, that if the premium charged for term insurance under a limited payment life preliminary term policy providing for the payment of all premiums thereon in less than twenty years from the date of the policy, or under an endowment preliminary term policy, exceeds that charged for life insurance twenty payment life preliminary term policies of the same company, the reserve thereon at the end of any year, including the first, shall not be less than the reserve on a twenty payment life preliminary term policy issued in the same year and at the same age, together with an amount which shall be equivalent to the accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium payment period equal to the difference between the value at the end of such period of such twenty payment life preliminary term policy and the full reserve at such time of such a limited payment life or endowment policy. The premium payment period is the period during which premiums are concurrently payable under such twenty payment life preliminary term policy and such limited payment life or endowment policy;

(d) Reserves for all such policies and contracts may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by subdivision (1) of this subsection. In the case of policy obligations of an insolvent life insurance company assumed or reinsured in bulk by an insurance company upon a basis requiring a separate accounting of the business and assets of such insolvent company and an application of any part of the earnings therefrom upon obligations which are not implicit in the original terms of the policies or contracts assumed or reinsured, the director, in order to protect all policyholders of the reinsuring company, including the holders of all policies so assumed or reinsured, and to safeguard the future solvency of such reinsuring company, shall have the right and authority to designate standards of valuation for such reinsured policies and contracts which will produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by subdivision (1) of this subsection or the terms and provisions of the policies and contracts so assumed or reinsured, and, in such event, such reinsuring company shall not, thereafter, adopt any lower standards of valuation without the approval of the director.

(2) For those policies and contracts issued on or after the operative date provided in subsection 14 of section 376.670:

(a) Except as otherwise provided in subdivision (3) of this subsection and subsection 2 of this section, the minimum standard for the valuation of all such policies and contracts shall be the commissioners reserve valuation methods defined in paragraphs (b), (c), (d), (e), and (h) of this subdivision, three and one-half percent interest on all such policies and contracts except those contracts specified in subparagraph c. of paragraph (a) of this subdivision which consist of single premium annuity contracts and in subparagraph d. of paragraph (a) of this subdivision which consists of group annuity contracts where the interest rate shall be five percent, and except policies and contracts, other than annuity and pure endowment contracts, issued on or after September 28, 1975, where the interest rate shall be four percent interest for such policies issued prior to September 28, 1979, and four and one-half percent interest for such policies issued on or after September 28, 1979, and the following tables:

a. For all ordinary policies of life insurance issued prior to the operative date provided in subsection 10 of section 376.670 on the standard basis, excluding any disability and accidental death benefits in such policies, the Commissioners 1941 Standard Ordinary Mortality Table, and for such policies issued on or after the operative date provided in subsection 10 of section 376.670, and prior to the operative date of subsection 10b of section 376.670, the Commissioners 1958 Standard Ordinary Mortality Table; provided that for any category of such policies issued on or after September 28, 1979, on female risks all modified net premiums and present values referred to in this section may be calculated according to an age not more than six years younger than the actual age of the insured; and for such policies issued on or after the operative date of subsection 10b of section 376.670:

i. The Commissioners 1980 Standard Ordinary Mortality Table; or

ii. At the election of the company for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors; or

iii. Any ordinary mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such policies;

b. For all industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in such policies, the 1941 Standard Industrial Mortality Table for such policies issued prior to the operative date of subsection 10a of section 376.670 and for such policies issued on or after such operative date, the Commissioners 1961 Standard Industrial Mortality Table or any industrial mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such policies;

c. For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the 1937 Standard Annuity Mortality Table or, at the option of the company, the Annuity Mortality Table for 1949, Ultimate, or any modification of either of these tables approved by the director;

d. For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the Group Annuity Mortality Table for 1951, any modification of such table approved by the director, or, at the option of the company, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts;

e. For total and permanent disability benefits in or supplementary to ordinary policies or contracts, for policies or contracts issued on or after January 1, 1966, the tables of period two disablement rates and the 1930 to 1950 termination rates of the 1952 disability study of the Society of Actuaries, with due regard to the type of benefit or any tables of disablement rates and termination rates, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such policies; for policies or contracts issued on or after January 1, 1961, and prior to January 1, 1966, either such tables or at the option of the company, the Class (3) Disability Table (1926); and for policies issued prior to January 1, 1961, the Class (3) Disability Table (1926). Any such table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies;

f. For accidental death benefits in or supplementary to policies issued on or after January 1, 1966, the 1959 Accidental Death Benefits Table or any accidental death benefits table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such policies; for policies issued on or after January 1, 1961, and prior to January 1, 1966, either such table or, at the option of the company, the Inter-Company Double Indemnity Mortality Table; and for policies issued prior to January 1, 1961, the Inter-Company Double Indemnity Mortality Table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies;

g. For group life insurance, life insurance issued on the substandard basis and other special benefits, such tables as may be approved by the director;

(b) Except as otherwise provided in paragraphs (d), (e), and (h) of this subdivision, reserves according to the commissioners reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such policies, over the then present value of any future modified net premiums therefor. The modified net premiums for any such policy shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then present value of such benefits provided for by the policy and the excess of a. over b., as follows:

a. A net level annual premium equal to the present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due; provided, however, that such net level annual premium shall not exceed the net level annual premium on the nineteen year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of such policy;

b. A net one year term premium for such benefit provided for in the first policy year; provided, that for any life insurance policy issued on or after January 1, 1986, for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the reserve according to the commissioners reserve valuation method as of any policy anniversary occurring on or before the assumed ending date defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than such excess premium shall, except as otherwise provided in paragraph (h) of this subdivision, be the greater of the reserve as of such policy anniversary calculated as described in paragraph (b) of this subdivision and the reserve as of such policy anniversary calculated as described in paragraph (b) of this subdivision, but with:

i. The value defined in subparagraph a. of paragraph (b) being reduced by fifteen percent of the amount of such excess first year premium;

ii. All present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date;

iii. The policy being assumed to mature on such date as an endowment; and

iv. The cash surrender value provided on such date being considered as an endowment benefit. In making the above comparison the mortality and interest bases stated in paragraph (a) of this subdivision and subsection 2 of this section shall be used;

(c) Reserves according to the commissioners reserve valuation method for:

a. Life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums;

b. Group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code, as now or hereafter amended;

c. Disability and accidental death benefits in all policies and contracts; and

d. All other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of paragraph (b) of this subdivision;

(d) Paragraph (e) of this subdivision shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship), or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code, as now or hereafter amended;

(e) Reserves according to the commissioners annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in such contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by such contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of such contract, that become payable prior to the end of such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values;

(f) In no event shall a company's aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, be less than the aggregate reserves calculated in accordance with the method set forth in paragraphs (b), (c), (d), (e), (h) and (i) of this subdivision and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for such policies;

(g) In no event shall the aggregate reserves for all policies, contracts and benefits be less than the aggregate reserves determined by the qualified actuary to be necessary to render the opinion required by subsection 4 of this section;

(h) If in any contract year the gross premium charged by any life insurance company on any policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve thereon but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for such policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for such policy or contract, or the reserve calculated by the method actually used for such policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this section are those standards stated in paragraph (a) of this subdivision and subsection 2 of this section; provided, that for any life insurance policy issued on or after January 1, 1986, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the foregoing provisions of this paragraph shall be applied as if the method actually used in calculating the reserve for such policy were the method described in paragraph (b) of this subdivision. The minimum reserve at each policy anniversary of such a policy shall be the greater of the minimum reserve calculated in accordance with paragraphs (b) and (c) and the minimum reserve calculated in accordance with this paragraph;

(i) In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance or annuity which is of such a nature that the minimum reserves cannot be determined by the methods described in paragraphs (b) to (e) of this subdivision, and paragraph (h) of this subdivision, the reserves which are held under any such plan must:

a. Be appropriate in relation to the benefits and the pattern of premiums for that plan; and

b. Be computed by a method which is consistent with the principles of this section as determined by regulations promulgated by the director.

(3) Except as provided in subsection 2 of this section, the minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the operative date of this subdivision, as defined herein, and for all annuities and pure endowments purchased on or after such operative date under group annuity and pure endowment contracts, shall be the commissioners reserve valuation methods defined in paragraphs (b), (c), (d), and (e) of subdivision (2) of this subsection, and the following tables and interest rates:

(a) For individual annuity and pure endowment contracts issued prior to September 28, 1979, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, or any modification of this table approved by the director, and six percent interest for single premium immediate annuity contracts, and four percent interest for all other individual annuity and pure endowment contracts;

(b) For individual single premium immediate annuity contracts issued on or after September 28, 1979, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, or any individual annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the director, and seven and one-half percent interest;

(c) For individual annuity and pure endowment contracts issued on or after September 28, 1979, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, or any individual annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the director, and five and one-half percent interest for single premium deferred annuity and pure endowment contracts and four and one-half percent interest for all other such individual annuity and pure endowment contracts;

(d) For all annuities and pure endowments purchased prior to September 28, 1979, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table, or any modification of this table approved by the director, and six percent interest;

(e) For all annuities and pure endowments purchased on or after September 28, 1979, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table, or any group annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such annuities and pure endowments, or any modification of these tables approved by the director, and seven and one-half percent interest;

(f) On and after September 28, 1975, any company may file with the director a written notice of its election to comply with the provisions of this subdivision after a specified date before January 1, 1980, which shall be the operative date of this subdivision for such company, provided a company may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If a company makes no such election, the operative date of this subdivision for such company shall be January 1, 1980.

2. (1) The calendar year statutory valuation interest rates as defined in this subsection shall be the interest rates used in determining the minimum standard for the valuation of:

(a) All life insurance policies issued in a particular calendar year, on or after the operative date of subsection 10b of section 376.670;

(b) All individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1983;

(c) All annuities and pure endowment contracts purchased in a particular calendar year on or after January 1, 1983, under group annuity and pure endowment contracts; and

(d) The net increase, if any, in a particular calendar year after January 1, 1983, in amounts held under guaranteed interest contracts.

(2) The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearer one-quarter of one percent:

(a) For life insurance:

I =.03 + W (R1 -.03) + W/2 (R2 -.09);

(b) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options:

I =.03 + W (R -.03), where R1 is the lesser of R and .09; R2 is the greater of R and .09; R is the reference interest rate defined in this subsection; and W is the weighting factor defined in this subsection;

(c) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in paragraph (b) of this subdivision, the formula for life insurance stated in paragraph (a) of this subdivision shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of ten years and the formula for single premium immediate annuities stated in paragraph (b) of this subdivision shall apply to annuities and guaranteed interest contracts with guarantee durations of ten years or less;

(d) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in paragraph (b) of this subdivision shall apply;

(e) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in paragraph (b) of this subdivision shall apply. If the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than one-half of one percent, the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980 (using the reference interest rate defined for 1979) and shall be determined for each subsequent calendar year regardless of when subsection 10b of section 376.670 becomes operative.

(3) The weighting factors referred to in the formulas stated in subdivision (2) of this subsection are given in the following tables:

(a) Weighting factors for life insurance:

Guarantee Weighting

Duration Factors

(Years)

10 or less .50

More than 10, but not more than 20 .45

More than 20 .35 For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy;

(b) Weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options: .80;

(c) Weighting factors for other annuities and for guaranteed interest contracts, except as stated in paragraph (b) of this subdivision, shall be as specified in subparagraphs a., b., and c. of this paragraph, according to the rules and definitions in subparagraphs d., e., and f. of this paragraph:

a. For annuities and guaranteed interest contracts valued on an issue year basis: Guarantee Weighting Factor Duration for Plan Type (Years) A B C 5 or less: .80 .60 .50 More than 5, but not more than 10: .75 .60 .50 More than 10, but not more than 20: .65 .50 .45 More than 20:

.45 .35 .35;

b. For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in subparagraph a. of this paragraph increased by:

Plan Type

A B C

.15 .25 .05 ;

c. For annuities and guaranteed interest contracts valued on an issue year basis (other than those with no cash settlement options) which do not guarantee interest on considerations received more than one year after issue or purchase and for annuities and guaranteed interest contracts valued on a change in fund basis which do not guarantee interest rates on considerations received more than twelve months beyond the valuation date, the factors shown in subparagraph a. of this paragraph or derived in subparagraph b. of this paragraph increased by:

Plan Type

A B C

.05 .05 .05;

d. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of twenty years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence;

e. Plan type as used in subparagraphs a., b., and c. of this paragraph is defined as follows:

Plan Type A: At any time policyholder may withdraw funds only with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or without such adjustment but in installments over five years or more, or as an immediate life annuity, or no withdrawal permitted;

Plan Type B: Before expiration of the interest rate guarantee, policyholder may withdraw funds only with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or without such adjustment but in installments over five years or more, or no withdrawal permitted. At the end of interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over fewer than five years;

Plan Type C: Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over fewer than five years either without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund;

f. A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue year basis. As used in this subsection an issue year basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and the change in fund basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.

(4) The "reference interest rate" referred to in subdivision (2) of this subsection shall be defined as follows:

(a) For all life insurance, the lesser of the average over a period of thirty-six months and the average over a period of twelve months, ending on June thirtieth of the calendar year next preceding the year of issue, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.;

(b) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of twelve months, ending on June thirtieth of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.;

(c) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in paragraph (b) of this subdivision, with guarantee duration in excess of ten years, the lesser of the average over a period of thirty-six months and the average over a period of twelve months, ending on June thirtieth of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.;

(d) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in paragraph (b) of this subdivision, with guarantee duration of ten years or less, the average over a period of twelve months, ending on June thirtieth of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.;

(e) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over a period of twelve months, ending on June thirtieth of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.;

(f) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as stated in paragraph (b) of this subdivision, the average over a period of twelve months, ending on June thirtieth of the calendar year of the change in the fund, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.

(5) In the event that the Monthly Average of the Composite Yield on Seasoned Corporate Bonds is no longer published by Moody's Investors Service, Inc., or in the event that the National Association of Insurance Commissioners determines that the Monthly Average of the Composite Yield on Seasoned Corporate Bonds as published by Moody's Investors Service, Inc., is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate, which is adopted by the National Association of Insurance Commissioners and approved by regulation promulgated by the director, may be substituted.

3. The director shall promulgate a regulation containing the minimum standards applicable to the valuation of health, disability and sickness and accident plans.

4. (1) Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the director by regulation are computed appropriately, are based on assumptions which satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The director by regulation shall define the specifics of this opinion and add any other items deemed to be necessary to its scope.

(2) (a) Every life insurance company, except as exempted by or pursuant to regulation, shall also annually include in the opinion required by subdivision (1) of this subsection, an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the director by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including but not limited to the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including but not limited to the benefits under and expenses associated with the policies and contracts.

(b) The director may provide by regulation for a transition period for establishing any higher reserves which the qualified actuary may deem necessary in order to render the opinion required by this subsection.

(3) Each opinion required by subdivision (2) of this subsection shall be governed by the following provisions:

(a) A memorandum, in form and substance acceptable to the director as specified by regulation, shall be prepared to support each actuarial opinion; and

(b) If the insurance company fails to provide a supporting memorandum at the request of the director within a period specified by regulation or the director determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the regulations or is otherwise unacceptable to the director, the director may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare such supporting memorandum as is required by the director.

(4) Every opinion shall be governed by the following provisions:

(a) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 1993;

(b) The opinion shall apply to all business in force including individual and group health insurance plans, in form and substance acceptable to the director as specified by regulation;

(c) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on such additional standards as the director may by regulation prescribe;

(d) In the case of an opinion required to be submitted by a foreign or alien company, the director may accept the opinion filed by that company with the insurance supervisory official of another state if the director determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state;

(e) For the purposes of this section, "qualified actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in such regulations;

(f) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurance company and the director, for any act, error, omission, decision or conduct with respect to the actuary's opinion;

(g) Disciplinary action by the director against the company or the qualified actuary shall be defined in regulations by the director; and

(h) Any memorandum in support of the opinion, and any other material provided by the company to the director in connection therewith, shall be kept confidential by the director and shall not be made public and shall not be subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required by this section or by regulations promulgated hereunder; except that the memorandum or other material may otherwise be released by the director:

a. With the written consent of the company; or

b. To the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the director for preserving the confidentiality of the memorandum or other material. Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before any governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential.

(RSMo 1939 § 5831, A.L. 1943 p. 596, A.L. 1947 V. I p. 335, A.L. 1959 H.B. 268, A.L. 1961 p. 177, A.L. 1965 p. 577, A.L. 1971 H.B. 506, A.L. 1975 S.B. 116, A.L. 1979 S.B. 325, A.L. 1982 S.B. 469, A.L. 1993 H.B. 709)

Prior revisions: 1929 § 5720; 1919 § 6131; 1909 § 6925

376.383. 1. For purposes of this section and section 376.384, the following terms shall mean:

(1) "Claimant", any individual, corporation, association, partnership or other legal entity asserting a right to payment arising out of a contract or a contingency or loss covered under a health benefit plan as defined in section 376.1350;

(2) "Clean claim", a claim that has no defect, impropriety, lack of any required substantiating documentation, or particular circumstance requiring special treatment that prevents timely payment;

(3) "Deny" or "denial", when the health carrier refuses to reimburse all or part of the claim;

(4) "Health care provider", health care provider as defined in section 376.1350;

(5) "Health care services", health care services as defined in section 376.1350;

(6) "Health carrier", health carrier as defined in section 376.1350 and any self-insured health plan, to the extent allowed by federal law; except that health carrier shall not include a workers' compensation carrier providing benefits to an employee pursuant to chapter 287. For the purposes of this section and section 376.384, third-party contractors are health carriers;

(7) "Processing days", number of days the health carrier or any of its agents, subsidiaries, contractors, subcontractors, or third-party contractors has the claim in its possession. Processing days shall not include days in which the health carrier is waiting for a response to a request for additional information from the claimant;

(8) "Request for additional information", a health carrier's electronic or facsimile request for additional information from the claimant specifying all of the documentation or information necessary to process all of the claim, or all of the claim on a multi-claim form, as a clean claim for payment;

(9) "Third-party contractor", a third party contracted with the health carrier to receive or process claims for reimbursement of health care services.

2. Within forty-eight hours after receipt of an electronically filed claim by a health carrier or a third-party contractor, a health carrier shall send an electronic acknowledgment of the date of receipt.

3. Within thirty processing days after receipt of a filed claim by a health carrier or a third-party contractor, a health carrier shall send an electronic or facsimile notice of the status of the claim that notifies the claimant:

(1) Whether the claim is a clean claim as defined under this section; or

(2) The claim requires additional information from the claimant.

If the claim is a clean claim, then the health carrier shall pay or deny the claim. If the claim requires additional information, the health carrier shall include in the notice a request for additional information. If a health carrier pays the claim, this subsection shall not apply.

4. Within ten processing days after receipt of additional information by a health carrier or a third-party contractor, a health carrier shall pay the claim or any undisputed part of the claim in accordance with this section or send an electronic or facsimile notice of receipt and status of the claim:

(1) That denies all or part of the claim and specifies each reason for denial; or

(2) That makes a final request for additional information.

5. Within five processing days after the day on which the health carrier or a third-party contractor receives the additional requested information in response to a final request for information, it shall pay the claim or any undisputed part of the claim or deny the claim.

6. If the health carrier has not paid the claimant on or before the forty-fifth processing day from the date of receipt of the claim, the health carrier shall pay the claimant one percent interest per month and a penalty in an amount equal to one percent of the claim per day. The interest and penalty shall be calculated based upon the unpaid balance of the claim as of the forty-fifth processing day. The interest and penalty paid pursuant to this subsection shall be included in any late reimbursement without the necessity for the person that filed the original claim to make an additional claim for that interest and penalty. A health carrier may combine interest payments and make payment once the aggregate amount reaches one hundred dollars. Any claim which has been properly denied before the forty-fifth processing day under this section and section 376.384 shall not be subject to interest or penalties. Such interest and penalties shall cease to accrue on the day after a petition is filed in a court of competent jurisdiction to recover payment of such claim. Upon a finding by a court of competent jurisdiction that the health carrier failed to pay a claim, interest, or penalty without good cause, the court shall enter judgment for reasonable attorney fees for services necessary for recovery. Upon a finding that a health care provider filed suit without reasonable grounds to recover a claim, the court shall award the health carrier reasonable attorney fees necessary to the defense.

7. The department of insurance, financial institutions and professional registration shall monitor denials and determine whether the health carrier acted reasonably.

8. If a health carrier or third-party contractor has reasonable grounds to believe that a fraudulent claim is being made, the health carrier or third-party contractor shall notify the department of insurance, financial institutions and professional registration of the fraudulent claim pursuant to sections 375.991 to 375.994.

9. Denial of a claim shall be communicated to the claimant and shall include the specific reason why the claim was denied. Any claim for which the health carrier has not communicated a specific reason for the denial shall not be considered denied under this section or section 376.384.

10. Requests for additional information shall specify all of the documentation and additional information that is necessary to process all of the claim, or all of the claims on a multi-claim form, as a clean claim for payment. Information requested shall be reasonable and pertain solely to the health carrier's liability. The health carrier shall acknowledge receipt of the requested additional information to the claimant within five calendar days or pay the claim.

(L. 1998 H.B. 1302 § 7, A.L. 2001 H.B. 328 & 88, A.L. 2010 H.B. 1498)

Effective 1-01-11

376.384. 1. All health carriers shall:

(1) Permit nonparticipating health care providers to file a claim for reimbursement for a health care service provided in this state as defined in section 376.1350 for a period of up to one year from the date of service;

(2) Permit participating health care providers to file a claim for reimbursement for a health care service provided in this state for a period of up to six months from the date of service, unless the contract between the health carrier and health care provider specifies a different standard;

(3) Not request a refund or offset against a claim more than twelve months after a health carrier has paid a claim except in cases of fraud or misrepresentation by the health care provider;

(4) Issue within one working day a confirmation of receipt of an electronically filed claim.

2. On or after January 1, 2003, all claims for reimbursement for a health care service provided in this shall be submitted in an electronic format consistent with federal administrative simplification standards adopted pursuant to the Health Insurance Portability and Accountability Act of 1996. Any claim submitted by a health care provider after January 1, 2003, in a nonelectronic format shall not be subject to the provisions of section 376.383. Any health carrier shall provide readily accessible electronic filing after this date to health care providers.

3. On or after January 1, 2002, the director of the department of insurance, financial institutions and professional registration shall monitor health carrier compliance with the provisions of this section and section 376.383. Examinations, which may be based upon statistical samplings, to determine compliance may be conducted by the department or the director may contract with a qualified private entity. Compliance shall be defined as properly processing and paying ninety-five percent of all claims received in a given calendar year in accordance with the provisions of this section and section 376.383. The director may assess an administrative penalty in addition to the penalties outlined in section 376.383 of up to twenty-five dollars per claim for the percentage of claims found to be in noncompliance, but not to exceed an annual aggregate penalty of two hundred fifty thousand dollars, for any health carrier deemed to be not in* compliance with this section and section 376.383. Any penalty assessed pursuant to this subsection shall be assessed in addition to penalties provided for pursuant to sections 375.942 and 375.1012.

4. If the director finds that health carriers are failing to make interest payments to health care professionals authorized by section 376.383, the director is authorized to order such health carriers to remit such interest payments. The director is also authorized to assess a monetary penalty, payable to the state of Missouri, in a sum not to exceed twenty-five percent of the unpaid interest payment against health carriers.

5. A health carrier may request a waiver of the requirements of this section and section 376.383 if the basis for the request is an act of God or other good cause as determined by the director.

6. The director shall develop a method by which health care providers may submit complaints to the department identifying violations of this section and section 376.383 by a health carrier. The director shall consider such complaints when determining whether to examine a health carrier's compliance. Prior to filing a complaint with the department, health care providers who believe that a health carrier has not paid a claim in accordance with this section and section 376.383 shall first contact the health carrier to determine the status of the claim to ensure that sufficient documentation supporting the claim has been provided and to determine whether the claim is considered to be complete. Complaints to the department regarding the payment of claims by a health carrier should contain information such as:

(1) The health care provider's name, address, and daytime phone number;

(2) The health carrier's name;

(3) The dates of service and the dates the claims were filed with the health carrier;

(4) Relevant correspondence between the health care provider and the health carrier, including requests from the health carrier for additional information; and

(5) Additional information which the health care provider believes would be of assistance in the department's review.

7. On or after January 1, 2003, all claims submitted electronically for reimbursement for a health care service provided in this state shall be submitted in a uniform format utilizing standard medical code sets. The uniform format and the standard medical code sets shall be promulgated by the department of insurance, financial institutions and professional registration through rules consistent with but no more stringent than the federal administrative simplification standards adopted pursuant to the Health Insurance Portability and Accountability Act of 1996.

8. The department shall have authority to promulgate rules for the implementation of section 376.383 and this section. Any rule or portion of a rule, as that term is defined in section 536.010, that is created under the authority delegated in this section shall become effective only if it complies with and is subject to all of the provisions of chapter 536 and if applicable, sections 536.028. This section and chapter 536 are nonseverable and if any of the powers vested with the general assembly pursuant to chapter 536 to review, to delay the effective date or to disapprove and annul a rule subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2001, shall be invalid and void.

(L. 2001 H.B. 328 & 88)

Effective 1-01-02

*Word "it" appears in original rolls.

376.385. 1. Each entity offering individual and group health insurance policies providing coverage on an expense-incurred basis, individual and group service or indemnity type contracts issued by a health services corporation, individual and group service contracts issued by a health maintenance organization, all self-insured group arrangements, to the extent not preempted by federal law, and all managed health care delivery entities of any type or description, that are delivered, issued for delivery, continued or renewed in this state on or after January 1, 1998, shall offer coverage for all physician-prescribed medically appropriate and necessary equipment, supplies and self-management training used in the management and treatment of diabetes. Coverage shall include persons with gestational, type I or type II diabetes.

2. Health care services required by this section shall not be subject to any greater deductible or co-payment than any other health care service provided by the policy, contract or plan.

3. No entity enumerated in subsection 1 of this section may reduce or eliminate coverage due to the requirements of this section.

4. Nothing in this section shall apply to accident-only, specified disease, hospital indemnity, Medicare supplement, long-term care, or other limited benefit health insurance policies.

(L. 1997 S.B. 24)

376.386. For any health carrier or health benefit plan, as defined in section 376.1350, that provides prescription drug coverage, if a prescription drug covered by a health carrier or health benefit plan is prescribed in a single dosage amount for which the particular prescription drug is not manufactured in such single dosage amount and requires dispensing the particular prescription drug in a combination of different manufactured dosage amounts, the health carrier or health benefit plan shall only impose one co-payment for the dispensing of the combination of manufactured dosages that equal the prescribed dosage for such prescription drug. Such co-payment requirement shall not apply to prescriptions in excess of a one-month supply. If technology does not permit such adjudication, the health carrier or health benefit plan shall provide reimbursement forms for the patient.

(L. 2006 S.B. 567 & 792 § 376.392)

376.390. The reserve liability for group insurance written by any life insurance company doing business in this state shall be computed upon such tables and basis as may be approved by the director of the department of insurance, financial institutions and professional registration.

(RSMo 1939 § 5832, A.L. 1943 p. 596)

Prior revision: 1929 § 5721

376.391. A health benefit plan or health carrier, as defined in section 376.1350, including but not limited to preferred provider organizations, independent physicians associations, third-party administrators, or any entity that contracts with licensed health care providers shall not impose any co-payment that exceeds fifty percent of the total cost of providing any single chiropractic service to its enrollees.

(L. 2009 H.B. 577)

376.392. For any health carrier or health benefit plan, as defined in section 376.1350, that provides prescription drug coverage or contracts with a third-party for prescription drug services, the health carrier or health benefit plan shall notify enrollees presently taking a prescription drug electronically, or in writing, upon request of the enrollee, at least thirty days prior to any deletions, other than generic substitutions, in the health carrier's or health benefit plan's prescription drug formulary that affect such enrollees.

(L. 2007 H.B. 818)

Effective 1-01-08

376.395. As used in sections 376.395 to 376.404 the following terms shall mean:

(1) "Group policy", a group health insurance policy issued by an insurance company and a group contract issued by a health service corporation, a health maintenance organization or a similar corporation or organization;

(2) "Group policyholder", the entity purchasing the group policy from the insurer;

(3) "Individual policy" or "converted policy", an individual health insurance policy issued by an insurance company or an individual health services contract issued by a health service corporation, a health maintenance organization or a similar corporation or organization;

(4) "Insurer", the entity issuing a group policy or an individual or converted policy;

(5) "Medicare", Title XVIII of the United States Social Security Act as added by the Social Security Amendments of 1965 or as later amended or superseded;

(6) "Premium", any premium or other consideration payable for coverage under a group or individual policy.

(L. 1981 S.B. 58 § 1)

Effective 1-1-83

376.397. 1. A group policy delivered or issued for delivery in this state which insures employees or members for hospital, surgical or major medical insurance on an expense incurred or service basis, other than for specific diseases or for accidental injuries only, shall provide that an employee or member whose insurance under the group policy has been terminated shall be entitled to have a converted policy issued to him by the insurer under whose group policy he was insured, without evidence of insurability, subject to the following terms and conditions:

(1) A converted policy need not be made available to an employee or member if termination of his insurance under the group policy occurred:

(a) Because he failed to make timely payment of any required contribution; or

(b) For any other reason, and he had not been continuously covered under the group policy, and for similar benefits under any group policy which it replaced, during the entire three months' period ending with such termination; or

(c) Because the group policy terminated or an employer's participation terminated, and the insurance is replaced by similar coverage under another group policy within thirty-one days of the date of termination;

(2) Written application and the first premium payment for the converted policy shall be made to the insurer not later than thirty-one days after such termination;

(3) The premium for the converted policy shall be determined in accordance with the insurer's table of premium rates applicable to the age and class of risk of each person to be covered under that policy and to the type and amount of insurance provided;

(4) The converted policy shall cover the employee or member and his dependents who were covered by the group policy on the date of termination of insurance. At the option of the insurer, a separate converted policy may be issued to cover any dependent;

(5) The insurer shall not be required to issue a converted policy covering any person if such person is or could be covered by Medicare. Furthermore, the insurer shall not be required to issue a converted policy covering any person if:

(a) Such person is or could be covered for similar benefits by another individual policy; such person is or could be covered for similar benefits under any arrangement of coverage for individuals in a group, whether insured or uninsured; or similar benefits are provided for or available to such person, by reason of any state or federal law; and

(b) The benefits under sources of the kind referred to in paragraph (a) above for such person, or benefits provided or available under sources of the kind referred to in paragraph (a) above for such person, together with the converted policy's benefits would result in overinsurance according to the insurer's standards for overinsurance;

(6) A converted policy may provide that the insurer may at any time request information of any person covered thereunder as to whether he is covered for the similar benefits described in paragraph (a) of subdivision (5) above or is or could be covered for the similar benefits described in paragraph (a) of subdivision (5) above. The converted policy may provide that as of any premium due date the insurer may refuse to renew the policy or the coverage of any insured person for the following reasons only:

(a) Either those similar benefits for which such person is or could be covered, together with the converted policy's benefits, would result in overinsurance according to the insurer's standards for overinsurance, or the policyholder of the converted policy fails to provide the requested information;

(b) Fraud or material misrepresentation in applying for any benefits under the converted policy;

(c) Eligibility of the insured person for coverage under Medicare or under any other state or federal law providing for benefits similar to those provided by the converted policy;

(d) Other reasons approved by the director of the department of insurance, financial institutions and professional registration;

(7) An insurer shall not be required to issue a converted policy providing benefits in excess of the hospital, surgical or major medical insurance under the group policy from which conversion is made;

(8) The converted policy shall not exclude, as a preexisting condition, any condition covered by the group policy; provided, however, that the converted policy may provide for a reduction of its hospital, surgical or medical benefits by the amount of any such benefits payable under the group policy after the individual's insurance terminates thereunder. The converted policy may also provide that during the first policy year the benefits payable under the converted policy, together with the benefits payable under the group policy, shall not exceed those that would have been payable had the individual's insurance under the group policy remained in force and effect;

(9) Subject to the provisions and conditions of sections 376.395 to 376.404, if the group insurance policy from which conversion is made insures the employee or member for basic hospital or surgical expense insurance, the employee or member shall be entitled to obtain a converted policy providing, at his option, coverage on an expense incurred basis under any of the following plans:

(a) Plan A, which shall include:

a. Hospital room and board daily expense benefits in a maximum dollar amount approximating the average semiprivate rate charged in the largest major metropolitan area of this state, for a maximum duration of seventy days;

b. Miscellaneous hospital expense benefits up to a maximum amount of ten times the hospital room and board daily expense benefits; and

c. Surgical expense benefits according to a surgical procedures schedule consistent with those customarily offered by the insurer under group or individual health insurance policies and providing a maximum benefit of eight hundred dollars;

(b) Plan B, which shall be the same as plan A, except that the maximum hospital room and board daily expense benefit is seventy-five percent of the corresponding maximum under subparagraph a of plan A, and the surgical schedule maximum is six hundred dollars;

(c) Plan C, which shall be the same as plan A, except that the maximum hospital room and board daily expense benefit is fifty percent of the corresponding maximum under subparagraph a of plan A, and the surgical schedule maximum is four hundred dollars. The maximum dollar amount for plan A's maximum hospital room and board daily expense benefit shall be determined by the director of the department of insurance, financial institutions and professional registration and may be redetermined by him from time to time as to converted policies issued subsequent to such redetermination. Such redetermination shall not be made more often than once every three years. Such plan A maximum, and the corresponding maximums in plans B and C, shall be rounded to the nearest ten dollar multiple; provided that, rounding may be to the next higher or lower multiple of ten dollars if otherwise exactly midway between two multiples;

(10) Subject to the provisions and conditions of sections 376.395 to 376.404, if the group policy from which conversion is made insures the employee or member for major medical expense insurance, the employee or member shall be entitled to obtain a converted policy providing catastrophic or major medical coverage under a plan meeting the following requirements:

(a) A maximum benefit at least equal to, at the option of the insurer, either:

a. A maximum payment per covered person for all covered medical expenses incurred during that person's lifetime, equal to the smaller of the maximum benefit provided under the group policy or two hundred fifty thousand dollars;

b. A maximum payment for each unrelated injury or sickness, equal to the smaller of the maximum benefit provided under the group policy or two hundred fifty thousand dollars;

(b) Payment of benefits at the rate of eighty percent of covered medical expenses which are in excess of the deductible, until twenty percent of such expenses in a benefit period reaches one thousand dollars, after which benefits will be paid at the rate of one hundred percent during the remainder of such benefit period. Payment of benefits for outpatient treatment of mental illness, if provided in the converted policy, may be at a lesser rate, but not less than fifty percent;

(c) A deductible for each benefit period which, at the option of the insurer, shall be the sum of the benefits deductible plus one hundred dollars, or the corresponding deductible in the group policy. The term "benefits deductible", as used herein, means the value of any benefits provided on an expense incurred basis which are provided with respect to covered medical expenses by any other group or individual hospital, surgical or medical insurance policy or medical practice or other prepayment plan, or any other plan or program, whether insured or uninsured, or by reason of any state or federal law and if, pursuant to subdivision (11) herein, the converted policy provides both basic hospital or surgical coverage and major medical coverage, the value of such basic benefits. If the maximum benefit is determined under subparagraph b of paragraph (a) of this subdivision, the insurer may require that the deductible be satisfied during a period of not less than three months if the deductible is one hundred dollars or less, and not less than six months if the deductible exceeds one hundred dollars;

(d) The benefit period shall be each calendar year when the maximum benefit is determined under subparagraph a of paragraph (a) of this subdivision or twenty-four months when the maximum benefit is determined under subparagraph b of paragraph (a) of this subdivision;

(e) The term "covered medical expenses", as used in this subdivision, shall include at least, in the case of hospital room and board charges, the lesser of the dollar amount set out in plan A under subdivision (9) and the average semiprivate room and board rate for the hospital in which the individual is confined, and at least twice such amount for charges in an intensive care unit. Any surgical procedures schedule shall be consistent with those customarily offered by the insurer under group or individual health insurance policies and must provide at least a one thousand two hundred dollar maximum benefit;

(11) At the option of the insurer, benefit plans set forth in subdivisions (9) and (10) of this section may be provided under one policy or, in lieu of the benefit plans set forth in subdivisions (9) and (10) of this section, the insurer may provide a policy for comprehensive medical expense benefits without first dollar coverage. Such policy shall conform to the requirements of subdivision (10) of this section; provided, however, that an insurer electing to provide such a policy shall make available a low deductible option, not to exceed one hundred dollars, a high deductible option between five hundred dollars and one thousand dollars, and a third deductible option midway between the high and low deductible options. Alternatively, such a policy may provide for deductible options equal to the greater of the benefits deductible and the amount specified in the preceding sentence.

2. (1) The insurer may, at its option, offer alternative plans for converted policies from group policies in addition to those required by sections 376.395 to 376.404. Furthermore, if any insurer customarily offers individual policies on a service basis, that insurer may, in lieu of converted policies on an expense incurred basis, make available converted policies on a service basis which, in the opinion of the director of the department of insurance, financial institutions and professional registration, satisfy the intent of sections 376.395 to 376.404.

(2) Nothing in sections 376.395 to 376.404 shall preclude a health service corporation from limiting its conversion offerings to one of the plans offered by the insurer that is consistent with group policies customarily offered by the health service corporation. The employee or member under the group insurance policy from which conversion is made shall be entitled to obtain one such converted policy.

3. Notification of the conversion privilege shall be included in each certificate of coverage.

4. All converted policies shall become effective on the day immediately following the date of termination of insurance under a group policy.

(L. 1981 S.B. 58 § 2)

Effective 1-1-83

376.398. The provisions of sections 376.395 to 376.404 shall become effective January 1, 1983, and shall apply to all group policies delivered, issued for delivery or amended on or after January 1, 1983.

(L. 1981 S.B. 58 § A)

Effective 1-1-83

376.401. 1. In the event coverage would be continued under the group policy on an employee following his retirement, but prior to the time he is or could be covered by Medicare, the employee or member may elect, in lieu of such continuation of group insurance, to have the same conversion rights as would apply had that insurance terminated at retirement. The converted policy may provide for reduction or termination of coverage of any person upon his eligibility for coverage under Medicare or under any other state or federal law providing for benefits similar to those provided by the converted policy.

2. Subject to the conditions set forth in this section and section 376.397, the conversion privilege shall also be available to:

(1) The surviving spouse, if any, at the death of the employee or member, with respect to the spouse and such children whose coverage under the group policy terminates by reason of such death, or if the group policy provides for continuation of dependents coverage following the employee's or member's death, at the end of such continuation;

(2) The spouse of the employee or member upon termination of coverage of the spouse, while the employee or member remains insured under the group policy, with respect to the spouse and such children whose coverage under the group policy terminates at the same time; or

(3) A child, solely with respect to himself, upon termination of his coverage by reason of ceasing to be a qualified family member under the group policy, if a conversion privilege is not otherwise provided in sections 376.395 to 376.404 with respect to such termination.

(L. 1981 S.B. 58 § 3)

Effective 1-1-83

376.403. 1. If the benefit levels required in subdivision (9) of subsection 1 of section 376.397 exceed the benefit levels provided under the group policy, the converted policy may offer benefits which are substantially similar to those provided under the group policy in lieu of those required in subdivision (9) of subsection 1 of section 376.397.

2. The insurer may elect to provide group insurance coverage in lieu of the issuance of an individual converted policy.

3. A converted policy which is delivered outside this state may be on a form which could be delivered in such other jurisdiction as a converted policy had the group policy been issued in that jurisdiction.

(L. 1981 S.B. 58 § 4)

Effective 1-1-83

376.404. Upon written request by the group policyholder, the coverages required in section 376.397 may be changed or altered to meet the specific requirements of such group policyholder.

(L. 1981 S.B. 58 § 5)

Effective 1-1-83

376.405. 1. No insurance company licensed to transact business in this state shall deliver or issue for delivery in this state any policy of group accident or group health insurance, or group accident and health insurance, including insurance against hospital, medical or surgical expenses, covering a group in this state, unless such policy form shall have been approved by the director of the department of insurance, financial institutions and professional registration of the state of Missouri.

2. The director of the department of insurance, financial institutions and professional registration shall have authority to make such reasonable rules and regulations concerning the filing and submission of such policy forms as are necessary, proper or advisable. Such rules and regulations shall provide, among other things, that if a policy form is disapproved, the reasons therefor shall be stated in writing; that a hearing shall be granted upon such disapproval, if so requested; and that the failure of the director of the department of insurance, financial institutions and professional registration to take action approving or disapproving a submitted policy form within a stipulated time, not to exceed sixty days from the date of filing, shall be deemed an approval thereof until such time as the director of the department of insurance, financial institutions and professional registration shall notify the submitting company, in writing, of his disapproval thereof.

3. The director of the department of insurance, financial institutions and professional registration shall approve only those policy forms which are in compliance with the insurance laws of this state and which contain such words, phraseology, conditions and provisions which are specific, certain and unambiguous and reasonably adequate to meet needed requirements for the protection of those insured. The disapproval of any policy form shall be based upon the requirements of the laws of this state or of any regulation lawfully promulgated thereunder.

4. The director of the department of insurance, financial institutions and professional registration may, by order or bulletin, exempt from the approval requirements of this section for so long as he deems proper any insurance policy, document, or form or type thereof, as specified in such order or bulletin, to which, in his opinion, this section may not practicably be applied, or the approval of which is, in his opinion, not desirable or necessary for the protection of the public.

(L. 1959 H.B. 253 § 1, A.L. 1984 S.B. 592)

376.406. 1. All health benefit plans which provide coverage for a family member of an enrollee shall, as to such family member's coverage, also provide that the health benefits applicable for children shall be payable with respect to a newly born child of the enrollee from the moment of birth.

2. The coverage for newly born children shall consist of coverage of injury or sickness including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities.

3. If payment of a specific premium or subscription fee is required to provide coverage for a child, the health benefit plan may require that notification of birth of a newly born child and payment of the required premium or fees must be furnished to the health carrier within thirty-one days after the date of birth in order to have the coverage continue beyond such thirty-one-day period. If an application or other form of enrollment is required in order to continue coverage beyond the thirty-one-day period after the date of birth and the enrollee has notified the health carrier of the birth, either orally or in writing, the health carrier shall, upon notification, provide the enrollee with all forms and instructions necessary to enroll the newly born child and shall allow the enrollee an additional ten days from the date the forms and instructions are provided in which to enroll the newly born child.

4. The requirements of this section shall apply to all health benefit plans delivered or issued for delivery in this state on or after August 28, 2001.

5. For the purposes of this section, any review, renewal, extension, or continuation of any health benefit plan or of any of the terms, premiums, or subscriptions of the health benefit plan shall constitute a new delivery or issuance for delivery of the health benefit plan.

6. As used in this section, the terms "health benefit plan", "health carrier", and "enrollee" shall have the same meaning as defined in section 376.1350.

(L. 1974 H.B. 1487 §§ 1 to 4, A.L. 1983 S.B. 333, A.L. 2001 H.B. 328 & 88)

376.407. Any health insurer, as defined in section 376.806, nonprofit health service plan or health maintenance organization shall reimburse a claim for services provided by an advance practice nurse, as defined in section 335.016, if such services are within the scope of practice of such nurse.

(L. 1998 H.B. 1302 § 9)

376.410. Except as provided in subdivision (6) of this section, all companies organized under the laws of this state, and engaged in writing policies of accident or health insurance, or combination policies of accident and health insurance, and all other companies transacting such kinds of business in this state, shall maintain reserves thereon in accordance with the following requirements:

(1) On all such policies actually written there shall be maintained an unearned gross premium reserve which reserve may be computed on a pro rata basis or such reserve may be computed at not less than fifty percent of the gross premiums in force;

(2) On all such policies written on a noncancellable plan and under the terms of which the company is obligated to renew or continue for a stated period, or to a stated age or for life, there shall be maintained active life reserves and reserves for losses in amounts not less than such minimum standards which the director of the department of insurance, financial institutions and professional registration shall determine and prescribe after giving proper consideration to the terms and conditions of the policies involved; (3) On all such policies other than those written on a noncancellable plan there shall be maintained reserves for losses in amounts not less than the minimum standards which the director of the department of insurance, financial institutions and professional registration shall determine and prescribe after giving proper consideration to the terms and conditions of the policies involved;

(4) In the calculation of reserves required to be maintained under this section, proper credit shall be allowed for reinsurance in other companies licensed to do business in this state;

(5) In addition to the minimum reserves mentioned above the director of the department of insurance, financial institutions and professional registration may also require such companies to maintain reserves for extraordinary losses in amounts not less than such minimum standards which the director of the department of insurance, financial institutions and professional registration shall determine and prescribe after giving proper consideration to the terms and conditions of the policies involved;

(6) This section shall not be applicable to total and permanent disability benefits, or to accidental death benefits, contained in or supplementary to life insurance policies or other contracts and for which benefits the standard of valuation is prescribed by section 376.380.

(L. 1945 p. 1000 § 6077a)

376.421. 1. Except as provided in subsection 2 of this section, no policy of group health insurance shall be delivered in this state unless it conforms to one of the following descriptions:

(1) A policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer, subject to the following requirements:

(a) The employees eligible for insurance under the policy shall be all of the employees of the employer, or all of any class or classes thereof. The policy may provide that the term employees shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships or partnerships, if the business of the employer and of such affiliated corporations, proprietorships or partnerships is under common control. The policy may provide that the term employees shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term employees shall include retired employees, former employees and directors of a corporate employer. A policy issued to insure the employees of a public body may provide that the term employees shall include elected or appointed officials;

(b) The premium for the policy shall be paid either from the employer's funds or from funds contributed by the insured employees, or from both. Except as provided in paragraph (c) of this subdivision, a policy on which no part of the premium is to be derived from funds contributed by the insured employees must insure all eligible employees, except those who reject such coverage in writing; and

(c) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer in a policy insuring fewer than ten employees and in a policy insuring ten or more employees if:

a. Application is not made within thirty-one days after the date of eligibility for insurance; or

b. The person voluntarily terminated the insurance while continuing to be eligible for insurance under the policy; or

c. After the expiration of an open enrollment period during which the person could have enrolled for the insurance or could have elected another level of benefits under the policy;

(2) A policy issued to a creditor or its parent holding company or to a trustee or trustees or agent designated by two or more creditors, which creditor, holding company, affiliate, trustee, trustees or agent shall be deemed the policyholder, to insure debtors of the creditor or creditors with respect to their indebtedness subject to the following requirements:

(a) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor or creditors, or all of any class or classes thereof. The policy may provide that the term debtors shall include:

a. Borrowers of money or purchasers or lessees of goods, services, or property for which payment is arranged through a credit transaction;

b. The debtors of one or more subsidiary corporations; and

c. The debtors of one or more affiliated corporations, proprietorships or partnerships if the business of the policyholder and of such affiliated corporations, proprietorships or partnerships is under common control;

(b) The premium for the policy shall be paid either from the creditor's funds or from charges collected from the insured debtors, or from both. Except as provided in paragraph (c) of this subdivision, a policy on which no part of the premium is to be derived from funds contributed by insured debtors specifically for their insurance must insure all eligible debtors;

(c) An insurer may exclude any debtors as to whom evidence of individual insurability is not satisfactory to the insurer in a policy insuring fewer than ten debtors and in a policy insuring ten or more debtors if:

a. Application is not made within thirty-one days after the date of eligibility for insurance; or

b. The person voluntarily terminated the insurance while continuing to be eligible for insurance under the policy; or

c. After the expiration of an open enrollment period during which the person could have enrolled for the insurance or could have elected another level of benefits under the policy;

(d) The total amount of insurance payable with respect to an indebtedness shall not exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor. The insurer may exclude any payments which are delinquent on the date the debtor becomes disabled as defined in the policy;

(e) The insurance may be payable to the creditor or to any successor to the right, title, and interest of the creditor. Such payment or payments shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of each such payment and any excess of insurance shall be payable to the insured or the estate of the insured;

(f) Notwithstanding the preceding provisions of this subdivision, insurance on agricultural credit transaction commitments may be written up to the amount of the loan commitment, and insurance on educational credit transaction commitments may be written up to the amount of the loan commitment less the amount of any repayments made on the loan;

(3) A policy issued to a labor union or similar employee organization, which shall be deemed to be the policyholder, to insure members of such union or organization for the benefit of persons other than the union or organization or any of its officials, representatives, or agents, subject to the following requirements:

(a) The members eligible for insurance under the policy shall be all of the members of the union or organization, or all of any class or classes thereof;

(b) The premium for the policy shall be paid either from funds of the union or organization or from funds contributed by the insured members specifically for their insurance, or from both. Except as provided in paragraph (c) of this subdivision, a policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members, except those who reject such coverage in writing;

(c) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer in a policy insuring fewer than ten members and in a policy insuring ten or more members if:

a. Application is not made within thirty-one days after the date of eligibility for insurance; or

b. The person voluntarily terminated the insurance while continuing to be eligible for insurance under the policy; or

c. After the expiration of an open enrollment period during which the person could have enrolled for the insurance or could have elected another level of benefits under the policy;

(4) A policy issued to a trust, or to the trustee of a fund, established or adopted by two or more employers, or by one or more labor unions or similar employee organizations, or by one or more employers and one or more labor unions or similar employee organizations, which trust or trustee shall be deemed the policyholder, to insure employees of the employers or members of the unions or organizations for the benefit of persons other than the employers or the unions or organizations, 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 organizations, or all of any class or classes thereof. The policy may provide that the term employees shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships or partnerships if the business of the employer and of such affiliated corporations, proprietorships or partnerships is under common control. The policy may provide that the term employees shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term employees shall include retired employees, former employees and directors of a corporate employer. The policy may provide that the term employees shall include the trustees or their employees, or both, if their duties are principally connected with such trusteeship;

(b) The premium for the policy shall be paid from funds contributed by the employer or employers of the insured persons or by the union or unions or similar employee organizations, or by both, or from funds contributed by the insured persons or from both the insured persons and the employer or union or similar employee organization. Except as provided in paragraph (c) of this subdivision, 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 except those who reject such coverage in writing;

(c) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer;

(5) A policy issued to an association or to a trust or to the trustees of a fund established, created and maintained for the benefit of members of one or more associations. The association or associations shall have at the outset a minimum of fifty members; shall have been organized and maintained in good faith for purposes other than that of obtaining insurance; shall have been in active existence for at least two years; shall have a constitution and bylaws which provide that the association or associations shall hold regular meetings not less than annually to further the purposes of the members; shall, except for credit unions, collect dues or solicit contributions from members; and shall provide the members with voting privileges and representation on the governing board and committees. The policy shall be subject to the following requirements:

(a) The policy may insure members of such association or associations, employees thereof, or employees of members, or one or more of the preceding, or all of any class or classes thereof for the benefit of persons other than the employee's employer;

(b) The premium for the policy shall be paid from funds contributed by the association or associations or by employer members, or by both, or from funds contributed by the covered persons or from both the covered persons and the association, associations, or employer members;

(c) Except as provided in paragraph (d) of this subdivision, a policy on which no part of the premium is to be derived from funds contributed by the covered persons specifically for their insurance must insure all eligible persons, except those who reject such coverage in writing;

(d) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer;

(e) If the health benefit plan, as defined in section 376.1350, is delivered, issued for delivery, continued or renewed, is providing coverage to any resident of this state, and is providing coverage to sole proprietors, self-employed persons, small employers as defined in subsection 2 of section 379.930, and large employers, the insurer providing the coverage to the association or trust or trustees of a fund established, created, and maintained for the benefit of members of one or more associations may be exempt from subdivision (1) of subsection 1 of section 379.936 as it relates to the association plans established under this section. The director shall find that an exemption would be in the public interest and approved and that additional classes of business may be approved under subsection 4 of section 379.934 if the director determines that the health benefit plan:

a. Is underwritten and rated as a single employer;

b. Has a uniform health benefit plan design option or options for all participating association members or employers;

c. Has guarantee issue to all association members and all eligible employees, as defined in subsection 2 of section 379.930, of any participating association member company; and

d. Complies with all other federal and state insurance requirements, including but not limited to the small employer health insurance and availability act under sections 379.930 to 379.952;

(6) A policy issued to a credit union or to a trustee or trustees or agent designated by two or more credit unions, which credit union, trustee, trustees or agent shall be deemed the policyholder, to insure members of such credit union or credit unions for the benefit of persons other than the credit union or credit unions, trustee or trustees, or agent or any of their officials, subject to the following requirements:

(a) The members eligible for insurance shall be all of the members of the credit union or credit unions, or all of any class or classes thereof;

(b) The premium for the policy shall be paid by the policyholder from the credit union's funds and, except as provided in paragraph (c) of this subdivision, must insure all eligible members;

(c) An insurer may exclude or limit the coverage on any member as to whom evidence of individual insurability is not satisfactory to the insurer;

(7) A policy issued to cover persons in a group where that group is specifically described by a law of this state as one which may be covered for group life insurance. The provisions of such law relating to eligibility and evidence of insurability shall apply.

2. Group health insurance offered to a resident of this state under a group health insurance policy issued to a group other than one described in subsection 1 of this section shall be subject to the following requirements:

(1) No such group health insurance policy shall be delivered in this state unless the director finds that:

(a) The issuance of such group policy is not contrary to the best interest of the public;

(b) The issuance of the group policy would result in economies of acquisition or administration; and

(c) The benefits are reasonable in relation to the premiums charged;

(2) No such group health insurance coverage may be offered in this state by an insurer under a policy issued in another state unless this state or another state having requirements substantially similar to those contained in subdivision (1) of this subsection has made a determination that such requirements have been met;

(3) The premium for the policy shall be paid either from the policyholder's funds, or from funds contributed by the covered persons, or from both;

(4) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.

3. As used in this section, insurer shall have the same meaning as the definition of health carrier under section 376.1350, and "class" means a predefined group of persons eligible for coverage under a group insurance policy where members of a class represent the same or essentially the same hazard; except that, an insurer may offer a policy to an employer that charges a reduced premium rate or deductible for employees who do not smoke or use tobacco products as authorized under section 290.145, and such insurer shall not be considered to be in violation of any unfair trade practice, as defined in section 379.936, even if only some employers elect to purchase such a policy and other employers do not.

(L. 1985 H.B. 623 § 376.420, A.L. 1986 S.B. 774, A.L. 2006 H.B. 1827 merged with S.B. 567 & 792, A.L. 2009 H.B. 919)

376.422. 1. As used in this section, the following terms shall mean:

(1) "Direct response solicitation", a solicitation through a sponsoring or endorsing entity or through the mails, telephone, or other mass communications medium;

(2) "Sponsoring or endorsing entity", an organization which has arranged for the offering of a program of insurance in a manner which communicates that eligibility for participation in the program is dependent upon affiliation with such organization or that it endorses participation in the program.

2. With respect to a program of insurance, whether issued on an individual basis or a group basis, which would not qualify under subdivisions (1), (2), (3), (4) and (6) of subsection 1 of section 376.421, if issued on a group basis, if compensation of any kind will or may be paid to a policyholder in the case of a group policy, or a sponsoring or endorsing entity in the case of individual, blanket or franchise policies marketed by means of direct response solicitation, the insurer shall cause to be distributed to prospective insureds a written notice that compensation will or may be paid. Such notice shall be distributed whether compensation is direct or indirect and whether such compensation is paid to or retained by the policyholder or sponsoring or endorsing entity or paid to or retained by a third party at the direction of the policyholder or sponsoring or endorsing entity or any entity affiliated therewith by way of ownership, contract or employment. The notice required by this subsection shall be placed on or shall accompany any application or enrollment form provided prospective insureds.

(L. 1985 H.B. 623)

376.423. 1. Beginning January 1, 1993, any consultant retained by any insurance company, health services corporation and any self-insured group arrangement to the extent not preempted by federal law, to review claims, under any policy of accident and sickness insurance or membership contract, denied in whole or in part for services rendered by a chiropractor shall:

(1) Be licensed and practicing as a chiropractor in the state of Missouri, and, if the claim is made from a metropolitan statistical area in Missouri as that term is defined by the United States Bureau of the Census, then he shall be practicing as a chiropractor in any such metropolitan statistical area in Missouri; or be licensed and practicing as a chiropractor in the state in which the claim is reviewed;

(2) Obtain a certificate from the board of chiropractic examiners, which shall indicate that the licensee has complied with the provisions of this section and has met the minimum standards contained in this section. The application for a certificate shall be on a form provided by the board;

(3) Provide to the board of chiropractic examiners, in addition to the other information required to be provided on the application, certification that the licensee has either:

(a) Successfully completed at least one hundred hours of postgraduate training in insurance claims consulting, which training was presented by a college of chiropractic having status with the council on chiropractic education; or

(b) Successfully completed at least one hundred hours training in insurance claims consulting in the course of study approved by the board of chiropractic examiners; and

(4) Have received at least one-half of his earned income from the clinical practice of chiropractic. The term "clinical practice of chiropractic" shall not include the review of claims regulated by this section nor any of the paperwork which is or becomes part of the review nor any of the income from examining a person whose claim is being reviewed.

2. The compensation of such consultant shall not be based on a percentage of the amount by which a claim is reduced for payment.

3. Upon receipt of a complaint from the insured or the chiropractor alleging an adverse chiropractic review determination, the director of the department of insurance, financial institutions and professional registration shall investigate to determine whether the insurance company or health services corporation has engaged in an unfair claims settlement practice under the provisions of subdivision (10) of section 375.936 or a violation of this section. The department of insurance, financial institutions and professional registration shall promulgate rules to enforce the provisions of this subsection.

4. Any licensee who shall advertise or announce to the public in any communication or solicitation that he engages in or provides insurance claims consulting in any aspect without having first complied with this section shall be deemed to have engaged in false, misleading or deceptive advertising.

5. It shall be unlawful for any person who is licensed under the provisions of chapter 331 to accept employment as a consultant to review health care claims for services rendered by any chiropractor unless he meets the qualifications and conditions of subsection 1 of this section. The provisions of this subsection shall be enforced by the board of chiropractic examiners, which administers the provisions of chapter 331. Violations of this section shall constitute grounds for disciplinary action pursuant to section 331.060.

6. The board of chiropractic examiners may by rule establish and enforce the conditions under which it will issue certificates of compliance.

7. The board of chiropractic examiners is authorized, pursuant to section 331.070, to set fees to cover the cost and expense of administering this section.

(L. 1990 H.B. 1739 § 13, A.L. 1992 S.B. 698, A.L. 1993 S.B. 52, A.L. 1997 H.B. 335)

376.424. Except for a policy issued under subdivision (2) of subsection 1 of section 376.421, a group health insurance policy may be extended to insure the employees and members with respect to their family members or dependents, or any class or classes thereof, subject to the following:

(1) The premium for the insurance shall be paid either from funds contributed by the employer, union, association or other person to whom the policy has been issued or from funds contributed by the covered persons, or from both. Except as provided in subdivision (2) of this section, a policy on which no part of the premium for the family members' or dependents' coverage is to be derived from funds contributed by the covered persons must insure all eligible employees or members with respect to their family members or dependents, or any class or classes thereof;

(2) An insurer may exclude or limit the coverage on any family member or dependent as to whom evidence of individual insurability is not satisfactory to the insurer, subject to sections 376.406 and 376.776 in a policy insuring fewer than ten employees or members and in a policy insuring ten or more employees or members if:

a. Application is not made within thirty-one days after the date of eligibility for insurance; or

b. The employee or member voluntarily terminated the insurance of the family member or dependent while such family member or dependent continues to be eligible for insurance under the policy; or

c. After the expiration of an open enrollment period during which the family member or dependent could have been enrolled for the insurance or could have been enrolled for another level of benefits under the policy.

(L. 1985 H.B. 623)

376.425. 1. As used in this section, the following terms mean:

(1) "Institution of higher learning", any college or university, or "institution" as that term is defined in section 173.510;

(2) "Sponsoring or endorsing entity", the same as that term is defined in section 376.422;

(3) "Student accident policy", any individual, franchise, group or blanket policy of accident or health insurance which policy is offered to students of a sponsoring or endorsing entity which is an institution of higher learning and under which policy the insured person pays all or substantially all of the cost of his insurance.

2. No student accident policy issued or delivered for issuance in this state shall limit or exclude surgical benefits to one procedure when multiple procedures are done in one operating session.

(L. 1992 S.B. 831 §§ A, 1)

Effective 1-1-93

376.426. No policy of group health insurance shall be delivered in this state unless it contains in substance the following provisions, or provisions which in the opinion of the director of the department of insurance, financial institutions and professional registration are more favorable to the persons insured or at least as favorable to the persons insured and more favorable to the policyholder; except that: provisions in subdivisions (5), (7), (12), (15), and (16) of this section shall not apply to policies insuring debtors; standard provisions required for individual health insurance policies shall not apply to group health insurance policies; and if any provision of this section is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy, the insurer, with the approval of the director, shall omit from such policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of the provision in such manner as to make the provision as contained in the policy consistent with the coverage provided by the policy:

(1) A provision that the policyholder is entitled to a grace period of thirty-one days for the payment of any premium due except the first, during which grace period the policy shall continue in force, unless the policyholder shall have 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 such grace period;

(2) 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 years from its date of issue, and that no statement made by any person covered under the policy relating to insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of two years during such person's lifetime nor unless it is contained in a written instrument signed by the person making such statement; except that, no such provision shall preclude the assertion at any time of defenses based upon the person's ineligibility for coverage under the policy or upon other provisions in the policy;

(3) 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 containing the statement is or has been furnished to such person or, in the event of the death or incapacity of the insured person, to the individual's beneficiary or personal representative;

(4) 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 individual's coverage;

(5) A provision specifying the additional exclusions or limitations, if any, applicable under the policy with respect to a disease or physical condition of a person, not otherwise excluded from the person's coverage by name or specific description effective on the date of the person's loss, which existed prior to the effective date of the person's coverage under the policy. Any such exclusion or limitation may only apply to a disease or physical condition for which medical advice or treatment was received by the person during the twelve months prior to the effective date of the person's coverage. In no event shall such exclusion or limitation apply to loss incurred or disability commencing after the earlier of:

(a) The end of a continuous period of twelve months commencing on or after the effective date of the person's coverage during all of which the person has received no medical advice or treatment in connection with such disease or physical condition; or

(b) The end of the two-year period commencing on the effective date of the person's coverage;

(6) If the premiums or benefits vary by age, there shall be a provision specifying an equitable adjustment of premiums or of benefits, or both, to be made in the event the age of the covered person has been misstated, such provision to contain a clear statement of the method of adjustment to be used;

(7) A provision that the insurer shall issue to the policyholder, for delivery to each person insured, a certificate setting forth a statement as to the insurance protection to which that person is entitled, to whom the insurance benefits are payable, and a statement as to any family member's or dependent's coverage;

(8) A provision that written notice of claim must be given to the insurer within twenty days after the occurrence or commencement of any loss covered by the policy. Failure to give notice within such time shall not invalidate nor reduce any claim if it shall be shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible;

(9) A provision that the insurer shall furnish to the person making claim, or to the policyholder for delivery to such person, such forms as are usually furnished by it for filing proof of loss. If such forms are not furnished before the expiration of fifteen days after the insurer receives notice of any claim under the policy, the person making such claim shall be deemed to have complied with the requirements of the policy as to proof of loss upon submitting, within the time fixed in the policy for filing proof of loss, written proof covering the occurrence, character, and extent of the loss for which claim is made;

(10) A provision that in the case of claim for loss of time for disability, written proof of such loss must be furnished to the insurer within ninety days after the commencement of the period for which the insurer is liable, and that subsequent written proofs of the continuance of such disability must be furnished to the insurer at such intervals as the insurer may reasonably require, and that in the case of claim for any other loss, written proof of such loss must be furnished to the insurer within ninety days after the date of such loss. Failure to furnish such proof within such time shall not invalidate nor reduce any claim if it was not reasonably possible to furnish such proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity of the claimant, later than one year from the time proof is otherwise required;

(11) A provision that all benefits payable under the policy other than benefits for loss of time shall be payable not more than thirty days after receipt of proof and that, subject to due proof of loss, all accrued benefits payable under the policy for loss of time shall be paid not less frequently than monthly during the continuance of the period for which the insurer is liable, and that any balance remaining unpaid at the termination of such period shall be paid as soon as possible after receipt of such proof;

(12) A provision that benefits for accidental loss of life of a person insured shall be payable to the beneficiary designated by the person insured or, if the policy contains conditions pertaining to family status, the beneficiary may be the family member specified by the policy terms. In either case, payment of these benefits is subject to the provisions of the policy in the event no such designated or specified beneficiary is living at the death of the person insured. All other benefits of the policy shall be payable to the person insured. The policy may also provide that if any benefit is payable to the estate of a person, or to a person who is a minor or otherwise not competent to give a valid release, the insurer may pay such benefit, up to an amount not exceeding two thousand dollars, to any relative by blood or connection by marriage of such person who is deemed by the insurer to be equitably entitled thereto;

(13) A provision that the insurer shall have the right and opportunity, at the insurer's own expense, to examine the person of the individual for whom claim is made when and so often as it may reasonably require during the pendency of the claim under the policy and also the right and opportunity, at the insurer's own expense, to make an autopsy in case of death where it is not prohibited by law;

(14) A provision that no action at law or in equity shall be brought to recover on the policy prior to the expiration of sixty days after proof of loss has been filed in accordance with the requirements of the policy and that no such action shall be brought at all unless brought within three years from the expiration of the time within which proof of loss is required by the policy;

(15) A provision specifying the conditions under which the policy may be terminated. Such provision shall state that except for nonpayment of the required premium or the failure to meet continued underwriting standards, the insurer may not terminate the policy prior to the first anniversary date of the effective date of the policy as specified therein, and a notice of any intention to terminate the policy by the insurer must be given to the policyholder at least thirty-one days prior to the effective date of the termination. Any termination by the insurer shall be without prejudice to any expenses originating prior to the effective date of termination. An expense will be considered incurred on the date the medical care or supply is received;

(16) A provision stating that if a policy provides that coverage of a dependent child terminates upon attainment of the limiting age for dependent children specified in the policy, such policy, so long as it remains in force, shall be deemed to provide that attainment of such limiting age does not operate to terminate the hospital and medical coverage of such child while the child is and continues to be both incapable of self-sustaining employment by reason of mental or physical handicap and chiefly dependent upon the certificate holder for support and maintenance. Proof of such incapacity and dependency must be furnished to the insurer by the certificate holder at least thirty-one days after the child's attainment of the limiting age. The insurer may require at reasonable intervals during the two years following the child's attainment of the limiting age subsequent proof of the child's incapacity and dependency. After such two-year period, the insurer may require subsequent proof not more than once each year. This subdivision shall apply only to policies delivered or issued for delivery in this state on or after one hundred twenty days after September 28, 1985;

(17) A provision stating that if a policy provides that coverage of a dependent child terminates upon attainment of the limiting age for dependent children specified in the policy, such policy, so long as it remains in force, until the dependent child attains the limiting age, shall remain in force at the option of the certificate holder. Eligibility for continued coverage shall be established where the dependent child is:

(a) Unmarried and no more than that twenty-five years of age; and

(b) A resident of this state; and

(c) Not provided coverage as a named subscriber, insured, enrollee, or covered person under any group or individual health benefit plan, or entitled to benefits under Title XVIII of the Social Security Act, P.L. 89-97, 42 U.S.C. Section 1395, et seq.;

(18) In the case of a policy insuring debtors, a provision that the insurer shall furnish to the policyholder for delivery to each debtor insured under the policy a certificate of insurance describing the coverage and specifying that the benefits payable shall first be applied to reduce or extinguish the indebtedness.

(L. 1985 H.B. 623, A.L. 2007 H.B. 818)

Effective 1-01-08

376.427. 1. As used in this section, the following terms mean:

(1) "Health care services", medical, surgical, dental, podiatric, pharmaceutical, chiropractic, licensed ambulance service, and optometric services;

(2) "Insured", any person entitled to benefits under a contract of accident and sickness insurance, or medical-payment insurance issued as a supplement to liability insurance but not including any other coverages contained in a liability or a workers' compensation policy, issued by an insurer;

(3) "Insurer", any person, reciprocal exchange, interinsurer, fraternal benefit society, health services corporation, self-insured group arrangement to the extent not prohibited by federal law, or any other legal entity engaged in the business of insurance;

(4) "Provider", a physician, hospital, dentist, podiatrist, chiropractor, pharmacy, licensed ambulance service, or optometrist, licensed by this state.

2. Upon receipt of an assignment of benefits made by the insured to a provider, the insurer shall issue the instrument of payment for a claim for payment for health care services in the name of the provider. All claims shall be paid within thirty days of the receipt by the insurer of all documents reasonably needed to determine the claim.

3. Nothing in this section shall preclude an insurer from voluntarily issuing an instrument of payment in the single name of the provider.

4. This section shall not require any insurer, health services corporation, health maintenance corporation or preferred provider organization which directly contracts with certain members of a class of providers for the delivery of health care services to issue payment as provided pursuant to this section to those members of the class which do not have a contract with the insurer.

(L. 1990 H.B. 1739 § 14, A.L. 1992 S.B. 698)

376.428. 1. A group policy delivered or issued for delivery in this state by a health carrier or health benefit plan, as defined in section 376.1350, which insures employees or members and their eligible dependents for hospital, surgical or major medical insurance on an expense-incurred or service basis, other than for specific diseases or for accidental injuries only, shall provide that employees or members whose coverage under the group policy, which includes coverage for their eligible dependents, would otherwise terminate because of termination of employment or membership shall be entitled to continue their hospital, surgical or major medical coverage, including coverage for their eligible dependents, under that group policy in the same manner as continuation of coverage is required under the continuation of coverage provisions set forth in the federal Consolidated Omnibus Budget Reconciliation Act (COBRA), as amended.

2. The spouse of an employee or member whose coverage under the group policy would otherwise terminate due to dissolution of marriage or death of the employee or member shall have the same continuation privilege accorded under sections 376.421 to 376.442, 376.694 to 376.696, and 376.779 to the employee or member upon termination of employment or membership.

3. The right to a converted policy pursuant to sections 376.395 to 376.404 for an employee or member entitled to continuation of coverage under sections 376.421 to 376.442, 376.694 to 376.696, and 376.779 shall commence upon termination of the continued coverage provided for in sections 376.421 to 376.442, 376.694 to 376.696, and 376.779.

4. This section shall only apply to those persons who are not subject to the continuation and conversion provisions set forth in Title I, Subtitle B, Part 6 of the Employment Retirement Income Security Act of 1974 or Title XXII of the Public Health Service Act, as said acts were in effect on January 1, 1987.

(L. 1985 H.B. 623, A.L. 1987 S.B. 337, A.L. 1988 H.B. 1242 Revision, A.L. 1991 H.B. 385, et al., A.L. 2009 H.B. 231)

Effective 6-26-09

376.429. 1. All health benefit plans, as defined in section 376.1350, that are delivered, issued for delivery, continued or renewed on or after August 28, 2006, and providing coverage to any resident of this state shall provide coverage for routine patient care costs as defined in subsection 7 of this section incurred as the result of phase II, III, or IV of a clinical trial that is approved by an entity listed in subsection 4 of this section and is undertaken for the purposes of the prevention, early detection, or treatment of cancer. Health benefit plans may limit coverage for the routine patient care costs of patients in phase II of a clinical trial to those treating facilities within the health benefit plans' provider network; except that, this provision shall not be construed as relieving a health benefit plan of the sufficiency of network requirements under state statute.

2. In the case of treatment under a clinical trial, the treating facility and personnel must have the expertise and training to provide the treatment and treat a sufficient volume of patients. There must be equal to or superior, noninvestigational treatment alternatives and the available clinical or preclinical data must provide a reasonable expectation that the treatment will be superior to the noninvestigational alternatives.

3. Coverage required by this section shall include coverage for routine patient care costs incurred for drugs and devices that have been approved for sale by the Food and Drug Administration (FDA), regardless of whether approved by the FDA for use in treating the patient's particular condition, including coverage for reasonable and medically necessary services needed to administer the drug or use the device under evaluation in the clinical trial.

4. Subsections 1 and 2 of this section requiring coverage for routine patient care costs shall apply to phase III or IV of clinical trials that are approved or funded by one of the following entities:

(1) One of the National Institutes of Health (NIH);

(2) An NIH cooperative group or center as defined in subsection 7 of this section;

(3) The FDA in the form of an investigational new drug application;

(4) The federal Departments of Veterans' Affairs or Defense;

(5) An institutional review board in this state that has an appropriate assurance approved by the Department of Health and Human Services assuring compliance with and implementation of regulations for the protection of human subjects (45 CFR 46); or

(6) A qualified research entity that meets the criteria for NIH Center support grant eligibility.

5. Subsections 1 and 2 of this section requiring coverage for routine patient care costs shall apply to phase II of clinical trials if:

(1) Phase II of a clinical trial is sanctioned by the National Institutes of Health (NIH) or National Cancer Institute (NCI) and conducted at academic or National Cancer Institute Center; and

(2) The person covered under this section is enrolled in the clinical trial. This section shall not apply to persons who are only following the protocol of phase II of a clinical trial, but not actually enrolled.

6. An entity seeking coverage for treatment, prevention, or early detection in a clinical trial approved by an institutional review board under subdivision (5) of subsection 4 of this section shall maintain and post electronically a list of the clinical trials meeting the requirements of subsections 2 and 3 of this section. This list shall include: the phase for which the clinical trial is approved; the entity approving the trial; the particular disease; and the number of participants in the trial. If the electronic posting is not practical, the entity seeking coverage shall periodically provide payers and providers in the state with a written list of trials providing the information required in this section.

7. As used in this section, the following terms shall mean:

(1) "Cooperative group", a formal network of facilities that collaborate on research projects and have an established NIH-approved Peer Review Program operating within the group, including the NCI Clinical Cooperative Group and the NCI Community Clinical Oncology Program;

(2) "Multiple project assurance contract", a contract between an institution and the federal Department of Health and Human Services (DHHS) that defines the relationship of the institution to the DHHS and sets out the responsibilities of the institution and the procedures that will be used by the institution to protect human subjects;

(3) "Routine patient care costs" shall include coverage for reasonable and medically necessary services needed to administer the drug or device under evaluation in the clinical trial. Routine patient care costs include all items and services that are otherwise generally available to a qualified individual that are provided in the clinical trial except:

(a) The investigational item or service itself;

(b) Items and services provided solely to satisfy data collection and analysis needs and that are not used in the direct clinical management of the patient; and

(c) Items and services customarily provided by the research sponsors free of charge for any enrollee in the trial.

8. For the purpose of this section, providers participating in clinical trials shall obtain a patient's informed consent for participation on the clinical trial in a manner that is consistent with current legal and ethical standards. Such documents shall be made available to the health insurer upon request.

9. The provisions of this section shall not apply to a policy, plan or contract paid under Title XVIII or Title XIX of the Social Security Act.

10. Nothing in this section shall apply to any accident-only policy, specified disease policy, hospital indemnity policy, Medicare supplement policy, long-term care policy, short-term major medical policy of six months or less duration, or other limited benefit health insurance policies.

11. The provisions of this section regarding phase II of a clinical trial shall not apply automatically to an individually underwritten health benefit plan, but shall be an option to any such plan.

(L. 2002 S.B. 1026, A.L. 2003 S.B. 407, A.L. 2006 S.B. 567 & 792)

376.431. The provisions of sections 376.431 to 376.442 are applicable to all insurance policies and contracts issued or provided by an insurance company, health services corporation or health maintenance organization on a group or group-type basis covering persons as employees of employers or as members of unions or associations.

(L. 1985 H.B. 623 § 376.430, A.L. 1999 H.B. 903)

376.432. As used in sections 376.431 to 376.442, the term "group-type basis" means a benefit plan, other than salary budget plans utilizing individual insurance policies or contracts, which meets the following conditions:

(1) Coverage is provided through insurance policies or contracts to classes of employees or members defined in terms of conditions pertaining to employment or membership;

(2) The coverage is not available to the general public and can be obtained and maintained only because of the covered person's membership in or connection with the particular organization or group;

(3) There are arrangements for bulk payment of premiums or subscription charges to the insurer or health services corporation; and

(4) There is sponsorship of the plan by the employer, union or association.

(L. 1985 H.B. 623, A.L. 1999 H.B. 903)

376.433. 1. Any public entity which provides, furnishes, or pays for hospital, medical, surgical, or other health care services under a plan of self-insurance to an employee or to any other person covered under the public entity's plan of self-insurance shall have the same rights and obligations, and be subject to the same remedies, as the department of social services has with Medicaid, as provided in section 208.215.

2. As used in this section, the term "public entity" shall have the same meaning ascribed to it in section 107.170.

3. This section shall not apply to limited benefit supplemental health insurance policies paid for entirely by an employee of the public entity.

(L. 2004 H.B. 1233)

376.434. 1. If a policy or contract subject to sections 376.431 to 376.442 provides for automatic discontinuance of the policy or contract after a premium or subscription charge has remained unpaid through the grace period allowed for such payment, the carrier shall be liable for valid claims for covered losses incurred prior to the end of the grace period. However, in no case shall a carrier be held liable for claims incurred during a grace period unless:

(1) Appropriate dues or premiums are received by the carrier during such grace period; or

(2) Such liability is specifically stated in the contract.

2. If the actions of the carrier after the end of the grace period indicate that it considers the policy or contract as continuing in force beyond the end of the grace period, such as by continuing to recognize claims subsequently incurred, the carrier shall be liable for valid claims for losses beginning prior to the effective date of written notice of discontinuance to the policyholder or other entity responsible for making payments or submitting subscription charges to the carrier. The effective date of discontinuance shall not be prior to midnight at the end of the third scheduled work day after the date upon which the notice is delivered.

(L. 1985 H.B. 623)

376.435. 1. Beginning January 1, 2008, a health carrier providing a group health benefit plan or plans, as such terms are defined in section 376.1350, to an employer who meets the requirements specified in subsection 2 of this section shall, upon request by the employer or the employer's producer of record, provide a report of the total dollar amount and total number of claims paid under the plan or plans for each of the prior three years or for each year coverage was in place if less than three years at the time of the request. In the case of an employer with multiple plans, the total dollar amounts shall be aggregated into one report. The report shall be provided within thirty days of the request; however, a health carrier shall not be required to provide such report for the employer or the employer's producer of record more than twice in any calendar year. The information provided to the employer or the employer's producer of record shall be furnished in a manner that does not individually identify any employee or other person covered by the health benefit plan and shall comply with all applicable federal and state privacy laws regarding the disclosure of health records.

2. For purposes of subsection 1 of this section, an "employer" is one who:

(1) Provides an employee health benefit plan with at least fifty-one covered lives either at the time of the request or at the start of the reporting period; and

(2) Has been insured continuously with the health carrier or a carrier affiliated with the health carrier for at least the preceding twenty-two months.

3. As used in this section, the term "covered lives" means employees, their spouses, and dependents insured under the health benefit plan for which a report is requested.

(L. 2007 H.B. 791)

376.436. 1. Any notice of discontinuance so given by the carrier shall include a request to the group policyholder or other entity involved to notify employees covered under the policy or contract of the date as of which the group policy or contract will discontinue and to advise that unless otherwise provided in the policy or contract, the carrier shall not be liable for claims for losses incurred after such date. Such notice of discontinuance shall also advise, in any instance in which the plan involves employee contributions, that if the policyholder or other entity continues to collect contributions for the coverage beyond the date of discontinuance, the policyholder or other entity may be held solely liable for the benefits with respect to which the contributions have been collected.

2. The carrier will prepare and furnish to the policyholder or other entity at the same time a supply of a notice form to be distributed to the employees or members concerned indicating such discontinuance and the effective date thereof, and urging the employees or members to refer to their certificates or contracts in order to determine what rights, if any, are available to them upon such discontinuance.

(L. 1985 H.B. 623, A.L. 1999 H.B. 903)

376.438. 1. Every group policy or other contract subject to sections 376.431 to 376.442, or under which the level of benefits is hereafter altered, modified or amended, must provide a reasonable provision for extension of benefits in the event of total disability at the date of any termination or discontinuance of the group policy or contract, regardless of the reason for the termination or discontinuance, as required by the following subdivisions of this subsection:

(1) In the case of a group life plan which contains a disability benefit extension of any type, such as premium waiver extension, extended death benefit in event of total disability, or payment of income for a specified period during total disability, the discontinuance of the group policy shall not operate to terminate such extension;

(2) In the case of a group plan providing benefits for loss of time from work or specific indemnity during hospital confinement, discontinuance of the policy during a disability shall have no effect on benefits payable for that disability or confinement;

(3) In the case of health maintenance organization, hospital or medical expense coverages other than dental and maternity expense, a reasonable extension of benefits or accrued liability provision is required. Such a provision will be considered reasonable if it provides an extension of at least twelve months under health maintenance organization, major medical and comprehensive medical type coverages, and under other types of hospital or medical expense coverages provides either an extension of at least ninety days or an accrued liability for expenses incurred during a period of disability or during a period of at least ninety days starting with a specific event which occurred while coverage was in force.

2. Any applicable extension of benefits or accrued liability shall be described in any policy or contract involved as well as in insurance certificates of coverage issued to employees or members. The benefits payable during any period of extension or accrued liability may be subject to the policy's or contract's regular benefit limits.

(L. 1985 H.B. 623, A.L. 1999 H.B. 903)

376.441. When one carrier's contract replaces a plan of similar benefits of another carrier, the prior carrier remains liable only to the extent of its accrued liabilities and extensions of benefits. The position of the prior carrier shall be the same whether the group policyholder or other entity secures replacement coverage from a new carrier, self-insurer, or foregoes the provision of coverage. Each person who is eligible for coverage in accordance with the succeeding carrier's plan of benefits in respect of classes eligible and activity at work and nonconfinement rules shall be covered by that carrier's plan of benefits. Each person not so covered under the succeeding carrier's plan of benefits must nevertheless be covered by the succeeding carrier in accordance with the following provisions if such individual was validly covered, including benefit extension, under the prior plan on the date of discontinuance and if such individual is a member of the class or classes of individuals eligible for coverage under the succeeding carrier's plan. Any reference in the following provisions to an individual who was or was not totally disabled is a reference to the individual's status immediately prior to the date the succeeding carrier's coverage becomes effective:

(1) The minimum level of benefits to be provided by the succeeding carrier shall be the applicable level of benefits of the prior carrier's plan reduced by any benefits payable by the prior plan;

(2) Coverage must be provided by the succeeding carrier until at least the earliest of the following dates:

(a) The date the individual becomes eligible under the succeeding carrier's plan;

(b) For each type of coverage, the date the individual's coverage would terminate in accordance with the succeeding carrier's plan provisions applicable to individual termination of coverage, such as at the termination of employment or ceasing to be eligible dependent, as the case may be; or

(c) In the case of an individual who was totally disabled, and in the case of a type of coverage for which section 376.438 requires an extension of accrued liability, the end of any period of extension or accrued liability which is required of the prior carrier by section 376.438 or, if the prior carrier's policy or contract is not subject to that section, would have been required of that carrier had its policy or contract been subject to section 376.438 at the time the prior plan was discontinued and replaced by the succeeding carrier's plan;

(3) In the case of a preexisting conditions limitation included in the succeeding carrier's plan, the level of benefits applicable to preexisting conditions of persons becoming covered by the succeeding carrier's plan during the period of time this limitation applies under the new plan shall be the lesser of:

(a) The benefits of the new plan determined without application of the preexisting conditions limitation; and

(b) The benefits of the prior plan;

(4) The succeeding carrier, in applying any deductibles or waiting periods in its plan, shall give credit for the satisfaction or partial satisfaction of the same or similar provisions under a prior plan providing similar benefits. In the case of deductible provisions, the credit shall apply for the same or overlapping benefit periods and shall be given for expenses actually incurred and applied against the deductible provisions of the prior carrier's plan during the ninety days preceding the effective date of the succeeding carrier's plan but only to the extent these expenses are recognized under the terms of the succeeding carrier's plan and are subject to a similar deductible provision. For purposes of this subdivision, the deductible provisions in insurance policies and health services corporation contracts are deemed to be similar to co-payment provisions in health maintenance organization contracts;

(5) In any situation where a determination of the prior carrier's benefit is required by the succeeding carrier, at the succeeding carrier's request the prior carrier shall furnish a statement of the benefits available or pertinent information, sufficient to permit verification of the benefit determination or the determination itself by the succeeding carrier. For the purposes of this section, benefits of the prior plan will be determined in accordance with all of the definitions, conditions and covered expense provisions of the prior plan rather than those of the succeeding plan. The benefit determination will be made as if coverage had not been replaced by the succeeding carrier.

(L. 1985 H.B. 623 § 376.440, A.L. 1999 H.B. 903)

376.442. The department of insurance, financial institutions and professional registration is authorized to promulgate rules and regulations necessary to the administration or enforcement of the provisions of sections 376.431 to 376.442, pursuant to section 376.982 and chapter 536.

(L. 1985 H.B. 623, A.L. 1993 S.B. 52)

376.446. 1. Health carriers shall permit individuals to learn the amount of cost-sharing, including deductibles, copayments, and coinsurance, under the individual's health benefit plan or coverage that the individual would be responsible for paying with respect to the furnishing of a specific item or service by a participating provider in a timely manner upon the request of the individual. At a minimum, such information shall be made available to such individual through an internet website and such other means for individuals without access to the internet. As used in this section, the terms "health carrier" and "health benefit plans" shall have the same meanings assigned to them in section 376.1350.

2. This section shall not apply to a supplemental insurance policy, including a life care contract, accident-only policy, specified disease policy, hospital policy providing a fixed daily benefit only, Medicare supplement policy, long-term care policy, hospitalization-surgical care policy, short-term major medical policy of six months or less duration, or any other supplemental policy.

3. The provisions of subsections 1 and 2 shall become effective on January 1, 2014.

(L. 2011 S.B. 62 § 376.1190, subsecs. 1, 2, 4)

CROSS REFERENCE:

Nonseverability clause, 190.840

376.450. 1. Sections 376.450 to 376.454 shall be known and may be cited as the "Missouri Health Insurance Portability and Accountability Act". Notwithstanding any other provision of law to the contrary, health insurance coverage offered in connection with the small group market, the large group market and the individual market shall comply with the provisions of sections 376.450 to 376.453 and, in the case of the small group market, the provisions of sections 379.930 to 379.952. As used in sections 376.450 to 376.453, the following terms mean:

(1) "Affiliation period", a period which, under the terms of the coverage offered by a health maintenance organization, must expire before the coverage becomes effective. The organization is not required to provide health care services or benefits during such period and no premium shall be charged to the participant or beneficiary for any coverage during the period;

(2) "Beneficiary", the same meaning given such term under Section 3(8) of the Employee Retirement Income Security Act of 1974 and Public Law 104-191;

(3) "Bona fide association", an association which:

(a) Has been actively in existence for at least five years;

(b) Has been formed and maintained in good faith for purposes other than obtaining insurance;

(c) Does not condition membership in the association on any health status-related factor relating to an individual (including an employee of an employer or a dependent of an employee);

(d) Makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to such members (or individuals eligible for coverage through a member); and

(e) Does not make health insurance coverage offered through the association available other than in connection with a member of the association; and

(f) Meets all other requirements for an association set forth in subdivision (5) of subsection 1 of section 376.421 that are not inconsistent with this subdivision;

(4) "COBRA continuation provision":

(a) Section 4980B of the Internal Revenue Code (26 U.S.C. 4980B), as amended, other than subsection (f)(1) of such section as it relates to pediatric vaccines;

(b) Title I, Subtitle B, Part 6, excluding Section 609, of the Employee Retirement Income Security Act of 1974; or

(c) Title XXII of the Public Health Service Act, 42 U.S.C. 300dd, et seq.;

(5) "Creditable coverage", with respect to an individual:

(a) Coverage of the individual under any of the following:

a. A group health plan;

b. Health insurance coverage;

c. Part A or Part B of Title XVIII of the Social Security Act;

d. Title XIX of the Social Security Act, other than coverage consisting solely of benefits under Section 1928 of such act;

e. Chapter 55 of Title 10, United States Code;

f. A medical care program of the Indian Health Service or of a tribal organization;

g. A state health benefits risk pool;

h. A health plan offered under Title 5, Chapter 89, of the United States Code;

i. A public health plan as defined in federal regulations authorized by Section 2701(c)(1)(I) of the Public Health Services Act, as amended by Public Law 104-191;

j. A health benefit plan under Section 5(e) of the Peace Corps Act (22 U.S.C. 2504(3));

(b) Creditable coverage does not include coverage consisting solely of excepted benefits;

(6) "Department", the Missouri department of insurance, financial institutions and professional registration;

(7) "Director", the director of the Missouri department of insurance, financial institutions and professional registration;

(8) "Enrollment date", with respect to an individual covered under a group health plan or health insurance coverage, the date of enrollment of the individual in the plan or coverage or, if earlier, the first day of the waiting period for such enrollment;

(9) "Excepted benefits":

(a) Coverage only for accident (including accidental death and dismemberment) insurance;

(b) Coverage only for disability income insurance;

(c) Coverage issued as a supplement to liability insurance;

(d) Liability insurance, including general liability insurance and automobile liability insurance;

(e) Workers' compensation or similar insurance;

(f) Automobile medical payment insurance;

(g) Credit-only insurance;

(h) Coverage for on-site medical clinics;

(i) Other similar insurance coverage, as approved by the director, under which benefits for medical care are secondary or incidental to other insurance benefits;

(j) If provided under a separate policy, certificate or contract of insurance, any of the following:

a. Limited scope dental or vision benefits;

b. Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof;

c. Other similar limited benefits as specified by the director;

(k) If provided under a separate policy, certificate or contract of insurance, any of the following:

a. Coverage only for a specified disease or illness;

b. Hospital indemnity or other fixed indemnity insurance;

(l) If offered as a separate policy, certificate, or contract of insurance, any of the following:

a. Medicare supplemental coverage (as defined under Section 1882(g)(1) of the Social Security Act);

b. Coverage supplemental to the coverage provided under Chapter 55 of Title 10, United States Code;

c. Similar supplemental coverage provided to coverage under a group health plan;

(10) "Group health insurance coverage", health insurance coverage offered in connection with a group health plan;

(11) "Group health plan", an employee welfare benefit plan as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974 and Public Law 104-191 to the extent that the plan provides medical care, as defined in this section, and including any item or service paid for as medical care to an employee or the employee's dependent, as defined under the terms of the plan, directly or through insurance, reimbursement or otherwise, but not including excepted benefits;

(12) "Health insurance coverage", or "health benefit plan" as defined in section 376.1350 and benefits consisting of medical care, including items and services paid for as medical care, that are provided directly, through insurance, reimbursement, or otherwise under a policy, certificate, membership contract, or health services agreement offered by a health insurance issuer, but not including excepted benefits;

(13) "Health insurance issuer", "issuer", or "insurer", an insurance company, health services corporation, fraternal benefit society, health maintenance organization, multiple employer welfare arrangement specifically authorized to operate in the state of Missouri, or any other entity providing a plan of health insurance or health benefits subject to state insurance regulation;

(14) "Individual health insurance coverage", health insurance coverage offered to individuals in the individual market, not including excepted benefits or short-term limited duration insurance;

(15) "Individual market", the market for health insurance coverage offered to individuals other than in connection with a group health plan;

(16) "Large employer", in connection with a group health plan, with respect to a calendar year and a plan year, an employer who employed an average of at least fifty-one employees on business days during the preceding calendar year and who employs at least two employees on the first day of the plan year;

(17) "Large group market", the health insurance market under which individuals obtain health insurance coverage directly or through any arrangement on behalf of themselves and their dependents through a group health plan maintained by a large employer;

(18) "Late enrollee", a participant who enrolls in a group health plan other than during the first period in which the individual is eligible to enroll under the plan, or a special enrollment period under subsection 6 of this section;

(19) "Medical care", amounts paid for:

(a) The diagnosis, cure, mitigation, treatment, or prevention of disease or amounts paid for the purpose of affecting any structure or function of the body;

(b) Transportation primarily for and essential to medical care referred to in paragraph (a) of this subdivision; or

(c) Insurance covering medical care referred to in paragraphs (a) and (b) of this subdivision;

(20) "Network plan", health insurance coverage offered by a health insurance issuer under which the financing and delivery of medical care, including items and services paid for as medical care, are provided, in whole or in part, through a defined set of providers under contract with the issuer;

(21) "Participant", the same meaning given such term under Section 3(7) of the Employer Retirement Income Security Act of 1974 and Public Law 104-191;

(22) "Plan sponsor", the same meaning given such term under Section 3(16)(B) of the Employee Retirement Income Security Act of 1974;

(23) "Preexisting condition exclusion", with respect to coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for such coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date. Genetic information shall not be treated as a preexisting condition in the absence of a diagnosis of the condition related to such information;

(24) "Public Law 104-191", the federal Health Insurance Portability and Accountability Act of 1996;

(25) "Small group market", the health insurance market under which individuals obtain health insurance coverage directly or through an arrangement, on behalf of themselves and their dependents, through a group health plan maintained by a small employer as defined in section 379.930;

(26) "Waiting period", with respect to a group health plan and an individual who is a potential participant or beneficiary in a group health plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the group health plan.

2. A health insurance issuer offering group health insurance coverage may, with respect to a participant or beneficiary, impose a preexisting condition exclusion only if:

(1) Such exclusion relates to a condition, whether physical or mental, regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the six-month period ending on the enrollment date;

(2) Such exclusion extends for a period of not more than twelve months, or eighteen months in the case of a late enrollee, after the enrollment date; and

(3) The period of any such preexisting condition exclusion is reduced by the aggregate of the periods of creditable coverage, if any, applicable to the participant as of the enrollment date.

3. For the purposes of applying subdivision (3) of subsection 2 of this section:

(1) A period of creditable coverage shall not be counted, with respect to enrollment of an individual under group health insurance coverage, if, after such period and before the enrollment date, there was a sixty-three day period during all of which the individual was not covered under any creditable coverage;

(2) Any period of time that an individual is in a waiting period for coverage under group health insurance coverage, or is in an affiliation period, shall not be taken into account in determining whether a sixty-three day break under subdivision (1) of this subsection has occurred;

(3) Except as provided in subdivision (4) of this subsection, a health insurance issuer offering group health insurance coverage shall count a period of creditable coverage without regard to the specific benefits included in the coverage;

(4) (a) A health insurance issuer offering group health insurance coverage may elect to apply the provisions of subdivision (3) of subsection 2 of this section based on coverage within any category of benefits within each of several classes or categories of benefits specified in regulations implementing Public Law 104-191, rather than as provided under subdivision (3) of this subsection. Such election shall be made on a uniform basis for all participants and beneficiaries. Under such election a health insurance issuer shall count a period of creditable coverage with respect to any class or category of benefits if any level of benefits is covered within the class or category.

(b) In the case of an election with respect to health insurance coverage offered by a health insurance issuer in the small or large group market under this subdivision, the health insurance issuer shall prominently state in any disclosure statements concerning the coverage, and prominently state to each employer at the time of the offer or sale of the coverage, that the issuer has made such election, and include in such statements a description of the effect of this election;

(5) Periods of creditable coverage with respect to an individual may be established through presentation of certifications and other means as specified in Public Law 104-191 and regulations pursuant thereto.

4. A health insurance issuer offering group health insurance coverage shall not apply any preexisting condition exclusion in the following circumstances:

(1) Subject to subdivision (4) of this subsection, a health insurance issuer offering group health insurance coverage shall not impose any preexisting condition exclusion in the case of an individual who, as of the last day of the thirty-one-day period beginning with the date of birth, is covered under creditable coverage;

(2) Subject to subdivision (4) of this subsection, a health insurance issuer offering group health insurance coverage shall not impose any preexisting condition exclusion in the case of a child who is adopted or placed for adoption before attaining eighteen years of age and who, as of the last day of the thirty-day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage. The previous sentence shall not apply to coverage before the date of such adoption or placement for adoption;

(3) A health insurance issuer offering group health insurance coverage shall not impose any preexisting condition exclusion relating to pregnancy as a preexisting condition;

(4) Subdivisions (1) and (2) of this subsection shall no longer apply to an individual after the end of the first sixty-three-day period during all of which the individual was not covered under any creditable coverage.

5. A health insurance issuer offering group health insurance coverage shall provide a certification of creditable coverage as required by Public Law 104-191 and regulations pursuant thereto.

6. A health insurance issuer offering group health insurance coverage shall provide for special enrollment periods in the following circumstances:

(1) A health insurance issuer offering group health insurance in connection with a group health plan shall permit an employee or a dependent of an employee who is eligible but not enrolled for coverage under the terms of the plan to enroll for coverage if:

(a) The employee or dependent was covered under a group health plan or had health insurance coverage at the time that coverage was previously offered to the employee or dependent;

(b) The employee stated in writing at the time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment, but only if the plan sponsor or health insurance issuer required the statement at the time and provided the employee with notice of the requirement and the consequences of the requirement at the time;

(c) The employee's or dependent's coverage described in paragraph (a) of this subdivision was:

a. Under a COBRA continuation provision and was exhausted; or

b. Not under a COBRA continuation provision and was terminated as a result of loss of eligibility for the coverage or because employer contributions toward the cost of coverage were terminated; and

(d) Under the terms of the group health plan, the employee requests the enrollment not later than thirty days after the date of exhaustion of coverage described in subparagraph a. of paragraph (c) of this subdivision or termination of coverage or employer contributions described in subparagraph b. of paragraph (c) of this subdivision;

(2) (a) A group health plan shall provide for a dependent special enrollment period described in paragraph (b) of this subdivision during which an employee who is eligible but not enrolled and a dependent may be enrolled under the group health plan and, in the case of the birth or adoption of a child, the spouse of the employee may be enrolled as a dependent if the spouse is otherwise eligible for coverage.

(b) A dependent special enrollment period under this subdivision is a period of not less than thirty days that begins on the date of the marriage or adoption or placement for adoption, or the period provided for enrollment in section 376.406 in the case of a birth;

(3) The coverage becomes effective:

(a) In the case of marriage, not later than the first day of the first month beginning after the date on which the completed request for enrollment is received;

(b) In the case of a dependent's birth, as of the date of birth; or

(c) In the case of a dependent's adoption or placement for adoption, the date of the adoption or placement for adoption.

7. In the case of group health insurance coverage offered by a health maintenance organization, the plan may provide for an affiliation period with respect to coverage through the organization only if:

(1) No preexisting condition exclusion is imposed with respect to coverage through the organization;

(2) The period is applied uniformly without regard to any health status-related factors;

(3) Such period does not exceed two months, or three months in the case of a late enrollee;

(4) Such period begins on the enrollment date; and

(5) Such period runs concurrently with any waiting period.

(L. 2007 H.B. 818)

Effective 1-01-08

376.451. 1. A health insurance issuer offering group health insurance coverage shall comply with the following standards prohibiting discrimination as to eligibility based upon health status:

(1) A health insurance issuer offering group health insurance coverage shall not establish rules for eligibility, including continued eligibility, of any individual to enroll under the terms of the group health plan based on any of the following health status-related factors of the individual or a dependent of the individual:

(a) Health status;

(b) Medical condition, including both physical and mental illness;

(c) Claims experience;

(d) Receipt of health care;

(e) Medical history;

(f) Genetic information;

(g) Evidence of insurability, including conditions arising out of acts of domestic violence; or

(h) Disability;

(2) This subsection does not require a health insurance issuer offering group health insurance coverage to provide particular benefits other than those provided under the terms of the group health insurance coverage, or prevent the issuer from establishing limitations or restrictions on the amount, level, extent, or nature of the benefits or coverage for similarly situated individuals enrolled in the group health insurance coverage;

(3) For purposes of subdivision (1) of this subsection, rules for eligibility to enroll include rules defining any applicable waiting or affiliation period for such enrollment, and rules relating to late and special enrollments.

2. A health insurance issuer offering group health insurance coverage shall comply with the following standards prohibiting discrimination as to premium contributions based upon health status:

(1) A health insurance issuer offering health insurance coverage in connection with a group health plan shall not require any individual, as a condition of enrollment or continued enrollment under the plan, to pay a premium or contribution that is greater than the premium or contribution for a similarly situated individual enrolled in the group health plan on the basis of any health status-related factor in relation to the individual or to an individual enrolled under the plan as a dependent of the individual;

(2) Nothing in subdivision (1) of this subsection shall be construed to:

(a) Restrict the amount that any employer may be charged for coverage under a group health plan, other than as provided in sections 379.930 to 379.952, for health insurance coverage provided in the small group market; or

(b) Prevent a health insurance issuer offering group health insurance coverage from establishing premium discounts or rebates or modifying otherwise applicable co-payments or deductibles in return for adherence to programs of health promotion and disease prevention. Premium discount or rebates established under this subsection shall not be included when computing a small group rate band under section 379.936.

(L. 2007 H.B. 818)

Effective 1-01-08

376.452. 1. Except as provided in this section, if a health insurance issuer offers health insurance coverage in the large group market in connection with a group health plan, the health insurance issuer shall renew or continue the coverage in force at the option of the plan sponsor.

2. A health insurance issuer may nonrenew or discontinue health insurance coverage offered in connection with a group health plan in the large group market if:

(1) The plan sponsor has failed to pay premiums or contributions in accordance with the terms of the health insurance coverage or if the health insurance issuer has not received timely premium payments;

(2) The plan sponsor has performed an act or practice that constitutes fraud or has made an intentional misrepresentation of material fact under the terms of the coverage;

(3) The plan sponsor has failed to comply with the health insurance issuer's minimum participation requirements;

(4) The plan sponsor has failed to comply with the health insurance issuer's employer contribution requirements;

(5) The health insurance issuer is ceasing to offer coverage in the large group market in accordance with subsection 3 of this section;

(6) In the case of a health insurance issuer that offers health insurance coverage in the large group market through a network plan, there is no longer any enrollee under the group health plan who lives, resides, or works in the service area of the health insurance issuer or in the area for which the issuer is authorized to do business;

(7) In the case of health insurance coverage that is made available in the large group market only through one or more bona fide associations, the membership of an employer in the bona fide association ceases, but only if coverage is terminated under this subdivision uniformly without regard to any health status-related factor of any covered individual.

3. A health insurance issuer shall not discontinue offering a particular type of group health insurance coverage offered in the large group market unless:

(1) The issuer provides notice to each plan sponsor, participant and beneficiary provided coverage of this type in the large group market of the discontinuation at least ninety days prior to the date of the discontinuation of the coverage;

(2) The issuer offers to each plan sponsor being provided coverage of this type in the large group market the option to purchase any other health insurance coverage currently being offered by the health insurance issuer to a group health plan in the large group market; and

(3) The issuer acts uniformly without regard to the claims experience of those plan sponsors or any health status-related factor of any participant or beneficiary covered or new participant or beneficiary who may become eligible for such coverage.

4. (1) A health insurance issuer shall not discontinue offering all health insurance coverage in the large group market unless:

(a) The issuer provides notice of discontinuation to the director and to each plan sponsor, participant and beneficiary covered at least one hundred eighty days prior to the date of the discontinuation of coverage; and

(b) All health insurance issued or delivered for issuance in Missouri in the large group market is discontinued and coverage under such health insurance is not renewed.

(2) In the case of a discontinuation under this subsection, the health insurance issuer shall not provide for the issuance of any health insurance coverage in the large group market for a period of five years beginning on the date of the discontinuation of the last health insurance coverage not renewed.

5. At the time of coverage renewal, a health insurance issuer may modify the health insurance coverage for a product offered to a group health plan in the large group market. For purposes of this subsection, renewal shall be deemed to occur not more often than annually on the anniversary of the effective date of the group health plan's health insurance coverage unless a longer term is specified in the policy or contract.

6. In the case of health insurance coverage that is made available by a health insurance issuer only through one or more bona fide associations, a reference to plan sponsor in this section is deemed, with respect to coverage provided to an employer member of the association, to include a reference to such employer.

(L. 2007 H.B. 818)

Effective 1-01-08

376.453. 1. An employer that provides health insurance coverage for which any portion of the premium is payable by the employer shall not provide such coverage unless the employer has established a premium-only cafeteria plan as permitted under federal law, 26 U.S.C. Section 125. The provisions of this subsection shall not apply to employers who offer health insurance through any self-insured or self-funded group health benefit plan of any type or description.

2. Nothing in this section shall prohibit or otherwise restrict an employer's ability to either provide a group health benefit plan or create a premium-only cafeteria plan with defined contributions and in which the employee purchases the policy.

(L. 2007 H.B. 818)

Effective 1-01-08

376.454. 1. Except as provided in this section, a health insurance issuer that provides individual health insurance coverage to an individual shall renew or continue in force such coverage at the option of the individual.

2. A health insurance issuer may nonrenew or discontinue health insurance coverage of an individual in the individual market based only on one or more of the following:

(1) The individual has failed to pay premiums or contributions in accordance with the terms of the health insurance coverage or the issuer has not received timely premium payments;

(2) The individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage;

(3) The issuer is ceasing to offer coverage in the individual market in accordance with subsection 4 of this section;

(4) In the case of a health insurance issuer that offers health insurance coverage in the market through a network plan, the individual no longer resides, lives, or works in the service area or in an area for which the issuer is authorized to do business but only if such coverage is terminated under this subdivision uniformly without regard to any health status-related factor of covered individuals;

(5) In the case of health insurance coverage that is made available in the individual market only through one or more bona fide associations, the membership of the individual in the association on the basis of which the coverage is provided ceases, but only if such coverage is terminated under this subdivision uniformly without regard to any health status-related factor of covered individuals.

3. In any case in which an issuer decides to discontinue offering a particular type of health insurance coverage offered in the individual market, coverage of such type may be discontinued by the issuer only if:

(1) The issuer provides notice to each covered individual provided coverage of this type in such market of such discontinuation at least ninety days prior to the date of the discontinuation of such coverage;

(2) The issuer offers to each individual in the individual market provided coverage of this type, the option to purchase any other individual health insurance coverage currently being offered by the issuer for individuals in such market; and

(3) In exercising the option to discontinue coverage of this type and in offering the option of coverage under subdivision (2) of this subsection, the issuer acts uniformly without regard to any health status-related factor of enrolled individuals or individuals who may become eligible for such coverage.

4. (1) In any case in which a health insurance issuer elects to discontinue offering all health insurance coverage in the individual market in the state, health insurance coverage may be discontinued by the issuer only if:

(a) The issuer provides notice to the director and to each individual of such discontinuation at least one hundred eighty days prior to the date of the expiration of such coverage; and

(b) All health insurance issued or delivered for issuance in the state in such market is discontinued and coverage under such health insurance coverage in such market is not renewed.

(2) In the case of a discontinuation under subdivision (1) of this subsection, the issuer shall not provide for the issuance of any health insurance coverage in the individual market for a five-year period beginning on the date of the discontinuation of the last health insurance coverage not so renewed.

5. At the time of coverage renewal, a health insurance issuer may modify the health insurance coverage for a policy form offered to individuals in the individual market so long as such modification is consistent with applicable law and effective on a uniform basis among all individuals with that policy form. For purposes of this subsection, renewal shall be deemed to occur not more often than annually on the anniversary of the effective date of the individual's health insurance coverage or as specified in the policy or contract.

6. In applying this section in the case of health insurance coverage that is made available by a health insurance issuer in the individual market to individuals only through one or more associations, a reference to an individual is deemed to include a reference to such an association of which the individual is a member.

7. An insurer shall provide a certification of creditable coverage as required by Public Law 104-191 and regulations pursuant thereto.

(L. 2007 H.B. 818)

Effective 1-01-08

376.480. Whenever any life insurance company incorporated under the laws of this state assumes the risks, in whole or in part, of any life insurance company incorporated under the laws of any other state or the Dominion of Canada or any province thereof a deposit of any part of its capital stock, surplus, legal reserve or other funds on the policies so assumed, the director of the department of insurance, financial institutions and professional registration is hereby authorized, in his discretion, to receive from such official such deposit pertaining to the policies so assumed or the capital stock, surplus, legal reserve or other funds assigned by such foreign company to such domestic company, and during the time that any such official of any other state or the Dominion of Canada or any province thereof retains or holds possession and custody of such deposit after their assignment to such domestic company, such director may treat such deposits so held by the officials of such other state or the Dominion of Canada or any province thereof the same as if they had been received by and were in the custody of such director, and may, in his discretion, register the policies so assumed and may or may not, during such time, require such domestic company to make or maintain with such department of insurance, financial institutions and professional registration any additional deposit on account thereof; provided, that when any of the capital stock, surplus, legal reserve or other funds of any such foreign company is legally invested in securities not authorized by the laws of this state, such securities shall be sold and disposed of within five years as the director may direct, and such domestic company shall not hold such securities or carry same as part of its capital stock, surplus, legal reserve or other funds for a longer period unless it shall procure a certificate from such director that its interests will suffer materially by the forced sale thereof.

(RSMo 1939 § 6034)

Prior revision: 1929 § 5923

376.500. No life insurance company doing business in this state shall make or permit any distinction or discrimination in favor of individuals between insurants (the insured) of the same class and equal expectations of life in the amount or payment of premiums or rates charged for policies of life or endowment insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contracts it makes; nor shall any such company, or agent thereof, make any contract of insurance or agreement as to such contract other than as plainly expressed in the policy issued thereon; nor shall any such company, or any officer, agent, solicitor or representative thereof, pay, allow or give, or offer to pay, allow or give, directly or indirectly, as inducement to insurance, any rebate of premium payable on the policy, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any paid employment or contract for services of any kind, or any valuable consideration or inducement whatever, not specified in the policy contract of insurance; or give, sell or purchase, or offer to give, sell or purchase, as inducement to insurance or in connection therewith, any stocks, bonds or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits to accrue thereon, or anything of value whatsoever. The provisions of this section shall also apply to all companies incorporated under the provisions of sections 377.200 to 377.460.

(RSMo 1939 § 5840, A.L. 1965 p. 95)

Prior revisions: 1929 § 5729; 1919 § 6139; 1909 § 6934

376.502. 1. No life insurance company doing business within this state shall deny or refuse to accept an application for life insurance, refuse to renew, cancel, restrict, or otherwise terminate a policy of life insurance, or charge a different rate for the same life insurance coverage, based upon the applicant's or insured's past or future lawful travel destinations. Nothing in this section shall prohibit a life insurance company from denying an application for life insurance, or restricting or charging a different premium or rate for coverage under such a policy based on a specific travel destination where the denial, restriction, or rate differential is based upon sound actuarial principles or is related to actual or reasonably anticipated experience.

2. A violation of the provisions of this section shall be unfair trade practice as defined by sections 375.930 to 375.948 and shall be governed by and subject to all of the provisions and penalties provided by such sections.

3. The provisions of this section shall apply to any life insurance policy issued or renewed on or after August 28, 2009.

(L. 2009 H.B. 577 merged with S.B. 126)

376.510. Any life insurance company or association which may violate any of the provisions of section 376.500 or which may permit any of its agents or representatives in this state to violate said provisions, shall have its certificate of authority, or license to transact business in Missouri, revoked by the state director of the department of insurance, financial institutions and professional registration, and shall be, for a period of five years, barred from the further transaction of business in this state; and any agent, solicitor or representative in this state of any such insurance company or association, who shall violate any of the provisions of section 376.500, shall be deemed guilty of a misdemeanor, and on conviction thereof, in any court of competent jurisdiction in this state, shall be fined not less than fifty nor more than five hundred dollars for each such offense, or imprisoned in the county or city jail, for not less than thirty days nor more than six months, or by both such fine and imprisonment.

(RSMo 1939 § 5841)

Prior revisions: 1929 § 5730; 1919 § 6140; 1909 § 6935

376.531. 1. No life insurance contract upon an individual, except a contract of group life insurance, shall be made or effectuated unless at the time of the making of the contract the individual insured, being competent and of legal capacity to contract, applies therefor or has consented thereto in writing, except in the following cases:

(1) Any person having an insurable interest in the life of a minor, or any person upon whom a minor is dependent for support and maintenance, may effectuate insurance upon the life of, or pertaining to, the minor;

(2) Family policies may be issued insuring any two or more members of a family on an application signed by either parent, stepparent, or by a husband or wife.

2. An employer, or a trust which is sponsored by an employer for the benefit of its employees, shall have an insurable interest in each of the lives of the employer's employees, directors or retired employees. Notwithstanding the provisions of section 376.691, the employer or trust may insure such employees', directors' or retired employees' lives for such employer's or trust's benefit on an individual or group basis with the consent of the insured. The consent requirement shall be deemed to be satisfied if:

(1) The employee, director or retired employee is provided with a written notice that the employer or trust intends to obtain life insurance coverage with respect to such person's life; and

(2) The employee, director or retired employee fails to provide written notification to the employer or trust, within thirty days from the date that the notice was transmitted, that such person does not consent to the employer obtaining life insurance coverage on such person's life. It shall be unlawful for the employer or trust to retaliate against any person for refusing to consent to the issuance of life insurance on such person's life.

3. The employer's or trust's insurable interest in nonmanagement and retired employees shall be limited to an amount of aggregate projected death benefits commensurate with the aggregate projected liabilities to such employees under all employee welfare benefit plans, as defined in 29 U.S.C. 1002(1). Calculations of life insurance benefits and welfare benefit liabilities shall be made in accordance with generally accepted actuarial principles. Matching of life insurance benefits and welfare benefit liabilities may be done on a cash flow, present value or other appropriate basis.

4. For purposes of this section, the term "employer" means any individual, sole proprietorship, partnership, limited liability company, corporation or any other entity that is legally doing business in this state. The term shall also include all entities or persons which are controlled by or affiliated with any of the foregoing entities. The determination of whether any entity or person is controlled by or affiliated with another shall be made by applying the principles set forth in subsection (b) or (c) of section 414 of the Internal Revenue Code of 1986, as in effect on January 1, 1993, except that all references therein to eighty percent shall be changed to fifty-one percent.

5. This section shall not be interpreted to limit other insurable interests which may exist by statute or at common law. The provisions of this section shall apply to all insurance contracts in force on or after August 28, 1994.

6. Determination of the existence and extent of the insurable interest under any life insurance policy shall be made at the time the contract of insurance becomes effective but need not exist at the time the loss occurs.

(L. 1992 H.B. 1574 § 14, A.L. 1994 S.B. 732)

376.540. In case of the death of the wife before the decease of the husband, the amount of the insurance shall be payable to her heirs, for their use, and to their conservator, if under age, unless otherwise provided for and stipulated in the policy.

(RSMo 1939 § 5848, A.L. 1983 S.B. 44 & 45)

Prior revisions: 1929 § 5737; 1919 § 6147; 1909 § 6942

376.562. It shall be lawful for any charitable, benevolent, educational or religious institution qualified pursuant to section 501(c)(3) of the Internal Revenue Code, as amended, to solicit, procure and enforce, in the absence of any fraud or coercion, the payment of proceeds of:

(1) An assignment or designation as beneficiary, a gift or assignment of an interest in life insurance in the life of a donor or assignor; or

(2) An ownership of an interest in life insurance on the life of an insured if the charitable, benevolent, educational or religious institution has obtained the consent of the person whose life is being insured, as required by section 376.531.

(L. 1992 H.B. 1574 § 376.560, A.L. 1997 H.B. 622)

376.570. Whenever any nonresident of this state dies leaving a policy of life insurance issued by any life insurance company of this state and payable to his estate, it shall be lawful for the executor or administrator, duly appointed under the laws of the state of the residence of such deceased nonresident, to collect and receive the proceeds payable under the terms of such policy and the delivery or payment of such proceeds by any life insurance company of this state to such nonresident executor or administrator, at any time, shall operate as a full and complete release and discharge of any person or corporation so paying or delivering such proceeds to such foreign executor or administrator.

(RSMo 1939 § 6024)

Prior revision: 1929 § 5913

376.580. No misrepresentation made in obtaining or securing a policy of insurance on the life or lives of any person or persons, citizens of this state, shall be deemed material, or render the policy void, unless the matter misrepresented shall have actually contributed to the contingency or event on which the policy is to become due and payable, and whether it so contributed in any case shall be a question for the jury.

(RSMo 1939 § 5843)

Prior revisions: 1929 § 5732; 1919 § 6142; 1909 § 6937

376.590. 1. No life insurance company doing business in this state, and no officer, director, or agent thereof, shall issue or circulate, or cause or permit to be issued or circulated, any estimate, illustration, circular or statement of any sort misrepresenting the terms of any policy issued by it or the benefits or advantages promised thereby, or the dividends or shares of surplus to be received thereon, or shall use any name or title of any policy or class of policies misrepresenting the true nature thereof.

2. Any person who shall solicit an application for insurance upon the life of another shall, in any controversy between the assured or his beneficiary and the company issuing any policy upon such application, be regarded as the agent of the company and not the agent of the assured, nor shall any life insurance company or agent sell, discount or otherwise dispose of any note or notes taken for payment of life insurance premium or premiums, before delivering to the applicant, in person, the policy for which said note or notes shall have been given.

(RSMo 1939 § 5844)

Prior revisions: 1929 § 5733; 1919 § 6143; 1909 § 6938

376.600. Any life insurance company which may violate any of the provisions of section 376.590, or which may permit any of its agents or representatives in this state to violate said provisions, shall have its certificate of authority or license to transact business in Missouri revoked by the state director of the department of insurance, financial institutions and professional registration, and shall be for a period of five years barred from the further transaction of business in this state; and any agent, solicitor or representative in this state of any such insurance company who shall violate any of the provisions of said section shall be deemed guilty of a misdemeanor, and, on conviction thereof, in any court of competent jurisdiction in this state, shall be fined not less than fifty nor more than five hundred dollars for each such offense or imprisoned in the county or city jail for not less than ten days nor more than six months, or by both such fine and imprisonment.

(RSMo 1939 § 5845)

Prior revisions: 1929 § 5734; 1919 § 6144; 1909 § 6939

376.610. In suits brought upon life policies, heretofore or hereafter issued, no defense based upon misrepresentation in obtaining or securing the same shall be valid, unless the defendant shall, at or before the trial, deposit in court for the benefit of the plaintiffs, the premiums received on such policies.

(RSMo 1939 § 5846)

Prior revisions: 1929 § 5735; 1919 § 6145; 1909 § 6940

376.620. 1. Any life insurance or certificate issued or delivered in this state may exclude or restrict liability of death as the result of suicide in the event the insured, while sane or insane, dies as a result of suicide within one year from the date of the issue of the policy or certificate. Any such exclusion or restriction shall be clearly stated in the policy or certificate.

2. Any life insurance policy or certificate which contains any exclusion or restriction under subsection 1 of this section shall also provide that in the event the insured dies as a result of suicide within one year from the date of issue of the policy that the insurer shall promptly refund all premiums paid for coverage on such insured.

(RSMo 1939 § 5851, A.L. 2007 S.B. 66)

Prior revisions: 1929 § 5740; 1919 § 6150; 1909 § 6945

376.630. No policies of insurance on life issued prior to the operative date of section 376.670 by any life insurance company authorized to do business in this state shall, after payment upon it of three or more annual payments, be forfeited or become void by reason of nonpayment of premiums thereon, but it shall be subject to the following rules of commutation, to wit: The net value of the policy, when the premium becomes due and is not paid, shall be computed upon the actuaries' or combined experience table of mortality with four percent interest per annum, and after deducting from three-fourths of such net value the unpaid portion of any notes given on account of past premium payments on said policy and any other indebtedness to the company secured by said policy, which notes and indebtedness shall then be canceled, the balance shall be taken as a net single premium for temporary insurance (extended insurance). The amount of such temporary insurance shall be such as is specified in the policy, but never less than the face amount insured by the policy reduced by the unpaid portion of notes and indebtedness aforesaid; and the term for which said temporary insurance shall be in force shall be determined by the attained age of the person whose life is insured at the time of default of premium, the assumption of mortality and interest aforesaid, the amount of temporary insurance granted and the net single premium available for temporary insurance previously defined; provided, that if the original policy shall be an endowment, payable at a certain time or at death, if it should occur previously, then if the net single premium available for temporary insurance as aforesaid shall exceed the net single premium for temporary insurance granted for the remainder of the endowment term, such excess shall be considered as a net single premium for pure endowment of as much as said excess of premiums will purchase, determined by the attained age of the insured at date of default in the payment of premiums on the original policy, and the table of mortality and interest aforesaid, which amount of pure endowment shall be paid at the end of the original term of endowment if the insured shall then be alive.

(RSMo 1939 § 5852, A.L. 1943 p. 596)

Prior revisions: 1929 § 5741; 1919 § 6151; 1909 § 6946

376.640. At any time after the payment of three or more full annual premiums, and not later than sixty days from the beginning of the extended insurance provided in section 376.630, the legal holder of any policy affected by section 376.630 may demand of the company, and the company shall issue, its paid-up policy, which, in case of an ordinary life policy, shall be for such an amount as three-fourths of the net value of the regular policy at the age and date of lapse, computed according to actuaries' or combined experience table of mortality, with interest at the rate of four percent per annum, without deduction of indebtedness on account of said policy, will purchase, applied as a net single premium upon the said table of mortality and interest rate aforesaid; and in case of a limited payment life policy, or of a continued payment endowment policy, payable at a certain time, or at death, it shall be for an amount bearing such proportion to the amount of the original policy as the number of complete annual premiums actually paid shall bear to the number of such annual premiums stipulated to be paid; provided, that from such amount the company shall have a right to deduct the net reversionary value of all indebtedness to the company on account of such policy; and provided further, that the policyholder shall, at the time of making demand for such paid-up policy, surrender the original policy, legally discharged, at the parent office of the company.

(RSMo 1939 § 5853, A.L. 1943 p. 596)

Prior revisions: 1929 § 5742; 1919 § 6152; 1909 § 6947

376.650. If the death of the insured occur within the term of temporary insurance covered by the value of the policy as determined in section 376.630, and if no condition of the insurance other than the payment of premiums shall have been violated by the insured, the company shall be bound to pay the amount of the policy, the same as if there had been no default in the payment of premium, anything in the policy to the contrary notwithstanding; provided, however, that notice of the claim and proof of the death shall be submitted to the company in the same manner as provided by the terms of the policy within ninety days after the decease of the insured; and provided also, that the company shall have the right to deduct from the amount insured in the policy the amount compounded at six percent interest per annum of all the premiums that had been forborne at the time of the decease, including the whole of the year's premium in which the death occurs, but such premiums shall in no case exceed the ordinary life premium for the age at issue, with interest as last aforesaid.

(RSMo 1939 § 5854, A.L. 1943 p. 596)

Prior revisions: 1929 § 5743; 1919 § 6153; 1909 § 6948

376.660. Sections 376.630 to 376.650 shall not be applicable in the following cases, to wit: If the policy shall contain a provision for an unconditional surrender value, at least equal to the net single premium, for the temporary insurance provided for herein, or for the unconditional commutation of the policy for nonforfeitable paid-up insurance, or if the legal holder of the policy shall, within sixty days after default of premium, surrender the policy and accept from the company another form of policy, or if the policy shall be surrendered to the company for a consideration adequate in the judgment of the legal holder thereof, then, and in any of the foregoing cases, sections 376.010 to 376.670 shall not be applicable; provided, that in no instance shall a policy be forfeited for nonpayment of premiums after the payment of three annual payments thereon; but in all instances where three annual premiums shall have been paid on a policy of insurance, the holder of such policy shall be entitled to paid-up or extended insurance, the net value of which shall be equal to that provided for in sections 376.010 to 376.670; provided further, that this section and sections 376.630 to 376.650 shall apply only to policies of life insurance issued prior to the operative date of section 376.670.

(RSMo 1939 § 5855, A.L. 1943 p. 596)

Prior revisions: 1929 § 5744; 1919 § 6154; 1909 § 6949

376.669. 1. This section shall not apply to any reinsurance, group annuity purchased under a retirement plan, or plan of deferred compensation established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code of 1986, as amended, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which shall be delivered outside this state through an agent or other representative of the company issuing the contract.

2. In the case of contracts issued on or after the effective date of this section as defined in subsection 11 of this section, no contract of annuity, except as stated in subsection 1 of this section, shall be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the director are at least as favorable to the contract holder, upon cessation of payment of considerations under the contract:

(1) That upon cessation of payment of considerations under a contract, or upon the written request of the contract owner, the company shall grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in subsections 4, 5, 6, 7, and 9 of this section;

(2) If a contract provides for a lump sum settlement at maturity, or at any other time, that upon surrender of the contract at or prior to the commencement of any annuity payments, the company shall pay in lieu of a paid-up annuity benefit a cash surrender benefit of such amount as is specified in subsections 4, 5, 7, and 9 of this section. The company may reserve the right to defer the payment of the cash surrender benefit for a period not to exceed six months after demand therefor with surrender of the contract after making written request and receiving written approval of the director. The request shall address the necessity and equitability to all policyholders of the deferral;

(3) A statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of the benefits; and

(4) A statement that any paid-up annuity, cash surrender or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which the benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract or any prior withdrawals from or partial surrenders of the contract.

Notwithstanding the requirements of this subsection, a deferred annuity contract may provide that if no considerations have been received under a contract for a period of two full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from prior considerations paid would be less than twenty dollars monthly, the company may at its option terminate the contract by payment in cash of the then present value of the portion of the paid-up annuity benefit, calculated on the basis on the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by this payment shall be relieved of any further obligation under the contract.

3. The minimum values as specified in subsections 4, 5, 6, 7, and 9 of this section of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section.

(1) The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at rates of interest as indicated in subdivision (3) of this subsection of the net considerations (as hereinafter defined) paid prior to such time, decreased by the sum of paragraphs (a) to (d) below:

(a) Any prior withdrawals from or partial surrenders of the contract accumulated at rates of interest as indicated in subdivision (3) of this subsection; and

(b) An annual contract charge of fifty dollars, accumulated at rates of interest as indicated in subdivision (3) of this subsection;

(c) Any premium tax paid by the company for the contract, accumulated at rates of interest as indicated in subdivision (3) of this subsection; and

(d) The amount of any indebtedness to the company on the contract, including interest due and accrued.

(2) The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to eighty-seven and one-half percent of the gross considerations credited to the contract during that contract year.

(3) The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest determined as the lesser of three percent per annum and the following, which shall be specified in the contract if the interest rate will be reset:

(a) The five-year Constant Maturity Treasury Rate reported by the Federal Reserve as of a date, or average over a period, rounded to the nearest one-twentieth of one percent, specified in the contract no longer than fifteen months prior to the contract issue date or redetermination date under paragraph (d) of this subdivision;

(b) Reduced by one hundred twenty-five basis points;

(c) Where the resulting interest rate is not less than one percent; and

(d) The interest rate shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the five-year Constant Maturity Treasury Rate to be used at each redetermination date.

(4) During the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in paragraph (b) of subdivision (3) of this subsection by up to an additional one hundred basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date thereafter, of the additional reduction shall not exceed the market value of the benefit. The director may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. Lacking such a demonstration that is acceptable to the director, the director may disallow or limit the additional reduction.

(5) The director may adopt rules to implement the provisions of subdivision (4) of this subsection and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts that the director determines adjustments are justified.

4. Any paid-up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. Present value shall be computed using the mortality table, if any, and the interest rates specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract.

5. For contracts that provide cash surrender benefits, the cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit that would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, such present value being calculated on the basis of an interest rate not more than one percent higher than the interest rate specified in the contract for accumulating the net considerations to determine maturity value, decreased by the amount of any indebtedness to the company on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the company to the contract. In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under such contracts shall be at least equal to the cash surrender benefit.

6. For contracts that do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid prior to the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity, such present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine maturity value, and increased by any additional amounts credited by the company to the contract. For contracts that do not provide any death benefits prior to the commencement of any annuity payments, present values shall be calculated on the basis of such interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. However, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time.

7. For the purpose of determining the benefits calculated under subsections 5 and 6 of this section, in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever is later.

8. A contract that does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that such benefits are not provided.

9. Any paid-up annuity, cash surrender, or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs.

10. For a contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of subsections 4, 5, 6, 7, and 9 of this section, additional benefits payable in the event of total and permanent disability, as reversionary annuity or deferred reversionary annuity benefits, or as other policy benefits additional to life insurance, endowment, and annuity benefits, and considerations for all such additional benefits shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits that may be required by this section. The inclusion of such benefits shall not be required in any paid-up benefits, unless the additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits.

11. Notwithstanding the provisions of section 376.671, after the effective date of this section*, a company may elect to apply the provisions of this section in lieu of section 376.671 to annuity contracts on a contract form-by-contract form basis before July 1, 2006. In all other instances, this section shall become operative with respect to annuity contracts issued by the company after July 1, 2006.

(L. 2004 H.B. 938 merged with S.B. 1188)

*Effective 6-21-04 (S.B. 1188) 8-28-04 (H.B. 938)

376.670. 1. In the case of policies issued on or after the operative date of this section, as defined in subsection 14, no policy of life insurance, except as stated in subsection 13, shall be delivered or issued for delivery in this state unless it shall contain in substance the following provisions, or corresponding provisions which in the opinion of the director of the department of insurance, financial institutions and professional registration are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements specified in this section and are essentially in compliance with subsection 12a of this section:

(1) That, in the event of default in any premium payment, the company will grant, upon proper request not later than sixty days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of such amount as may be herein specified. In lieu of such stipulated paid-up nonforfeiture benefit, the company may substitute, upon proper request not later than sixty days after the due date of the premium in default, an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier payment of endowment benefits;

(2) That, upon surrender of the policy within sixty days after the due date of any premium payment in default after premiums have been paid for at least three full years in the case of ordinary insurance or five full years in the case of industrial insurance, the company will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be herein specified;

(3) That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make such election elects another available option not later than sixty days after the due date of the premium in default;

(4) That, if the policy shall have become paid up by completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance, the company will pay, upon surrender of the policy within thirty days after any policy anniversary, a cash surrender value of such amount as may be herein specified;

(5) In the case of policies which cause, on a basis guaranteed in the policy, unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest rate, and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available under the policy. In the case of all other policies, a statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefit, if any, available under the policy on each policy anniversary either during the first twenty policy years or during the term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the company on the policy;

(6) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered; an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the company on the policy; if a detailed statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that such method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered; and a statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary beyond the last anniversary for which such values and benefits are consecutively shown in the policy.

2. Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy.

3. The company shall reserve the right to defer the payment of any cash surrender value for a period of six months after demand therefor with surrender of the policy.

4. (1) Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary, whether or not required by subsection 1, shall be an amount not less than the excess, if any, of the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy if there had been no default, including any existing paid-up additions, over the sum of the then present value of the adjusted premiums as defined in subsections 6, 7, 8, 8a, 9, 10, 10a, and 10b corresponding to premiums which would have fallen due on and after such anniversary, and the amount of any indebtedness to the company on the policy.

(2) For any policy issued on or after the operative date of subsection 10b of this section which provides supplemental life insurance or annuity benefits at the option of the insured for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value referred to in subdivision (1) of this subsection shall be an amount not less than the sum of the cash surrender value for an otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender value for a policy which provides only the benefits otherwise provided by such rider or supplemental policy provision.

(3) For any family policy issued on or after the operative date of subsection 10b of this section which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse's age seventy-one, the cash surrender value referred to in subdivision (1) of this subsection shall be an amount not less than the sum of the cash surrender value for an otherwise similar policy issued at the same age without such term insurance on the life of the spouse and the cash surrender value for a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse.

(4) Any cash surrender value available within thirty days after any policy anniversary under any policy paid up by completion of all premium payments or any policy continued under any paid-up nonforfeiture benefit, whether or not required by subsection 1, shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits provided for the policy, including any existing paid-up additions, decreased by any indebtedness to the company on the policy.

5. Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for by the policy or, if none is provided for, that cash surrender value which would have been required by this section in the absence of the condition that premiums shall have been paid for at least a specified period.

6. This subsection and subsections 7, 8, 8a, and 9 of this section shall not apply to policies issued on or after the operative date of subsection 10b of this section. Except as provided in subsection 8a, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding any extra premiums charged because of impairments or special hazards, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of:

(1) The then present value of the future guaranteed benefits provided for by the policy;

(2) Two percent of the amount of insurance, if the insurance be uniform in amount, or of the equivalent uniform amount, as herein defined, if the amount of insurance varies with duration of the policy;

(3) Forty percent of the adjusted premium for the first policy year;

(4) Twenty-five percent of either the adjusted premiums for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less.

7. Provided, however, that in applying the percentages specified in subdivisions (3) and (4) of subsection 6, no adjusted premium shall be deemed to exceed four percent of the amount of insurance or uniform amount equivalent thereto. The date of issue of a policy for the purpose of subsections 6, 7, 8, 8a and 9 shall be the date as of which the rated age of the insured is determined.

8. In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount thereof for the purpose of subsections 6, 7, 8, 8a and 9 shall be deemed to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the policy; provided, however, that in the case of a policy providing a varying amount of insurance issued on the life of a child under age ten, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age ten were the amount provided by such policy at age ten.

8a. The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to (a) the adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased, during the period for which premiums for such term insurance benefits are payable, by (b) the adjusted premiums for such term insurance, the foregoing items (a) and (b) being calculated separately and as specified in subsections 6, 7 and 8 except that, for the purposes of subdivisions (2), (3) and (4) of subsection 6, the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in (b) shall be equal to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in (a).

9. Except as otherwise provided in subsections 10 and 10a, all adjusted premiums and present values referred to in this section shall, for all policies of ordinary insurance, be calculated on the basis of the Commissioners 1941 Standard Ordinary Mortality Table, provided that for any category of ordinary insurance issued on and after the effective date of this amendment on female risks, adjusted premiums and present values may be calculated according to an age not more than three years younger than the actual age of the insured and such calculations for all policies of industrial insurance shall be made on the basis of the 1941 Standard Industrial Mortality Table. All calculations shall be made on the basis of the rate of interest, not exceeding three and one-half percent per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits; provided, however, that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than one hundred and thirty percent of the rates of mortality according to such applicable table; provided, further, that for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the director.

10. This subsection shall not apply to ordinary policies issued on or after the operative date of subsection 10b. In the case of ordinary policies issued on or after the operative date provided in this subsection, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the Commissioners 1958 Standard Ordinary Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, provided that such rate of interest shall not exceed three and one-half percent per annum, except that a rate of interest not exceeding four percent per annum may be used for policies issued on or after September 28, 1975, and prior to September 28, 1979, and a rate of interest not exceeding five and one-half percent per annum may be used for policies issued on or after September 28, 1979, and provided that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than six years younger than the actual age of the insured; provided, however, that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1958 Extended Term Insurance Table; provided, further, that for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the director. After the date when this subsection becomes effective, any company may file with the director a written notice of its election to comply with the provisions of this subsection after a specified date before January 1, 1966. After the filing of such notice, then upon such specified date, which shall be the operative date of this subsection for such company, this subsection shall become operative with respect to the ordinary policies thereafter issued by such company. If a company makes no such election, the operative date of this subsection for such company shall be January 1, 1966.

10a. This subsection shall not apply to industrial policies issued on or after the operative date of subsection 10b. In the case of industrial policies issued on or after the operative date of this subsection as defined herein, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, provided that such rate of interest shall not exceed three and one-half percent per annum, except that a rate of interest not exceeding four percent per annum may be used for policies issued on or after September 28, 1975, and prior to September 28, 1979, and a rate of interest not exceeding five and one-half percent per annum may be used for policies issued on or after September 28, 1979; provided, however, that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1961 Industrial Extended Term Insurance Table; provided, further, that for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the director. After the date when this subsection becomes effective, any company may file with the director a written notice of its election to comply with the provisions of this subsection after a specified date before January 1, 1968. After the filing of such notice, then upon such specified date, which shall be the operative date of this subsection for such company, this subsection shall become operative with respect to the industrial policies thereafter issued by such company. If a company makes no such election, the operative date of this subsection for such company shall be January 1, 1968.

10b. (1) This subsection shall apply to all policies issued on or after the operative date of this subsection as defined herein. Except as provided in subdivision (7) of this subsection, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums shall be equal to the sum of:

(a) The then present value of the future guaranteed benefits provided for by the policy;

(b) One percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years; and

(c) One hundred twenty-five percent of the nonforfeiture net level premium as hereinafter defined. In applying the percentage specified in paragraph (c) above, no nonforfeiture net level premium shall be deemed to exceed four percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years. The date of issue of a policy for the purpose of this subsection shall be the date as of which the rated age of the insured is determined.

(2) The nonforfeiture net level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one per annum payable on the date of issue of the policy and on each anniversary of such policy on which a premium falls due.

(3) In the case of policies which cause, on a basis guaranteed in the policy, unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums the future adjusted premiums, nonforfeiture net level premiums and present values shall be recalculated on the assumption that future benefits and premiums do not change from those stipulated by the policy immediately after the change.

(4) Except as otherwise provided in subdivision (7) of this subsection, the recalculated future adjusted premiums for any such policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits or premiums, of all such future adjusted premiums shall be equal to the excess of (A) the sum of the then present value of the then future guaranteed benefits provided for by the policy and the additional expense allowance, if any, over (B) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy.

(5) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum of:

(a) One percent of the excess, if positive, of the average amount of insurance at the beginning of each of the first ten policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of the first ten policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and

(b) One hundred twenty-five percent of the increase, if positive, in the nonforfeiture net level premium.

(6) The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing (a) by (b) where:

(a) Equals the sum of:

a. The nonforfeiture net level premium applicable prior to the change times the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred; and

b. The present value of the increase in future guaranteed benefits provided for by the policy; and

(b) Equals the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due.

(7) Notwithstanding any other provisions of this subsection to the contrary, in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance so that in each policy year such policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform amounts of insurance on the standard basis.

(8) All adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of the Commissioners 1980 Standard Ordinary Mortality Table or, at the election of the company for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors. All adjusted premiums and present values referred to in this section shall for all policies of industrial insurance be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table. All adjusted premiums and present values referred to in this section shall for all policies issued in a particular calendar year be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this subsection for policies issued in that calendar year.

(9) Except as provided in subdivision (8) of this subsection:

(a) At the option of the company, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this subsection, for policies issued in the immediately preceding calendar year;

(b) Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by subsection 1 of this section, shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any;

(c) A company may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values;

(d) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1980 Extended Term Insurance Table for policies of ordinary insurance and not more than the Commissioners 1961 Industrial Extended Term Insurance Table for policies of industrial insurance;

(e) For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on appropriate modifications of the tables listed in subdivision (d) of this subsection;

(f) Any ordinary mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the director for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table;

(g) Any industrial mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the director for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or* for the Commissioners 1961 Industrial Extended Term Insurance Table;

(10) The nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be equal to one hundred twenty-five percent of the calendar year statutory valuation interest rate for such policy as defined in section 376.380 rounded to the nearer one-quarter of one percent;

(11) Notwithstanding any other provision of law to the contrary, any refiling of nonforfeiture values or their methods of computation for any previously approved policy form which involves only a change in the interest rate or mortality table used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form;

(12) After the effective date of this subsection, any company may file with the director a written notice of its election to comply with the provisions of this subsection after a specified date before January 1, 1989, which shall be the operative date of this subsection for such company. If a company makes no such election, the operative date of this subsection for such company shall be January 1, 1989.

10c. In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance which is of such a nature that minimum values cannot be determined by the methods described in subsections 1 to 10b of this section, then:

(1) The director must be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by subsections 1 to 10b of this section;

(2) The director must be satisfied that the benefits and the pattern of premiums of that plan are not such as to mislead prospective policyholders or insureds;

(3) The cash surrender values and paid-up nonforfeiture benefits provided by the plan must not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this section, as determined by regulations promulgated by the director.

11. Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in subsections 4, 5, 6, 7, 8, 8a, 9, 10, 10a and 10b of this section may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, shall be not less than the amounts used to provide such additions.

12. Notwithstanding the provisions of subsection 4, additional benefits payable:

(1) In the event of death or dismemberment by accident or accidental means;

(2) In the event of total and permanent disability;

(3) As reversionary annuity or deferred reversionary annuity benefits;

(4) As term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, this section would not apply;

(5) As term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child's age is twenty-six, is uniform in amount after the child's age is one, and has not become paid up by reason of the death of a parent of the child; and

(6) As other policy benefits additional to life insurance and endowment benefits, and premiums for all such additional benefits; shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this section, and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits.

12a. (1) This subsection, in addition to all other applicable subsections of this section, shall apply to all policies issued on or after January 1, 1986. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall be in an amount which does not differ by more than two-tenths of one percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years, from the sum of the greater of zero and the basic cash value hereinafter specified and the present value of any existing paid-up additions less the amount of any indebtedness to the company under the policy.

(2) The basic cash value shall be equal to the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the company, if there had been no default, less the then present value of the nonforfeiture factors, as defined in subdivision (3) of this subsection, corresponding to premiums which would have fallen due on and after such anniversary. The effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in subsection 4 of this section or in subsections 6, 7, 8, 8a and 9 of this section, whichever is applicable, shall be the same as are the effects specified in subsection 4 of this section or in subsections 6, 7, 8, 8a and 9 of this section, whichever is applicable on the cash surrender values defined in that subsection.

(3) The nonforfeiture factor for each policy year shall be an amount equal to a percentage of the adjusted premium for the policy year, as defined in subsections 6, 7, 8, 8a and 9 of this section or in subsection 10b of this section, whichever is applicable. Except as is required by subdivision (4) of this subsection, such percentage:

(a) Must be the same percentage for each policy year between the second policy anniversary and the later of the fifth policy anniversary or the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least two-tenths of one percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years; and

(b) Must be such that no percentage after the later of the two policy anniversaries specified in paragraph (a) of this subdivision may apply to fewer than five consecutive policy years. No basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in subsections 6, 7, 8, 8a and 9 of this section or in subsection 10b of this section, whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value.

(4) All adjusted premiums and present values referred to in this subsection shall for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the policy's compliance with the other subsections of this section. The cash surrender values referred to in this subsection shall include any endowment benefits provided for by the policy.

(5) Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment shall be determined in manners consistent with the manners specified for determining the analogous minimum amounts in subsections 3, 4, 5, 10b and 11 of this section. The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed as subdivisions (1) to (6) in subsection 12 shall conform with the principles of this subsection.

13. (1) This section shall not apply to any of the following:

(a) Reinsurance;

(b) Group insurance;

(c) Pure endowments;

(d) Annuities or reversionary annuity contracts;

(e) Term policies of uniform amounts, which provide no guaranteed nonforfeiture or endowment benefits, or renewals thereof of twenty years or less expiring before age seventy-one, for which uniform premiums are payable during the entire term of the policy;

(f) Term policies of decreasing amounts, which provide no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium calculated as specified in subsections 6, 7, 8, 8a, 9, 10, 10a, and 10b is less than the adjusted premium so calculated on a term policy of uniform amount, or renewal thereof, which provides no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance, and for a term of twenty years or less expiring before age seventy-one, for which uniform premiums are payable during the entire term of the policy;

(g) Policies, which provide no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated as specified in subsections 4 to 10b of this section, exceeds two and one-half percent of the amount of insurance at the beginning of the same policy year;

(h) Policies which shall be delivered outside this state through an agent or other representative of the company issuing the policies.

(2) For purposes of determining the applicability of this section, the expiration date for a joint term life insurance policy shall be the age at expiry of the oldest life.

14. After the effective date of this section, any company may file with the director a written notice of its election to comply with the provisions of this section after a specified date before January 1, 1948. After the filing of such notice, then upon such specified date, which shall be the operative date for such company, this section shall become operative with respect to the policies thereafter issued by such company. If a company makes no such election, the operative date of this section for such company shall be January 1, 1948.

(L. 1943 p. 596 § 5855A, A.L. 1959 H.B. 267, A.L. 1961 p. 181, A.L. 1965 p. 581, A.L. 1975 S.B. 116, A.L. 1979 S.B. 325, A.L. 1982 S.B. 469)

*Word "or" does not appear in original rolls.

376.671. 1. This section shall not apply to any reinsurance, group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter amended, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which shall be delivered outside this state through an agent or other representative of the company issuing the contract.

2. In the case of contracts issued on or after the operative date of this section as defined in subsection 11 of this section, no contract of annuity, except as stated in subsection 1 of this section, shall be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the director are at least as favorable to the contractholder, upon cessation of payment of considerations under the contract:

(1) That upon cessation of payment of considerations under a contract, the company will grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in subsections 4, 5, 6, 7, and 9 of this section;

(2) If a contract provides for a lump sum settlement at maturity, or at any other time, that upon surrender of the contract at or prior to the commencement of any annuity payments, the company will pay in lieu of any paid-up annuity benefit a cash surrender benefit of such amount as is specified in subsections 4, 5, 7, and 9 of this section. The company shall reserve the right to defer the payment of such cash surrender benefit for a period of six months after demand therefor with surrender of the contract;

(3) A statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of such benefits;

(4) A statement that any paid-up annuity, cash surrender or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which such benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract or any prior withdrawals from or partial surrenders of the contract. Notwithstanding the requirements of this section, any deferred annuity contract may provide that if no considerations have been received under a contract for a period of two full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to such period would be less than twenty dollars monthly, the company may at its option terminate such contract by payment in cash of the then present value of such portion of the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by such payment shall be relieved of any further obligation under such contract.

3. The minimum values as specified in subsections 4, 5, 6, 7, and 9 of this section of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section.

(1) With respect to contracts providing for flexible considerations, the minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payment shall be equal to an accumulation up to such time at a rate of interest of three percent per annum of percentages of the net considerations (as hereinafter defined) paid prior to such time, decreased by the sum of:

(a) Any prior withdrawals from or partial surrenders of the contract accumulated at a rate of interest of three percent per annum; and

(b) The amount of any indebtedness to the company on the contract, including interest due and accrued and increased by any existing additional amounts credited by the company to the contract. The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount not less than zero and shall be equal to the corresponding gross considerations credited to the contract during that contract year less an annual contract charge of thirty dollars and less a collection charge of one dollar and twenty-five cents per consideration credited to the contract during that contract year. The percentages of net considerations shall be sixty-five percent of the net consideration for the first contract year and eighty-seven and one-half percent of the net considerations for the second and later contract years. Notwithstanding the provisions of the preceding sentence, the percentage shall be sixty-five percent of the portion of the total net consideration for any renewal contract year which exceeds by not more than two times the sum of those portions of the net considerations in all prior contract years for which the percentage was sixty-five percent;

(2) With respect to contracts providing for fixed scheduled considerations, minimum nonforfeiture amounts shall be calculated on the assumption that considerations are paid annually in advance and shall be defined as for contracts with flexible considerations which are paid annually with two exceptions:

(a) The portion of the net consideration for the first contract year to be accumulated shall be the sum of sixty-five percent of the net consideration for the first contract year plus twenty-two and one-half percent of the excess of the net consideration for the first contract year over the lesser of the net considerations for the second and third contract years;

(b) The annual contract charge shall be the lesser of thirty dollars or ten percent of the gross annual consideration;

(3) With respect to contracts providing for a single consideration, minimum nonforfeiture amounts shall be defined as for contracts with flexible considerations except that the percentage of net consideration used to determine the minimum nonforfeiture amount shall be equal to ninety percent, and the net consideration shall be the gross consideration less a contract charge of seventy-five dollars;

(4) Notwithstanding any other provision of this subsection, for any contract issued on or after July 1, 2002, and before July 1, 2006, the interest rate at which net considerations, prior withdrawals, and partial surrenders shall be accumulated, for the purpose of determining minimum nonforfeiture amounts, shall be one and one-half percent per annum.

4. Any paid-up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. Such present value shall be computed using the mortality table, if any, and the interest rate specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract.

5. For contracts which provide cash surrender benefits, such cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit which would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, such present value being calculated on the basis of an interest rate not more than one percent higher than the interest rate specified in the contract for accumulating the net considerations to determine such maturity value, decreased by the amount of any indebtedness to the company on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the company to the contract. In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under such contracts shall be at least equal to the cash surrender benefit.

6. For contracts which do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid prior to the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity, such present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine such maturity value, and increased by any existing additional amounts credited by the company to the contract. For contracts which do not provide any death benefits prior to the commencement of any annuity payments, such present values shall be calculated on the basis of such interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. However, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time.

7. For the purpose of determining the benefits calculated under subsections 5 and 6 of this section, in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity date, the maturity date shall be deemed to be the latest date for which election shall be permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever is later.

8. Any contract which does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that such benefits are not provided.

9. Any paid-up annuity, cash surrender or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs.

10. For any contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of subsections 4, 5, 6, 7, and 9 of this section, additional benefits payable in the event of total and permanent disability, as reversionary annuity or deferred reversionary annuity benefits, or as other policy benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits, shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits that may be required by this section. The inclusion of such additional benefits shall not be required in any paid-up benefits, unless such additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits.

11. After September 28, 1979, any company may file with the director a written notice of its election to comply with the provisions of this section after a specified date before September 28, 1981. After the filing of such notice, then upon such specified date, which shall be the operative date of this section for such company, this section shall become operative with respect to annuity contracts thereafter issued by such company. If a company makes no such election, the operative date of this section for such company shall be September 28, 1981.

12. The provisions of this section shall not apply to any new contract entered into after July 1, 2006.

(L. 1979 S.B. 325, A.L. 2002 H.B. 1568 merged with S.B. 1009, A.L. 2004 H.B. 938 merged with S.B. 1188, A.L. 2010 H.B. 1965)

376.673. 1. No life insurance policy shall be issued or delivered in this state after October 13, 1967, which:

(1) By its terms expressly provides that the policyholder will participate in the distribution of earnings or surplus other than earnings or surplus attributable, by reasonable and nondiscriminatory standards, to the participating policies of the company and allocated to the policyholder on reasonable and nondiscriminatory standards; or

(2) Through sales material or oral presentations, is represented by the company or its agent to prospective policyholders as entitling the policyholder to the benefits described in subdivision (1) of this subsection; or

(3) By its terms expressly provides that the policyholder will receive some preferential or discriminatory advantage or benefit not available to persons who purchase insurance from the company at future dates or under other circumstances; or

(4) Through sales material or oral presentations is represented by the company or its agent to prospective policyholders as entitling the policyholder to the benefits described in subdivision (3) of this subsection.

2. Life insurance policies providing for the payment of a series of pure endowments maturing periodically during the premium paying period of the policy which are issued or delivered in this state after October 13, 1967, shall be subject to the following provisions:

(1) No detachable coupons or certificates or passbooks may be used. No other device may be used which tends to emphasize the periodic pure endowment benefits or which tends to create the impression that the pure endowments represent interest earnings or anything other than benefits which have been purchased by part of the policyholder's premium payments.

(2) Each pure endowment benefit must have a fixed maturity date and payment of the pure endowment benefit shall not be contingent upon the payment of any premium becoming due on or after the maturity date.

(3) The pure endowment benefits must be expressed in dollar amounts rather than as percentages of other quantities or in other ways, both in the policy itself and in the sale thereof.

(4) The pure endowment premiums shall be calculated with mortality, interest, and expense factors which are consistent with those for the basic policy premium and it shall be noted in bold type on the face of the policy that "a portion of the premium is used to pay the annual endowment".

(5) No insurance company, insurance agent, solicitor, nor insurance company representative, shall, as a competitive or twisting device, inform any policyholder or prospective policyholder that any insurance company was required to change a policy form or related material to comply with the provisions of this law.

(L. 1967 p. 516)

376.674. 1. Notwithstanding any provision of section 376.670 to the contrary, after September 28, 1987, a company may issue policies of life insurance which differ from its existing or currently filed policies only in that they do not provide for any cash surrender value prior to the death of the life insured. If a policy provides for any cash surrender value, endowment, or pure endowment prior to the death of the life insured, this exemption shall not apply. Any policy without cash surrender values, for which one or more cash surrender values would otherwise have been required, shall contain on its first page a concise, exact description set out in contrasting type at least four points larger than used in the body of that page a statement in a prominent place that such values are not provided and that no policy loans are available under the policy. The company shall provide to each prospective purchaser of such a policy a policy summary, the form of which shall be filed for approval pursuant to section 376.675 which includes the same description as the policy, similarly displayed, and which shows the premium said company charges for the same policy when cash surrender values are included. Such policy summary shall be delivered before any premium is accepted.

2. Except for the requirement of payment upon surrender, the nonforfeiture amounts for such policies shall be subject to all provisions of this chapter which apply to the cash surrender values of otherwise similar life insurance policies with cash surrender values.

3. The insurance laws of this state relating to policy loans shall not apply to policies which do not provide cash surrender values.

(L. 1987 S.B. 337)

376.675. 1. No policy of life insurance or contract of annuity shall be delivered or issued for delivery to any person in this state unless the policy or contract shall have been filed with and approved by the director of the department of insurance, financial institutions and professional registration.

2. The director of the department of insurance, financial institutions and professional registration shall have authority to make reasonable rules and regulations concerning the procedure for the filing and submission of policy or contract forms as are necessary, proper or advisable. The director shall approve or disapprove a policy or contract form within forty-five days after the filing and submission thereof. The failure of the director of the department of insurance, financial institutions and professional registration to take action approving or disapproving a submitted policy or contract form within the stipulated time shall be deemed an approval thereof until such time as the director of the department of insurance, financial institutions and professional registration shall notify the submitting company of his disapproval thereof.

3. The director of the department of insurance, financial institutions and professional registration shall approve only those forms which are in compliance with the insurance laws of this state and which contain such words, phraseology, conditions and provisions with are specific, certain and unambiguous and reasonably adequate to meet needed requirements for the protection of those insured. If any policy or contract form is disapproved, the reasons therefor shall be based upon the requirements of the laws of this state or of any regulation lawfully promulgated thereunder, and shall be stated in writing and a notification thereof shall be sent to the submitting company. The director shall accord a hearing upon a disapproval, if so requested. The disapproval of any policy or contract form by the director shall be subject to judicial review as provided in chapter 536.

4. The director of the department of insurance, financial institutions and professional registration may, by order or bulletin, exempt from the approval requirements of this section for so long as he deems proper any insurance policy, document, or form or type thereof, as specified in such order or bulletin, to which, in his opinion, this section may not practicably be applied, or the approval of which is, in his opinion, not desirable or necessary for the protection of the public.

(L. 1963 p. 497 §§ 1, 2, A.L. 1984 S.B. 592)

376.676. The department of insurance, financial institutions and professional registration shall promulgate regulations governing the valuation of life insurance policies. The department of insurance, financial institutions and professional registration may adopt the "Valuation of Life Insurance Policies Model Regulation" adopted by the National Association of Insurance Commissioners.

(L. 2000 H.B. 1739)

376.677. 1. Notwithstanding any provision of section 376.670, to the contrary, after September 28, 1987, a company may issue policies of life insurance which differ from its existing or currently filed policies only in that they do not provide for any cash surrender value prior to the death of the life insured. If a policy provides for any cash surrender value, endowment, or pure endowment prior to the death of the life insured, this exemption shall not apply. Any policy without cash surrender values, for which one or more cash surrender values would otherwise have been required, shall contain on its first page a concise, exact description set out in contrasting type at least four points larger than used in the body of that page a statement in a prominent place that such values are not provided and that no policy loans are available under the policy. The company shall provide to each prospective purchaser of such a policy a policy summary, the form of which shall be filed for approval pursuant to section 376.675, which includes the same description as the policy, similarly displayed, and which shows the premium said company charges for the same policy when cash surrender values are included. Such policy summary shall be delivered before any premium is accepted.

2. Except for the requirement of payment upon surrender, the nonforfeiture amounts for such policies shall be subject to all provisions of chapter 376, which apply to the cash surrender values of otherwise similar life insurance policies with cash surrender values.

3. The insurance laws of this state relating to policy loans shall not apply to policies which do not provide cash surrender values.

(L. 1987 H.B. 415 § 1)

376.678. 1. Notwithstanding any other provision of law, all life insurance companies licensed to do business in this state shall furnish at least annually to each individual whole life policyholder and individual deferred annuity contractholder, a statement or notice providing sufficient information to permit identification of the policy or contract. Such identification notice shall include the name of the policyholder or contractholder, the policy or contract number and any premium payable.

2. Upon the request of the policyholder or an authorized representative, such company shall, within a reasonable period of time, furnish applicable information relating to the policy or contract, such as, type of plan, amount of insurance, policy values, policy loans or dividends.

(L. 1987 S.B. 337 § 1)

376.679. Any domestic life insurer or reinsurer may also reinsure, by itself, or together with other insurance companies, subject to any limitations, approval or rules promulgated by the director of the department of insurance, financial institutions and professional registration, any risk arising from, related to, or incident to the manufacture, ownership or operation of aircraft.

(L. 1992 S.B. 831 §§ A, 3)

Effective 1-1-93

376.680. Subject to the terms of the policy relating to assignment of incidents of ownership thereunder, a person whose life is insured under a policy of group life insurance may assign any or all incidents of ownership granted him under such policy, including but not limited to any right to designate a beneficiary, to have an individual policy issued to him, and to pay premiums. Any assignment by the insured, made either before or after September 28, 1971, shall be valid for the purpose of vesting in the assignee in accordance with any provisions included therein as to the time at which it is to be effective, all of such incidents of ownership so assigned, but without prejudice to the insurer on account of any payment it may make or individual policy it may issue without notice of the assignment.

(L. 1971 S.B. 125 § 1)

376.691. Except as provided in section 376.693, no policy of group life insurance shall be delivered in this state unless it is one of the following:

(1) A policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer, subject to the following requirements:

(a) The employees eligible for insurance under the policy shall be all of the employees of the employer, or all of any class or classes of such employees. The policy may provide that the term "employees" shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships, or partnerships if the business of the employer and of such affiliated corporations, proprietorships, or partnerships is under common control. The policy may also provide that the term "employees" shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may also provide that the term "employees" shall include retired employees and directors of a corporate employer. A policy issued to insure the employees of a public body may provide that the term "employees" shall include elected or appointed officials;

(b) The premium for the policy shall be paid either from the employer's funds or from funds contributed by the insured employees, or from both. Except as provided in paragraph (c) of this subdivision, a policy on which no part of the premium is to be derived from funds contributed by the insured employees must insure all eligible employees, except those who reject such coverage in writing; and

(c) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer;

(2) A policy issued to a creditor, its parent holding company, or to a trustee or agent designated by two or more creditors, which creditor, holding company, affiliate, trustee, or agent shall be deemed the policyholder, to insure debtors of the creditor, or creditors, subject to the following requirements:

(a) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor, or creditors, or all of any class or classes of such debtors. The policy may provide that the term "debtors" shall include:

a. Borrowers of money or purchasers or lessees of goods, services, or property for which payment is arranged through a credit transaction;

b. The debtors of one or more subsidiary corporations; and

c. The debtors of one or more affiliated corporations, proprietorships, or partnerships if the business of the policyholder and of such affiliated corporations, proprietorships, or partnerships is under common control;

(b) The premium for the policy shall be paid either from the creditor's funds or from charges collected from the insured debtors, or from both. Except as provided in paragraph (c) of this subdivision, a policy on which no part of the premium is to be derived from the funds contributed by insured debtors specifically for their insurance must insure all eligible debtors;

(c) An insurer may exclude any debtors as to whom evidence of individual insurability is not satisfactory to the insurer;

(d) The amount of the insurance on the life of any debtor shall at no time exceed the scheduled amount of indebtedness to the creditor;

(e) The insurance may be payable to the creditor or any successor to the right, title, and interest of the creditor. Such payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of such payment. Any excess insurance above the scheduled amount shall be payable to the second beneficiary; if there is no second beneficiary, the insured's estate;

(f) Notwithstanding the provisions of the above paragraphs of this subdivision, insurance on agricultural credit transaction commitments may be written up to the amount of the loan commitment on a nondecreasing or level term plan. Insurance on educational credit transaction commitments may be written up to the amount of the loan commitment less the amount of any repayments made on the loan. Insurance on residential real estate secured credit transaction commitments may be written up to the amount of the loan commitment;

(3) A policy issued to a labor union or similar employee organization, which shall be deemed to be the policyholder, to insure members of such union or organization for the benefit of persons other than the union or organization or any of its officials, representatives, or agents, subject to the following requirements:

(a) The members eligible for insurance under the policy shall be all of the members of the union or organization, or all of any class or classes of such members;

(b) The premium for the policy shall be paid either from funds of the union or organization or from funds contributed by the insured members specifically for their insurance, or from both. Except as provided in this subdivision, a policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members, except those who reject such coverage in writing;

(c) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer;

(4) A policy issued to a trust or to the trustee of a fund established by two or more employers, or by one or more labor unions or similar employee organizations, or by one or more employers and one or more labor unions or similar employee organizations, which trust or trustee shall be deemed the policyholder, to insure employees of the employers or members of the unions or organizations for the benefit of persons other than the employers or the unions or organizations, 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 organizations, or all of any class or classes of such employees or members. The policy may provide that the term "employees" shall include retired employees, the individual proprietor or partners if an employer is an individual proprietorship or a partnership, and directors of a corporate employer. The policy may also provide that the term "employees" shall include the trustees or their employees, or both, if their duties are principally connected with such trusteeship;

(b) The premium for the policy shall be paid from funds contributed by the employer or employers of the insured persons or by the union or unions or similar employee organizations, or by both, or from funds contributed by the insured persons or from both the insured persons and the employer or union or similar employee organization. Except as provided in paragraph (c) of this subdivision, 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, except those who reject such coverage in writing;

(c) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer;

(5) A policy issued to an association or to a trust or trustee of a fund established, created, or maintained for the benefit of members of one or more associations. The association or associations shall have at the outset a minimum of one hundred persons or there shall be a minimum of one hundred employees or* employer members of the association, shall have been organized and maintained in good faith for purposes other than that of obtaining insurance, shall have been in active existence for at least two years prior to obtaining a policy of group life insurance, and shall have a constitution and bylaws which provide that: the association shall hold regular meetings not less than annually to further purposes of its members; except for credit unions, the association shall collect dues or solicit contributions from members; and the members shall have voting privileges and representation on the governing board and committees. The policy shall be subject to the following requirements:

(a) The policy may insure members of such association, employees of such association, or employees of members of such association, or any combination thereof, or all of any class or classes of such members or employees, for the benefit of persons other than the employee's employer;

(b) The premium for the policy shall be paid from funds contributed by the association or by employer members, or by both, or from funds contributed by the covered persons, or from both the covered persons and the association or employer members;

(c) Except as provided in paragraph (d) of this subdivision, a policy on which no part of the premium is to be derived from funds contributed by the covered persons specifically for the insurance must insure all eligible persons, except those who reject such coverage in writing;

(d) An insurer may exclude or limit the coverage of any person as to whom evidence of individual insurability is not satisfactory to the insurer;

(6) A policy issued to a credit union or to a trustee or agent designated by two or more credit unions, which credit union, trustee or agent shall be deemed the policyholder, to insure members of such credit union for the benefit of persons other than the credit union, trustee, agent, or any of their officials, subject to the following requirements:

(a) The members eligible for insurance shall be all of the members of the credit union, or all of any class or classes of such members;

(b) The premium for the policy shall be paid by the policyholder from the credit union's funds and, except as provided in paragraph (c) of this subdivision, must insure all eligible members;

(c) An insurer may exclude or limit the coverage on any member as to whom evidence of individual insurability is not satisfactory to the insurer.

(L. 1982 H.B. 1546 § 1, A.L. 1987 H.B. 510)

*Word "of" appears in original rolls.

376.693. Group life insurance offered to a resident of this state under a group life insurance policy issued to a group other than one described in section 376.691 shall be subject to the following requirements:

(1) No such group life insurance policy shall be delivered in this state unless the director of the department of insurance, financial institutions and professional registration finds that:

(a) The issuance of such group policy is not contrary to the best interest of the public;

(b) The issuance of the group policy would be actuarially sound;

(c) The issuance of the group policy would result in economies of acquisition or administration; and

(d) The benefits are reasonable in relation to the premiums charged;

(2) No such group life insurance coverage may be offered in this state by an insurer under a policy issued in another state unless this state, or another state having requirements substantially similar to those contained in subdivision (1) of this section, has made a determination that such requirements have been met;

(3) The premium for the policy shall be paid either from the policyholder's funds or from funds contributed by the covered persons, or from both;

(4) An insurer may exclude or limit coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.

(L. 1982 H.B. 1546 § 2)

376.694. 1. As used in this section, the following terms shall mean:

(1) "Direct response solicitation", a solicitation through a sponsoring or endorsing entity or through the mails, telephone, or other mass communications medium;

(2) "Sponsoring or endorsing entity", an organization which has arranged for the offering of a program of insurance in a manner which communicates that eligibility for participation in the program is dependent upon affiliation with such organization or that it endorses participation in the program.

2. With respect to a program of insurance, whether issued on an individual basis or a group basis, which would not qualify under subdivisions (1), (2), (3), (4) and (6) of section 376.691 if issued on a group basis, if compensation of any kind will or may be paid to a policyholder in the case of a group policy, or a sponsoring or endorsing entity in the case of individual, blanket or franchise policies marketed by means of direct response solicitation, the insurer shall cause to be distributed to prospective insureds a written notice that compensation will or may be paid.

3. Such notice shall be distributed whether compensation is direct or indirect and whether such compensation is paid to or retained by the policyholder or sponsoring or endorsing entity or paid to or retained by a third party at the direction of the policyholder or sponsoring or endorsing entity or any entity affiliated therewith by way of ownership, contract or employment.

4. The notice required by this section shall be placed on or accompany any application or enrollment form provided prospective insureds.

(L. 1985 H.B. 623)

376.695. Except for a policy issued under subdivision (2) of section 376.691, a group life insurance policy may be extended to insure the employees or members against loss due to the death of their spouses and dependent children, or any class or classes of such spouses or dependent children, subject to the following provisions:

(1) The premium for the insurance shall be paid either from funds contributed by the employer, union, association, or other person to whom the policy has been issued, or from funds contributed by the covered persons, or from both. Except as provided in subdivision (2) of this section, a policy on which no part of the premium for the spouse's and dependent child's coverage is to be derived from funds contributed by the covered persons must insure all eligible employees or members with respect to their spouses and dependent children, or any class or classes of such employees or members, except those who reject such coverage in writing;

(2) An insurer may exclude or limit the coverage on any spouse or dependent child as to whom evidence of individual insurability is not satisfactory to the insurer.

(L. 1982 H.B. 1546 § 3, A.L. 1985 H.B. 623)

376.696. Any other law to the contrary notwithstanding, no contract shall be entered into by the governing body of any political subdivision to purchase any insurance policy or policies unless the contract is submitted to competitive bidding at least every six years and the contract is awarded to the lowest or best bidder. The renewal of any insurance policy during any period between submissions of the contract to competitive bidding shall not constitute a separate and distinct contract for the time covered by the renewal but shall be treated only as an extension of an existing contract.

(L. 1985 H.B. 623)

376.697. No policy of group life insurance shall be delivered in this state unless it contains in substance the following provisions, or similar provisions which, in the opinion of the director of the department of insurance, financial institutions and professional registration, are more favorable to the persons insured or are at least as favorable to the persons insured and more favorable to the policyholder; provided, however, that the provisions in subdivisions (6) to (11) of this section shall not apply to policies insuring the lives of debtors, that the standard provisions required for individual life insurance policies shall not apply to group life insurance policies, and that if the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision which, in the opinion of the director of the department of insurance, financial institutions and professional registration, is equitable to the insured persons and to the policyholder. Nothing contained herein shall be construed to require that group life insurance policies contain the same nonforfeiture provisions as are required for individual life insurance policies:

(1) A provision stating that the policyholder is entitled to a grace period of thirty-one 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 shall have 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 such a grace period;

(2) A provision stating that the validity of the policy shall not be contested except for nonpayment of premiums and fraudulent misstatements made by the applicant in the application for such policy after the policy has been in force for two years from its date of issue, and that no statement made by any person insured under the policy relating to his insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force during such person's lifetime for a period of two years prior to the contest unless it is contained in a * written instrument signed by such person. Nothing in this subdivision shall preclude the assertion at any time of defenses based upon provisions in the policy which relate to eligibility for coverage;

(3) A provision stating 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 containing the statement is or has been furnished to such person or, in the event of death or incapacity of the insured person, to his beneficiary or personal representative;

(4) 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 his coverage;

(5) A provision specifying an equitable adjustment of premiums or of benefits, or both, to be made in the event that the age of a person insured has been misstated, which provision shall contain a clear statement of the method of adjustment to be made;

(6) A provision stating 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; except, that where the policy contains conditions pertaining to family status, if there is no designated beneficiary, the beneficiary as to all or any part of the benefit sum may, subject to the provisions of the policy, be the family member specified under the policy who is living at the death of the person insured. The rights of such family member shall be 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 such sum, not exceeding two thousand dollars, to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured;

(7) A provision stating that the insurer will issue to the policyholder for delivery to each person insured a certificate specifying the insurance protection to which he is entitled, to whom the insurance benefits are payable, any dependent's coverage included in such certificate, and the rights and conditions set forth in subdivisions (8), (9), (10), and (11), of this section;

(8) A provision stating that if the insurance, or any portion of it, on a person covered under the policy, or on any dependent of such person, ceases because of termination of employment or of membership in any class eligible for coverage under the policy, such person shall be entitled to have issued to him 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 days after such termination; and, provided further, that:

(a) The individual policy shall, at the option of such person, be on any one 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;

(b) The individual policy shall be in an amount which does not exceed the life insurance which ceases because of such termination, less the amount of any life insurance for which such person becomes eligible under the same or any other group policy within thirty-one days after such termination; provided, that any amount of insurance which shall have matured on or before the date of such termination as an endowment payable to the person insured, whether in one sum, in installments, or in the form of an annuity, shall not, for the purposes of this paragraph, be included in the amount which is considered to cease because of such termination; and

(c) 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 such person then belongs, and to the individual age attained on the effective date of the individual policy;

Subject to the same conditions set forth in paragraphs (a), (b), and (c) of this subdivision the conversion privilege shall be available to a surviving dependent, if any, at the death of the employee or member, with respect to the coverage under the group policy which terminates by reason of such death; and to the dependent of the employee or member upon termination of coverage of the dependent, while the employee or member remains under the group policy, by reason of the dependent ceasing to be a qualified family member under the group policy;

(9) A provision stating that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of such termination whose insurance terminates, including the insured dependent of a covered person, and who has been so insured for at least five years prior to such termination date shall be entitled to have issued by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided under subdivision (8) of this section; except, that the group policy may provide that the amount of such individual policy shall not exceed 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 he is or becomes eligible under a group policy issued or reinstated by the same or another insurer within thirty-one days after such termination, or ten thousand dollars, whichever is smaller;

(10) A provision specifying that if a person insured under the group policy, or the insured dependent of a covered person, dies during the period within which the individual would have been entitled to have an individual policy issued in accordance with subdivision (8) or (9) of this section and before such an individual policy shall have become effective, the amount of life insurance which he would have been entitled to have issued under such 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 therefor has been made;

(11) Where active employment is a condition of insurance, a provision stating that an insured may continue coverage during the insured's total disability by timely payment to the policyholder of that portion, if any, of the premium that would have been required from the insured had total disability not incurred. The continuation shall be on a premium paying basis for a period of six months from the date on which the total disability started, but shall not extend beyond the approval by the insurer of continuation of the coverage under any disability provision which the group insurance policy may contain or the discontinuance of the group insurance policy, whichever occurs earlier;

(12) In the case of a policy insuring the lives of debtors, a provision stating that the insurer will furnish to the policyholder for delivery to each debtor insured under the policy a certificate of insurance describing the coverage and specifying that the death benefit shall first be applied to reduce or extinguish the indebtedness.

(L. 1982 H.B. 1546 § 4)

*Word "a" does not appear in original rolls.

376.699. If any individual insured under a group life insurance policy hereafter delivered in this state becomes entitled under the terms of such policy to have an individual policy of life insurance issued without evidence of insurability, subject to the making of an application and paying the first premium within the period specified in such policy, and if such individual is not given notice of the existence of such right at least fifteen days prior to the expiration date of such period, then, in such event, the individual shall have an additional period within which to exercise such right. Nothing contained herein shall be construed to continue any insurance beyond the period provided in such policy. The additional period provided in this section shall expire fifteen days after the individual is given the notice of his rights regarding an individual policy, but in no event shall such additional period extend beyond sixty days after the expiration date of the period provided in such 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 section.

(L. 1982 H.B. 1546 § 5)

376.700. 1. The purpose of sections 376.700 to 376.714 is to require insurers to deliver to purchasers of life insurance, information which will improve the buyer's ability to select the most appropriate plan of life insurance for his needs, improve the buyer's understanding of the basic features of the policy which has been purchased or which is under consideration, and improve the ability of the buyer to evaluate the relative costs of similar plans of life insurance.

2. Sections 376.700 to 376.714 do not prohibit the use of additional material which is not in violation of sections 376.700 to 376.714 or any other state law or regulation.

(L. 1979 H.B. 508 § 1)

376.702. 1. Except as hereafter exempted, sections 376.700 to 376.714 shall apply to any solicitation, negotiation or procurement of life insurance occurring within this state. Sections 376.700 to 376.714 shall apply to every issuer of life insurance contracts including fraternal benefit societies.

2. Unless otherwise specifically included, the provisions of sections 376.700 to 376.714 shall not apply to:

(1) Annuities;

(2) Credit life insurance;

(3) Group life insurance;

(4) Life insurance policies issued in connection with pension and welfare plans as defined by and which are subject to the federal Employee Retirement Income Security Act of 1974 (ERISA); or

(5) Variable life insurance under which the death benefits and cash values vary in accordance with unit values of investments held in a separate account.

(L. 1979 H.B. 508 § 2)

376.704. For the purposes of sections 376.700 to 376.714, the following definitions shall apply:

(1) "Buyer's guide", a document which contains, and is limited to, the language contained in section 376.714 or language approved by the director of the department of insurance, financial institutions and professional registration;

(2) "Cash dividend", the current illustrated dividend which can be applied toward payment of the gross premium;

(3) "Equivalent level annual dividend", a calculation made by applying the following steps:

(a) Accumulate the annual cash dividends at five percent interest, or other interest rate approved by the director of the department of insurance, financial institutions and professional registration, compounded annually to the end of the tenth and twentieth policy years;

(b) Divide each accumulation of (a) by an interest factor that converts it into one equivalent level annual amount that, if paid at the beginning of each year, would accrue to the values in (a) over the respective periods stipulated in (a). If the period is ten years, the factor is 13.207 and if the period is twenty years, the factor is 34.719;

(c) Divide the results of (b) by the number of thousands of the equivalent level death benefit to arrive at the equivalent level annual dividend;

(4) "Equivalent level death benefit", an amount calculated as follows:

(a) Accumulate the guaranteed amount payable upon death, regardless of the cause of death, at the beginning of each policy year for ten and twenty years at five percent interest, or other interest rate approved by the director of the department of insurance, financial institutions and professional registration, compounded annually to the end of the tenth and twentieth policy years respectively;

(b) Divide each accumulation of (a) by an interest factor that converts it into one equivalent level annual amount that, if paid at the beginning of each year, would accrue to the value in (a) over the respective periods stipulated in (a). If the period is ten years, the factor is 13.207 and if the period is twenty years, the factor is 34.719.

(5) "Generic name", a short title which is descriptive of the premium and benefit patterns of a policy or a rider;

(6) "Life insurance cost indexes":

(a) "Life insurance surrender cost index", a calculation made by applying the following steps:

a. Determine the guaranteed cash surrender value, if any, available at the end of the tenth and twentieth policy years;

b. For participating policies, add the terminal dividend payable upon surrender, if any, to the accumulation of the annual cash dividends at five percent interest, or other interest rate approved by the director of the department of insurance, financial institutions and professional registration, compounded annually to the end of the period selected and add this sum to the amount determined in step a;

c. Divide the result of step b. (step a. for guaranteed-cost policies) by an interest factor that converts it into an equivalent level annual amount that, if paid at the beginning of each year, would accrue to the value in step b. (step a. for guaranteed-cost policies) over the respective periods stipulated in step a. If the period is ten years, the factor is 13.207 and if the period is twenty years, the factor is 34.719;

d. Determine the equivalent level premium by accumulating each annual premium payable for the basic policy or rider at five percent interest, or other interest rate approved by the director of the department of insurance, financial institutions and professional registration, compounded annually to the end of the period stipulated in step a. and dividing the result by the respective factors stated in step c. (This amount is the annual premium payable for a level premium plan.);

e. Subtract the result of step c. from step d.;

f. Divide the result of step e. by the number of thousands of the equivalent level death benefit to arrive at the life insurance surrender cost index;

(b) "Life insurance net payment cost index", a calculation made in the same manner as the comparable life insurance cost index except that the cash surrender value and any terminal dividend are set at zero;

(7) "Policy summary", for the purposes of sections 376.700 to 376.714, policy summary means a written statement describing the elements of the policy including but not limited to:

(a) A prominently placed title as follows:

STATEMENT OF POLICY COST AND BENEFIT INFORMATION;

(b) The name and address of the insurance agent, or, if no agent is involved, a statement of the procedure to be followed in order to receive responses to inquiries regarding the policy summary;

(c) The full name and home office or administrative office address of the company in which the life insurance policy is to be or has been written;

(d) The generic name of the basic policy and each rider;

(e) The following amounts, where applicable, for the first five policy years and representative policy years thereafter sufficient to clearly illustrate the premium and benefit patterns, including, but not necessarily limited to, the years for which life insurance cost indexes are displayed and at least one age from sixty through sixty-five or maturity whichever is earlier:

a. The annual premium for the basic policy;

b. The annual premium for each optional rider;

c. Guaranteed amount payable upon death, at the beginning of the policy year regardless of the cause of death other than suicide, or other specifically enumerated exclusions, which is provided by the basic policy and each optional rider, with benefits provided under the basic policy and each rider shown separately;

d. Total guaranteed cash surrender values at the end of the year with values shown separately for the basic policy and each rider;

e. Cash dividends payable at the end of the year with values shown separately for the basic policy and each rider (Dividends need not be displayed beyond the twentieth policy year.);

f. Guaranteed endowment amounts payable under the policy which are not included under guaranteed cash surrender values above;

(f) The effective policy loan annual percentage interest rate, if the policy contains this provision, specifying whether this rate is applied in advance or in arrears. If the policy loan interest rate is variable, the policy summary includes the maximum annual percentage rate;

(g) Life insurance cost indexes for ten and twenty years but in no case beyond the premium paying period. Separate indexes are displayed for the basic policy and for each optional term life insurance rider. Such indexes need not be included for optional riders which are limited to benefits such as accidental death benefits, disability waiver of premium, preliminary term life insurance coverage of less than twelve months and guaranteed insurability benefits nor for basic policies or optional riders covering more than one life;

(h) The equivalent level annual dividend, in the case of participating policies and participating optional term life insurance riders, under the same circumstances and for the same durations at which life insurance cost indexes are displayed;

(i) A policy summary which includes dividends shall also include a statement that dividends are based on the company's current dividend scale and are not guaranteed, in addition to a statement in close proximity to the equivalent level annual dividend as follows: An explanation of the intended use of the equivalent level annual dividend is included in the life insurance buyer's guide;

(j) A statement in close proximity to the life insurance cost indexes as follows: An explanation of the intended use of these indexes is provided in the life insurance buyer's guide;

(k) The date on which the policy summary is prepared. The policy summary must consist of a separate document. All information required to be disclosed must be set out in such a manner as to not minimize or render any portion thereof obscure. Any amounts which remain level for two or more years of the policy may be represented by a single number if it is clearly indicated what amounts are applicable for each policy year. Amounts in item (e) of this section shall be listed in total, not on a per thousand nor per unit basis. If more than one insured is covered under one policy or rider, guaranteed death benefits shall be displayed separately for each insured or for each class of insureds if death benefits do not differ within the class. Zero amounts shall be displayed as zero and shall not be displayed as a blank space.

(L. 1979 H.B. 508 § 3)

376.706. 1. The insurer shall provide, to all prospective purchasers, a buyer's guide and a policy summary prior to accepting the applicant's initial premium or premium deposit, unless the policy for which application is made contains an unconditional refund provision of at least ten days or unless the policy summary contains such an unconditional refund offer, in which event the buyer's guide and policy summary must be delivered with the policy or prior to delivery of the policy.

2. The insurer shall provide a buyer's guide and a policy summary to any prospective purchaser upon request.

3. In the case of policies whose equivalent level death benefit does not exceed five thousand dollars, the requirement for providing a policy summary will be satisfied by delivery of a written statement containing the information described in section 376.704(7), items (b), (c), (d), (e)b., (e)c., (f), (g), (j) and (k).

(L. 1979 H.B. 508 § 4)

376.708. 1. Each insurer shall maintain at its home office or principal office, a complete file containing one copy of each document authorized by the insurer for use pursuant to sections 376.700 to 376.714. Such file shall contain one copy of each authorized form for a period of three years following the date of its last authorized use.

2. An agent shall inform the prospective purchaser, prior to commencing a life insurance sales presentation, that he is acting as a life insurance agent and inform the prospective purchaser of the full name of the insurance company which he is representing to the buyer. In sales situations in which an agent is not involved, the insurer shall identify its full name.

3. Terms such as financial planner, investment advisor, financial consultant, or financial counseling shall not be used in such a way as to imply that the insurance agent is generally engaged in an advisory business in which compensation is unrelated to sales unless such is actually the case.

4. Any reference to policy dividends must include a statement that dividends are not guaranteed.

5. A system or presentation which does not recognize the time value of money through the use of appropriate interest adjustments shall not be used for comparing the cost of two or more life insurance policies. Such a system may be used for the purpose of demonstrating the cash-flow pattern of a policy if such presentation is accompanied by a statement disclosing that the presentation does not recognize that, because of interest, a dollar in the future has less value than a dollar today.

6. A presentation of benefits shall not display guaranteed and nonguaranteed benefits as a single sum unless they are shown separately in close proximity thereto.

7. A statement regarding the use of the life insurance cost indexes shall include an explanation to the effect that the indexes are useful only for the comparison of the relative costs of two or more similar policies.

8. A life insurance cost index which reflects dividends or an equivalent level annual dividend shall be accompanied by a statement that it is based on the company's current dividend scale and is not guaranteed.

9. For the purposes of sections 376.700 to 376.714, the annual premium for a basic policy or rider, for which the company reserves the right to change the premium, shall be the maximum annual premium.

(L. 1979 H.B. 508 § 5)

376.710. Deliberate failure of an insurer to provide or deliver a buyer's guide, or a policy summary as provided in section 376.706 shall constitute an omission which misrepresents the benefits, advantages, conditions or terms of an insurance policy, and an agent's license may be revoked or suspended by the administrative hearing commission for such an omission.

(L. 1979 H.B. 508 § 6)

376.712. Sections 376.700 to 376.714 shall apply to all solicitations of life insurance which commence on or after January 1, 1980.

(L. 1979 H.B. 508 § 7)

376.714. The life insurance buyer's guide shall consist of the following:

(1) The face page of the buyer's guide shall read as follows: LIFE INSURANCE BUYER'S GUIDE

This guide can show you how to save money when you shop for life