CHAPTER 700d*
FRATERNAL BENEFIT SOCIETIES

      *See Sec. 38a-444 re interest rates on loans.

      See Sec. 38a-495 re Medicare supplement policies.

      See Sec. 38a-504 re insurance policy or contract requirements covering surgical removal of tumors and treatment of leukemia.

      Annotation to former chapter 684:

      Cited. 36 CS 63.


Table of Contents

Sec. 38a-595. (Formerly Sec. 38-206). Definitions.
Sec. 38a-596. (Formerly Sec. 38-207). Societies operating on the lodge system.
Sec. 38a-597. (Formerly Sec. 38-208). Representative form of government.
Sec. 38a-598. (Formerly Sec. 38-209). Incorporation. Preliminary and permanent certificates. Constitution and laws.
Sec. 38a-599. (Formerly Sec. 38-210). Rights and powers of societies existing on January 1, 1958.
Sec. 38a-600. (Formerly Sec. 38-211). Unincorporated or voluntary associations prohibited from transacting business.
Sec. 38a-601. (Formerly Sec. 38-212). Foreign and alien societies to be licensed.
Sec. 38a-602. (Formerly Sec. 38-213). Renewal of license.
Sec. 38a-603. (Formerly Sec. 38-214). Suspension or revocation of license of foreign or alien society.
Sec. 38a-604. (Formerly Sec. 38-215). Tax exemption.
Sec. 38a-605. (Formerly Sec. 38-216). Principal office. Meetings of governing body.
Sec. 38a-606. (Formerly Sec. 38-218). Amendment of articles of incorporation, constitution or laws.
Sec. 38a-607. (Formerly Sec. 38-219). Constitution and laws may be absolute authority.
Sec. 38a-608. (Formerly Sec. 38-220). Consolidation or merger.
Sec. 38a-609. (Formerly Sec. 38-221). Benefit membership.
Sec. 38a-610. (Formerly Sec. 38-222). Maintenance of institutions for benefit of members.
Sec. 38a-611. (Formerly Sec. 38-233). Reinsurance.
Sec. 38a-612. (Formerly Sec. 38-235). Use of assets. Proportion to be used for expenses.
Sec. 38a-613. (Formerly Sec. 38-236). Investments.
Sec. 38a-614. (Formerly Sec. 38-237). Annual report. Synopsis mailed to members. Valuation of certificates. Reserves.
Sec. 38a-615. (Formerly Sec. 38-237a). Requirements re filing of financial statements by society.
Sec. 38a-616. (Formerly Sec. 38-238). Examination of domestic society by commissioner.
Sec. 38a-617. (Formerly Sec. 38-239). Examination of foreign or alien society.
Sec. 38a-618. (Formerly Sec. 38-240). Statement affecting status of society prohibited pending answer of society.
Sec. 38a-619. (Formerly Sec. 38-241). Decisions of commissioner subject to Superior Court review.
Sec. 38a-620. (Formerly Sec. 38-242). Injunction or quo warranto action against domestic society.
Sec. 38a-621. (Formerly Sec. 38-243). Petition for injunction to be made only by Attorney General.
Sec. 38a-622. (Formerly Sec. 38-244). Misrepresentations, false statements prohibited. Penalties.
Sec. 38a-623. (Formerly Sec. 38-245). Discrimination, rebates prohibited.
Sec. 38a-624. (Formerly Sec. 38-246). Exemption from insurance laws.
Sec. 38a-624a. Effect of marriage laws on determination of members or beneficiaries or provision of insurance.
Sec. 38a-625. (Formerly Sec. 38-247). Exempt societies.
Sec. 38a-626. (Formerly Sec. 38-248). Penalties.
Secs. 38a-627 to 38a-630.
Sec. 38a-631. (Formerly Sec. 38-224). Types of benefits authorized.
Sec. 38a-632. (Formerly Sec. 38-224a). Additional benefits from special account.
Sec. 38a-633. (Formerly Sec. 38-225). Insurance and branches for children.
Sec. 38a-634. (Formerly Sec. 38-226). Nonforfeiture benefits, cash surrender values and certificate loans.
Sec. 38a-635. (Formerly Sec. 38-227). Officers and members not liable for benefits.
Sec. 38a-636. (Formerly Sec. 38-228). Beneficiaries. Funeral benefits.
Sec. 38a-637. (Formerly Sec. 38-229). Money or other benefits not liable to attachment.
Sec. 38a-638. (Formerly Sec. 38-230). Benefit certificate.
Sec. 38a-639. (Formerly Sec. 38-231). Certificate provisions.
Sec. 38a-640. (Formerly Sec. 38-232). Forms of certificates to be filed with the commissioner. Approval.
Secs. 38a-641 to 38a-644.

PART I
IN GENERAL

      Sec. 38a-595. (Formerly Sec. 38-206). Definitions. Any incorporated society, order or supreme lodge, without capital stock, including one exempted under subdivision (b) of section 38a-625 whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with ritualistic form of work, having a representative form of government, and which makes provision for the payment of benefits in accordance with sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive and 38a-800, is declared to be a fraternal benefit society. When used in sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive and 38a-800, "society", unless otherwise indicated, means fraternal benefit society and "premiums" means premiums, rates or other required contributions by whatever name known.

      (1949 Rev., S. 6222; 1957, P.A. 448, S. 1, 20.)

      History: Sec. 38-206 transferred to Sec. 38a-595 in 1991.

      Annotations to former section 38-206:

      Fraternal benefit society distinguished from insurance company. 64 C. 171. Nature may be such as to make such an organization contrary to public policy. Id., 208.


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      Sec. 38a-596. (Formerly Sec. 38-207). Societies operating on the lodge system. A society having a supreme legislative or governing body and subordinate lodges or branches by whatever name known, into which members are elected, initiated or admitted in accordance with its constitution, laws, ritual and rules, which subordinate lodges or branches are required by the laws of the society to hold regular meetings at least once in each month, shall be deemed to be operating on the lodge system.

      (1949 Rev., S. 6223; 1957, P.A. 448, S. 2.)

      History: Sec. 38-207 transferred to Sec. 38a-596 in 1991.

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      Sec. 38a-597. (Formerly Sec. 38-208). Representative form of government. A society shall be deemed to have a representative form of government when: (a) It provides in its constitution or laws for a supreme legislative or governing body, composed of representatives elected either by the members or by delegates elected directly or indirectly by the members, together with such other members of such body as may be prescribed by the society's constitution and laws; (b) the representatives elected constitute a majority in number and have not less than two-thirds of the votes nor less than the votes required to amend its constitution and laws; (c) the meetings of the supreme legislative or governing body and the election of officers, representatives or delegates are held as often as once in four calendar years; (d) each insured member shall be eligible for election to act or serve as a delegate to such meeting; (e) the society has a board of directors charged with the responsibility for managing its affairs in the interim between meetings of its supreme legislative or governing body, subject to control by such body and having powers and duties delegated to it in the constitution or laws of the society; (f) such board of directors is elected by the supreme legislative or governing body, except in case of filling a vacancy in the interim between meetings of such body; (g) the officers are elected either by the supreme legislative or governing body or by the board of directors; and (h) the members, officers, representatives or delegates shall not vote by proxy.

      (1949 Rev., S. 6224; 1957, P.A. 448, S. 3.)

      History: Sec. 38-208 transferred to Sec. 38a-597 in 1991.

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      Sec. 38a-598. (Formerly Sec. 38-209). Incorporation. Preliminary and permanent certificates. Constitution and laws. The organization of a society shall be governed as follows:

      (1) Seven or more citizens of the United States, a majority of whom are residents of this state, who desire to form a fraternal benefit society, may make, sign and acknowledge before some officer, competent to take acknowledgment of deeds, articles of incorporation, in which shall be stated: (a) The proposed corporate name of the society, which shall not so closely resemble the name of any society or insurance company as to be misleading or confusing; (b) the purposes for which it is being formed and the mode in which its corporate powers are to be exercised. Such purposes shall not include more liberal powers than are granted by sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800, provided any lawful, social, intellectual, educational, charitable, benevolent, moral, fraternal or religious advantages may be set forth among the purposes of the society; and (c) the names and residences of the incorporators and the names, residences and official titles of all the officers, trustees, directors or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which all such officers shall be elected by the supreme legislative or governing body, which election shall be held not later than one year from the date of the issuance of the permanent certificate.

      (2) Such articles of incorporation, certified copies of the constitution, laws and rules, copies of all proposed forms of certificates, applications therefor, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year shall be filed with the commissioner, who may require such further information as he deems necessary. Such bond, with sureties approved by the commissioner, shall be in such amount, not less than twenty-five thousand dollars, as is required by the commissioner. All documents filed shall be in the English language. If the purposes of the society conform to the requirements of sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800 and all provisions of the law have been complied with, the commissioner shall so certify, retain and file the articles of incorporation and furnish the incorporators a preliminary certificate authorizing the society to solicit members as hereinafter provided.

      (3) No preliminary certificate granted under the provisions of this section shall be valid after one year from its date or after such further period, not exceeding one year, as may be authorized by the commissioner upon cause shown, unless the five hundred applicants hereinafter required have been secured and the organization has been completed as herein provided. The articles of incorporation and all other proceedings thereunder shall become null and void in one year from the date of the preliminary certificate, or at the expiration of the extended period, unless the society has completed its organization and received a certificate of authority to do business as hereinafter provided.

      (4) Upon receipt of a preliminary certificate from the commissioner, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates as provided by its constitution and laws, and shall issue to each such applicant a receipt for the amount so collected. No society shall incur any liability other than for the return of such advance premium, nor issue any certificate, nor pay, allow, or offer or promise to pay or allow, any death or disability benefit to any person until: (a) Actual bona fide applications for death benefits have been secured aggregating at least five hundred thousand dollars on not less than five hundred lives; (b) all such applicants for death benefits have furnished evidence of insurability satisfactory to the society; (c) certificates of examinations or acceptable declarations of insurability have been filed and approved by the chief medical examiner of the society; (d) ten subordinate lodges or branches have been established into which the five hundred applicants have been admitted; (e) there has been submitted to the commissioner, under oath of the president or secretary, or corresponding officer of the society, a list of such applicants, giving their names and addresses, the date each was admitted, the name and number of the subordinate branch of which each applicant is a member, the amount of benefits to be granted and the premiums therefor; and (f) it has been shown to the commissioner, by sworn statement of the treasurer or corresponding officer of such society, that at least five hundred applicants have each paid in cash at least one regular monthly premium as herein provided, which premiums in the aggregate shall amount to at least twenty-five hundred dollars, all of which shall be credited to the fund or funds from which benefits are to be paid and no part of which may be used for expenses. Such advance premiums shall be held in trust during the period of organization and, if the society has not qualified for a certificate of authority within one year, as herein provided, such premiums shall be returned to the applicants.

      (5) The commissioner may make such examination and require such further information as he deems advisable. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, he shall issue to the society a certificate to that effect and that the society is authorized to transact business pursuant to the provisions of sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800. The certificate shall be prima facie evidence of the existence of the society at the date of such certificate. The commissioner shall cause a record of such certificate to be made. A certified copy of such record may be given in evidence with like effect as the original certificate.

      (6) Every society shall have the power to adopt a constitution and laws for the government of the society, the admission of its members, the management of its affairs and the fixing and readjusting of the rates of its members from time to time. It shall have the power to change, alter, add to or amend such constitution and laws and shall have such other powers as are necessary and incidental to carrying into effect the objects and purposes of the society.

      (1949 Rev., S. 6226-6230; 1957, P.A. 448, S. 4; 1959, P.A. 61, S. 1.)

      History: 1959 act set minimum bond requirement of Subsec. (2); Sec. 38-209 transferred to Sec. 38a-598 in 1991.

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      Sec. 38a-599. (Formerly Sec. 38-210). Rights and powers of societies existing on January 1, 1958. Any incorporated society authorized to transact business in this state on January 1, 1958, may exercise all the rights, powers and privileges prescribed in sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800 and in its charter or articles of incorporation as far as consistent with said sections. A domestic society shall not be required to reincorporate.

      (1949 Rev., S. 6232; 1957, P.A. 448, S. 5.)

      History: Sec. 38-210 transferred to Sec. 38a-599 in 1991.

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      Sec. 38a-600. (Formerly Sec. 38-211). Unincorporated or voluntary associations prohibited from transacting business. No unincorporated or voluntary association shall be permitted to transact business in this state as a fraternal benefit society. Every voluntary association which incorporated prior to January 1, 1958, shall incur the obligations and enjoy the benefits thereof the same as though originally incorporated, and such corporation shall be deemed a continuation of the original voluntary association. The officers thereof shall serve through their respective terms as provided in its original articles of association, but their successors shall be elected and serve as provided in its articles of incorporation. Incorporation of a voluntary association shall not affect suits, claims or contracts existing prior to such incorporation.

      (1957, P.A. 448, S. 6; 1959, P.A. 61, S. 2.)

      History: 1959 act added the words "as a fraternal benefit society" to the first sentence; Sec. 38-211 transferred to Sec. 38a-600 in 1991.

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      Sec. 38a-601. (Formerly Sec. 38-212). Foreign and alien societies to be licensed. No foreign or alien society shall transact business in this state without a license issued by the commissioner. Any such society may be licensed to transact business in this state upon filing with the commissioner: (a) A certified copy of its charter or articles of incorporation; (b) a copy of its constitution and laws, certified by its secretary or corresponding officer; (c) a power of attorney appointing the commissioner as its agent for service of process as prescribed in section 38a-25; (d) a statement of its business under oath of its president and secretary or corresponding officers in a form prescribed by the commissioner, verified by an examination made by the supervising insurance official of its home state or other state, territory, province or country, satisfactory to the Insurance Commissioner of this state; (e) a certificate from the proper official of its home state, territory, province or country that the society is legally incorporated and licensed to transact business therein; (f) copies of its certificate forms; and (g) such other information as he deems necessary; and upon a showing that its assets are invested in accordance with the provisions of sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800. Any foreign or alien society desiring admission to this state shall have the qualifications required of domestic societies organized under said sections.

      (1949 Rev., S. 6236; 1957, P.A. 448, S. 25; P.A. 90-243, S. 131.)

      History: P.A. 90-243 substituted "foreign" for "nonresident" and "alien" for "foreign" societies and added a provision re the insurance commissioner being appointed the agent for service of process; Sec. 38-212 transferred to Sec. 38a-601 in 1991.

      Annotations to former section 38-212:

      Under what law contract with foreign association construed. 64 C. 240; 82 C. 315; 87 C. 644.


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      Sec. 38a-602. (Formerly Sec. 38-213). Renewal of license. The authority of all licensed societies may be renewed annually, but in all cases shall terminate on the first day of the succeeding May. Any license so issued shall continue in effect until the new license is issued or specifically refused. For each such license or renewal the society shall pay the commissioner ten dollars. A certified copy or duplicate of such license shall be prima facie evidence that the licensee is a fraternal benefit society within the meaning of sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800.

      (1949 Rev., S. 6235; 1957, P.A. 448, S. 24; 1959, P.A. 392, S. 2.)

      History: 1959 act increased the license fee from $5 to $10; Sec. 38-213 transferred to Sec. 38a-602 in 1991.

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      Sec. 38a-603. (Formerly Sec. 38-214). Suspension or revocation of license of foreign or alien society. When the commissioner upon investigation finds that a foreign or alien society transacting or applying to transact business in this state: (a) Has exceeded its powers; (b) has failed to comply with any of the provisions of sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800; (c) is not fulfilling its contracts in good faith; or (d) is conducting its business fraudulently or in a manner hazardous to its members or creditors or the public, he shall notify the society of his findings, state in writing the reasons for his dissatisfaction and require the society to show cause on a date named why its license should not be suspended, revoked or refused. If on such date the society does not present good and sufficient reason why its authority to do business in this state should not be suspended, revoked or refused, he may suspend or refuse the license of the society to do business in this state until satisfactory evidence is furnished to him that such suspension or refusal should be withdrawn or he may revoke the authority of the society to do business in this state. Nothing contained in this section shall be taken or construed as preventing any such society from continuing in good faith all contracts made in this state during the time such society was legally authorized to transact business herein.

      (1949 Rev., S. 6267; 1957, P.A. 448, S. 27; P.A. 90-243, S. 132.)

      History: P.A. 90-243 substituted "foreign" for "nonresident" and "alien" for "foreign" societies; Sec. 38-214 transferred to Sec. 38a-603 in 1991.

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      Sec. 38a-604. (Formerly Sec. 38-215). Tax exemption. Every society organized or licensed under sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800, is hereby declared to be a charitable and benevolent institution, and all of its funds shall be exempt from all state and municipal taxes other than taxes on real estate and office equipment.

      (1949 Rev., S. 6270; 1957, P.A. 448, S. 40.)

      History: Sec. 38-215 transferred to Sec. 38a-604 in 1991.

      Annotations to former section 38-215:

      "Office equipment" does not include office supplies, materials and similar fungible items and is therefore exempt from taxation. 36 CS 63. Cited. Id.


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      Sec. 38a-605. (Formerly Sec. 38-216). Principal office. Meetings of governing body. The principal office of any domestic society shall be located in this state. The meetings of its supreme legislative or governing body may be held in any state, district, province or territory wherein such society has at least five subordinate branches and all business transacted at such meetings shall be as valid in all respects as if such meetings were held in this state.

      (1949 Rev., S. 6239; 1957, P.A. 448, S. 7.)

      History: Sec. 38-216 transferred to Sec. 38a-605 in 1991.

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      Sec. 38a-606. (Formerly Sec. 38-218). Amendment of articles of incorporation, constitution or laws. (a) A domestic society may amend its articles of incorporation, constitution or laws in accordance with the provisions thereof by action of its supreme legislative or governing body at any regular or special meeting thereof or, if its articles of incorporation, constitution or laws so provide, by referendum. Such referendum may be held in accordance with the provisions of its articles of incorporation, constitution or laws by the vote of the voting members of the society, by the vote of delegates or representatives of voting members or by the vote of local lodges or branches. No amendment submitted for adoption by referendum shall be adopted unless, within six months from the date of submission thereof, a majority of all of the voting members of the society have signified their consent to the amendment by one of the methods herein specified.

      (b) No amendment to the articles of incorporation, constitution or laws of any domestic society shall take effect unless approved by the commissioner, who shall approve the amendment if he finds that it has been duly adopted and is not inconsistent with any requirement of the laws of this state or with the character, objects and purposes of the society. Unless the commissioner disapproves any such amendment within sixty days after the filing of the same, the amendment shall be considered approved. The approval or disapproval of the commissioner shall be in writing and mailed to the secretary or corresponding officer of the society at its principal office. If he disapproves the amendment, the reasons for disapproval shall be stated in the written notice.

      (c) Within ninety days from the approval thereof by the commissioner, all such amendments, or a synopsis thereof, shall be furnished to all members of the society either by mail or by publication in full in the official organ of the society. The affidavit of any officer of the society, or of anyone authorized by it to mail any amendments or synopsis thereof, stating facts which show that the same have been duly addressed and mailed, shall be prima facie evidence that the amendments or synopsis thereof have been furnished the addressee. Every foreign or alien society authorized to do business in this state shall file with the commissioner a certified copy of all amendments of, or additions to, its articles of incorporation, constitution or laws within ninety days after the enactment of the same.

      (d) Printed copies of the constitution or laws as amended, certified by the secretary or corresponding officer of the society, shall be prima facie evidence of the legal adoption thereof.

      (1949 Rev., S. 6242; 1957, P.A. 448, S. 10; P.A. 90-243, S. 133.)

      History: P.A. 90-243 divided section into Subsecs. and made technical corrections, substituting "the" for "such", "foreign" for "nonresident" and "alien" for "foreign"; Sec. 38-218 transferred to Sec. 38a-606 in 1991.

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      Sec. 38a-607. (Formerly Sec. 38-219). Constitution and laws may be absolute authority. The constitution and laws of the society may provide that no subordinate body or any of its subordinate officers or members shall have the power or authority to waive any of the provisions of the laws and constitution of the society. Such provision shall be binding on the society and every member and beneficiary of a member.

      (1949 Rev., S. 6241; 1957, P.A. 448, S. 22.)

      History: Sec. 38-219 transferred to Sec. 38a-607 in 1991.

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      Sec. 38a-608. (Formerly Sec. 38-220). Consolidation or merger. (a) A domestic society may consolidate or merge with any other society by complying with the provisions of this section. It shall file with the commissioner: (1) A certified copy of the written contract containing in full the terms and conditions of the consolidation or merger; (2) a sworn statement by the president and secretary or corresponding officers of each society showing the financial condition thereof on a date fixed by the commissioner but not earlier than December thirty-first next preceding the date of the contract; (3) a certificate of such officers, verified by their respective oaths, that the consolidation or merger has been approved by a two-thirds vote of the supreme legislative or governing body of each society; and (4) evidence that, at least sixty days prior to the action of the supreme legislative or governing body of each society, the text of the contract has been furnished to all members of each society either by mail or by publication in full in the official organ of each society.

      (b) If the commissioner finds that the contract is in conformity with the provisions of this section, that the financial statements are correct and that the consolidation or merger is just and equitable to the members of each society, he shall approve the contract and issue his certificate to such effect. Upon such approval, the contract shall be in full force and effect unless any society which is a party to the contract is incorporated under the laws of any other state or territory. In such event the consolidation or merger shall not become effective unless and until it has been approved as provided by the laws of such state or territory and a certificate of approval filed with the Insurance Commissioner of this state. If the laws of such state or territory contain no such provision, the consolidation or merger shall not become effective unless and until it has been approved by the insurance commissioner of such state or territory and a certificate of approval filed with the Insurance Commissioner of this state.

      (c) Upon the consolidation or merger becoming effective as herein provided, all the rights, franchises and interests of the consolidated or merged societies in and to every species of property, real, personal or mixed, and things in action thereunto belonging shall be vested in the society resulting from or remaining after the consolidation or merger without any other instrument, except that conveyances of real property may be evidenced by proper deeds, and the title to any real estate or interest therein, vested under the laws of this state in any of the societies consolidated or merged, shall not revert or be in any way impaired by reason of the consolidation or merger but shall vest absolutely in the society resulting from or remaining after the consolidation or merger.

      (d) The affidavit of any officer of the society or of anyone authorized by it to mail any notice or document, stating that the notice or document has been duly addressed and mailed, shall be prima facie evidence that the notice or document has been furnished the addressees.

      (1949 Rev., S. 6233, 6234; 1957, P.A. 448, S. 8; P.A. 90-243, S. 134.)

      History: P.A. 90-243 divided section into Subsecs. and made technical corrections; Sec. 38-220 transferred to Sec. 38a-608 in 1991.

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      Sec. 38a-609. (Formerly Sec. 38-221). Benefit membership. A society may admit to benefit membership any person not less than fifteen years of age on his nearest birthday who has furnished evidence of insurability acceptable to the society. Any such member who applies for additional benefits more than six months after becoming a benefit member shall furnish additional evidence of insurability acceptable to the society. Any person admitted prior to attaining the full age of eighteen years shall be bound by the terms of the application and certificate and by all the laws and rules of the society and shall be entitled to all the rights and privileges of membership therein to the same extent as though the age of majority had been attained at the time of application. A society may also admit general or social members, who shall have no voice or vote in the management of its insurance affairs.

      (1949 Rev., S. 6248; 1949, 1955, S. 2850d; 1957, P.A. 488, S. 9; 1959, P.A. 61, S. 3; 1972, P.A. 127, S. 64.)

      History: 1959 act added the words "furnish additional evidence of insurability acceptable to" in the second sentence and deleted the requirement of an additional medical examination for additional benefits; 1972 act changed age of majority from 21 to 18; Sec. 38-221 transferred to Sec. 38a-609 in 1991.

      Annotation to former section 38-221:

      Effect of misstatement of age. 89 C. 249.


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      Sec. 38a-610. (Formerly Sec. 38-222). Maintenance of institutions for benefit of members. (a) A society may create, maintain and operate charitable, benevolent or educational institutions for the benefit of its members and their families and dependents and for the benefit of children insured by the society. For such purpose it may own, hold or lease personal property or real property located within or without this state, with necessary buildings thereon.

      (b) Such property shall be reported in every annual statement of the society in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions. Maintenance, treatment and proper attendance in any such institution may be furnished free or a reasonable charge may be made therefor, but no such institution shall be operated for profit. The society shall maintain a separate accounting of any income and disbursements under this section and report them in its annual statement.

      (c) No society shall own or operate funeral homes or undertaking establishments.

      (1957, P.A. 448, S. 11; P.A. 90-243, S. 135; P.A. 00-30, S. 13, 14.)

      History: P.A. 90-243 divided section into Subsecs. and made technical corrections; Sec. 38-222 transferred to Sec. 38a-610 in 1991; P.A. 00-30 amended Subsec. (b) to delete "shall not be allowed as an admitted asset" re "such property" and to require such property to be reported "in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions", effective January 1, 2001.

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      Sec. 38a-611. (Formerly Sec. 38-233). Reinsurance. A domestic society may, by a reinsurance agreement, cede any individual risk or risks in whole or in part to an insurer, other than another fraternal benefit society, having the power to make such reinsurance and authorized to do business in this state or, if not so authorized, one which is approved by the commissioner; but no such society may reinsure substantially all of its insurance in force without the written permission of the commissioner. It may take credit for the reserves on such ceded risks to the extent reinsured, but no credit shall be allowed, as an admitted asset or as a deduction from liability, to a ceding society for reinsurance made, ceded, renewed or otherwise becoming effective after January 1, 1958, unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding society under the contract or contracts reinsured without diminution because of the insolvency of the ceding society.

      (1949 Rev., S. 6244; 1957, P.A. 448, S. 23.)

      History: Sec. 38-233 transferred to Sec. 38a-611 in 1991.

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      Sec. 38a-612. (Formerly Sec. 38-235). Use of assets. Proportion to be used for expenses. All assets shall be held, invested and disbursed for the use and benefit of the society and no member or beneficiary shall have or acquire individual rights therein or become entitled to any apportionment or the surrender of any part thereof, except as provided in the contract. A society may create, maintain, invest, disburse and apply any special fund or funds necessary to carry out any purpose permitted by the laws of such society. Every society, the admitted assets of which are less than the sum of its accrued liabilities and reserves under all of its certificates when valued according to standards required for certificates issued after one year from January 1, 1958, shall, in every provision of the laws of the society for payments by members of such society, in whatever form made, distinctly state the purpose of the same and the proportion thereof which may be used for expenses, and no part of the money collected for mortuary or disability purposes or the net accretions thereto shall be used for expenses.

      (1949 Rev., S. 6250, 6253; 1957, P.A. 448, S. 32.)

      History: Sec. 38-235 transferred to Sec. 38a-612 in 1991.

      Annotations to former section 38-235:

      Right of members in fund of parent body left in hands of subordinate lodges; protection of members in this state where parent body is located outside. 64 C. 170; 81 C. 189; 83 C. 241; 88 C. 676. Certain special funds considered. 84 C. 96. This section does not govern the type of policy which a society may issue. 144 C. 346.


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      Sec. 38a-613. (Formerly Sec. 38-236). Investments. A society shall invest its funds only in such investments as are authorized by the laws of this state for the investment of assets of life insurance companies and subject to the limitations thereon. Any foreign or alien society permitted or seeking to do business in this state which invests its funds in accordance with the laws of the state, district, territory, country or province in which it is incorporated shall be held to meet the requirements of this section for the investment of funds.

      (1949 Rev., S. 6252; 1957, P.A. 448, S. 33; P.A. 90-243, S. 142.)

      History: P.A. 90-243 substituted "foreign" for "nonresident" and "alien" for "foreign" societies; Sec. 38-236 transferred to Sec. 38a-613 in 1991.

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      Sec. 38a-614. (Formerly Sec. 38-237). Annual report. Synopsis mailed to members. Valuation of certificates. Reserves. Reports shall be filed and synopses of annual statements shall be published in accordance with the provisions of this section.

      (1) Every domestic society transacting business in this state shall annually, on or before the first day of March, unless for cause shown such time has been extended by the commissioner, file with the commissioner, and electronically to the National Association of Insurance Commissioners, a true and complete statement of its financial condition, transactions and affairs for the preceding calendar year and pay a fee of ten dollars for filing the same. The statement shall be in general form and context as approved by the National Association of Insurance Commissioners for fraternal benefit societies and as supplemented by additional information required by the commissioner. An electronically filed true and complete report filed in accordance with section 38a-53a that is timely submitted to the National Association of Insurance Commissioners does not exempt a domestic insurance company or health care center from timely filing a true and complete paper copy with the commissioner.

      (2) Every foreign society transacting business in this state shall annually, on or before the first day of March, unless for cause shown such time has been extended by the commissioner, file with the commissioner, and electronically to the National Association of Insurance Commissioners, a true and complete statement of its financial condition, transactions and affairs for the preceding calendar year and pay a fee of ten dollars for filing the same. The statement shall be in general form and context as approved by the National Association of Insurance Commissioners for fraternal benefit societies and as supplemented by additional information required by the commissioner. An electronically filed true and complete report filed in accordance with section 38a-53a that is timely submitted to the National Association of Insurance Commissioners shall be deemed to have been submitted to the commissioner in accordance with this section.

      (3) A synopsis of its annual statement providing an explanation of the facts concerning the condition of the society thereby disclosed shall be printed and mailed to each benefit member of the society not later than the first day of June of each year, or, in lieu thereof, such synopsis may be published in the society's official publication.

      (4) As part of the annual statement herein required, each society shall, on or before the first day of March, file with the commissioner a valuation of its certificates in force on December thirty-first last preceding, provided the commissioner may, in his discretion for cause shown, extend the time for filing such valuation for not more than two calendar months. Such report of valuation shall show, as reserve liabilities, the difference between the present midyear value of the promised benefits provided in the certificates of such society in force and the present midyear value of the future net premiums as the same are in practice actually collected, not including therein any value for the right to make extra assessments and not including any amount by which the present midyear value of future net premiums exceeds the present midyear value of promised benefits on individual certificates. At the option of any society, in lieu of the above, the valuation may show the net tabular value. Such net tabular value as to certificates issued prior to January 1, 1959, shall be determined in accordance with the provisions of law applicable prior to January 1, 1958, and as to certificates issued on or after January 1, 1959, shall not be less than the reserves determined according to the Commissioners' Reserve Valuation method as hereinafter defined. If the premium charge is less than the tabular net premium according to the basis of valuation used, an additional reserve equal to the present value of the deficiency in such premiums shall be set up and maintained as a liability. The reserve liabilities shall be properly adjusted if the midyear or tabular values are not appropriate.

      (5) Reserves according to the Commissioners' Reserve Valuation method, for the life insurance and endowment benefits of certificates 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 certificates over the then present value of any future modified net premiums therefor. The modified net premiums for any such certificate shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the certificate, of all such modified net premiums shall be equal to the sum of the then present value of such benefits provided for by the certificate and the excess of (A) over (B), as follows: (A) A net level premium equal to the present value, at the date of issue, of such benefits provided for after the first certificate 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 certificate on which a premium falls due; provided 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 certificate; and (B) a net one-year term premium for such benefits provided for in the first certificate year. Reserves according to the Commissioners' Reserve Valuation method for (i) life insurance benefits for varying amounts of benefits or requiring the payment of varying premiums, (ii) annuity and pure endowment benefits, (iii) disability and accidental death benefits in all certificates and contracts, and (iv) all other benefits except life insurance and endowment benefits shall be calculated by a method consistent with the principles of this subdivision.

      (6) The present value of deferred payments due under incurred claims or matured certificates shall be deemed a liability of the society and shall be computed upon mortality and interest standards prescribed in subdivision (7) of this section.

      (7) Such valuation and underlying data shall be certified by a competent actuary or, at the expense of the society, verified by the actuary of the department of insurance of the state of domicile of the society. The minimum standards of valuation for certificates issued prior to January 1, 1959, shall be those provided by the law applicable immediately prior to January 1, 1958, but not lower than the standards used in the calculating of rates for such certificates. The minimum standard of valuation for certificates issued after January 1, 1959, shall be three and one-half per cent interest and the following tables: (A) For certificates of life insurance, American Men Ultimate Table of Mortality, with Bowerman's or Davis' Extension thereof or, with the consent of the Insurance Commissioner, the Commissioner's 1941 Standard Ordinary Mortality Table or the Commissioner's 1941 Standard Industrial Table of Mortality, or the Commissioners' 1958 Standard Ordinary Mortality Table, except that, with the approval of the commissioner, the valuation of contracts on female risks may be calculated, at the option of the society, according to an age not more than three years younger than the actual age of the insured; (B) for annuity certificates, including life annuities provided or available under optional modes of settlement in such certificates, the 1937 Standard Annuity Table; (C) for disability benefits issued in connection with life benefit certificates, Hunter's Disability Table, which, for active lives, shall be combined with a mortality table permitted for calculating the reserves on life insurance certificates, except that the table known as Class III Disability Table (1926), modified to conform to the contractual waiting period, shall be used in computing reserves for disability benefits under a contract which presumes that total disability shall be considered to be permanent after a specified period; (D) for accidental death benefits issued in connection with life benefit certificates, the Inter-Company Double Indemnity Mortality Table combined with a mortality table permitted for calculating the reserves for life insurance certificates; and (E) for noncancellable accident and health benefits, the Class III Disability Table (1926) with conference modifications or, with the consent of the commissioner, tables based upon the society's own experience. The commissioner may, in the commissioner's discretion, accept other standards for valuation if the commissioner finds that the reserves produced thereby will not be less in the aggregate than reserves computed in accordance with the minimum valuation standard herein prescribed. The commissioner may, in his or her discretion, vary the standards of mortality applicable to all certificates of insurance on substandard lives or other extra hazardous lives by any society authorized to do business in this state. Whenever the mortality experience under all certificates valued on the same mortality table is in excess of the expected mortality according to such table for a period of three consecutive years, the commissioner may require additional reserves when deemed necessary in his or her judgment on account of such certificates. Any society, with the consent of the insurance commissioner of the state of domicile of the society and under such conditions, if any, which the commissioner may impose, may establish and maintain reserves on its certificates in excess of the reserves required thereunder, but the contractual rights of any insured member shall not be affected thereby.

      (8) A society neglecting to file the annual statement in the form and within the time provided by this section shall forfeit one hundred dollars for each day during which such neglect continues, and, upon notice by the commissioner to that effect, its authority to do business in this state shall cease while such default continues.

      (9) Notwithstanding the provisions of this section, a society may, with the approval of the Insurance Commissioner, use the standards for valuation and nonforfeiture authorized by the provisions of sections 38a-61, 38a-77, 38a-78, 38a-81, 38a-82, 38a-284, 38a-287, 38a-430 to 38a-454, inclusive, and 38a-458.

      (1949 Rev., S. 6243, 6254, 6255, 6258, 6260, 6273; 1957, P.A. 448, S. 34; 1959, P.A. 55; 392, S. 5; 1963, P.A. 642, S. 40; P.A. 83-139; P.A. 07-225, S. 3.)

      History: 1959 acts increased fee for filing statement from $5 to $10 in Subdiv. (1) and added in Subdiv. (6)(a) reference to 1958 Standard Ordinary Mortality Table and the exception which follows; 1963 act specified disability "benefits" in Subsec. (6)(c); P.A. 83-139 added Subdiv. (8), which permits a fraternal benefit society to use the standards for valuation and nonforfeiture authorized in chapter 680, with the commissioner's approval; Sec. 38-237 transferred to Sec. 38a-614 in 1991; (Revisor's note: In 1993 references to Secs. 38a-94 to 38a-101, inclusive, and 38a-966 to 38a-970, inclusive, repealed by P.A. 92-60, were deleted editorially by the Revisors); P.A. 07-225 amended Subdiv. (1) to limit application of Subdiv. to domestic societies transacting business in this state, to require societies to file a true and complete statement of financial condition, transactions and affairs electronically to National Association of Insurance Commissioners and to require societies to timely file a true and complete paper copy of such statement with commissioner, inserted new Subdiv. (2) requiring foreign societies transacting business in this state to file statement of financial condition, transactions and affairs in the same manner as specified in Subdiv. (1), except for filing paper copies with commissioner, redesignated existing Subdivs. (2) to (18) as Subdivs. (3) to (9), and made technical changes in Subdivs. (5) to (7).

      See Sec. 38a-610 re authority to maintain institutions for members' benefit.

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      Sec. 38a-615. (Formerly Sec. 38-237a). Requirements re filing of financial statements by society. (a) In addition to the annual report required under section 38a-614, the commissioner, when he deems it necessary, may require any fraternal benefit society licensed under sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800 to file financial statements on a quarterly basis.

      (b) In addition to such annual report and the quarterly report required under subsection (a) of this section, the commissioner, whenever the commissioner determines that more frequent reports are required because of certain factors or trends affecting companies writing a particular class or classes of business or because of changes in the company's management or financial or operating condition, may require any fraternal benefit society licensed under sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800 to file financial statements on other than an annual or quarterly basis.

      (P.A. 76-167, S. 2; P.A. 05-29, S. 8.)

      History: Sec. 38-237a transferred to Sec. 38a-615 in 1991; P.A. 05-29 amended Subsec. (b) to make technical changes.

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      Sec. 38a-616. (Formerly Sec. 38-238). Examination of domestic society by commissioner. (a) The commissioner, or any person he may appoint, shall have the power of visitation and examination into the affairs of any domestic society and he shall make such examination at least once in every five years. He may employ assistants for the purpose of such examination, and he, or any person he may appoint, shall have free access to all books, papers and documents that relate to the business of the society. The minutes of the proceedings of the supreme legislative or governing body and of the board of directors or corresponding body of a society shall be in the English language. In making any such examination the commissioner may summon and qualify as witnesses under oath and examine its officers, agents and employees or other persons in relation to the affairs, transactions and condition of the society.

      (b) A summary of the report of the commissioner and such recommendations or statements of the commissioner as may accompany such report shall be read at the first meeting of the board of directors or corresponding body of the society following the receipt thereof and, if so directed by the commissioner, shall also be read at the first meeting of the supreme legislative or governing body of the society following the receipt thereof. A copy of the report, recommendations and statements of the commissioner shall be furnished by the society to each member of such board of directors or other governing body.

      (c) The state shall be reimbursed for the costs of each examination and of each valuation of any domestic society to the extent provided in sections 38a-49 and 38a-50.

      (1957, P.A. 448, S. 35; 1959, P.A. 381, S. 1; P.A. 81-101, S. 8; P.A. 90-243, S. 143.)

      History: 1959 act deleted provision which had required society to pay examination costs, requiring instead reimbursement "to the extent provided in sections 38-51 and 38-52"; P.A. 81-101 required that insurance commissioner examine affairs of each domestic fraternal benefit society every five years, rather than every three years; P.A. 90-243 divided section into Subsecs.; Sec. 38-238 transferred to Sec. 38a-616 in 1991.

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      Sec. 38a-617. (Formerly Sec. 38-239). Examination of foreign or alien society. The commissioner, or any person whom he may appoint, may examine any foreign or alien society transacting or applying for admission to transact business in this state. He may employ assistants and he, or any person he may appoint, shall have free access to all books, papers and documents that relate to the business of the society. He may in his discretion accept, in lieu of such examination, the examination of the insurance department of the state, territory, district, province or country where such society is organized. The compensation and actual expenses of the examiners making any examination or general or special valuation shall be paid by the society examined or by the society whose certificate obligations have been valued, upon statements furnished by the commissioner.

      (1949 Rev., S. 6265; 1957, P.A. 448, S. 36; P.A. 90-243, S. 144.)

      History: P.A. 90-243 substituted "foreign" for "nonresident" and "alien" for "foreign" societies; Sec. 38-239 transferred to Sec. 38a-617 in 1991.

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      Sec. 38a-618. (Formerly Sec. 38-240). Statement affecting status of society prohibited pending answer of society. Pending, during or after an examination or investigation of a society, domestic, foreign or alien, the commissioner shall not make public any financial statement, report or finding, nor shall he permit to become public any financial statement, report or finding affecting the status, standing or rights of any society, until a copy thereof has been served upon the society at its principal office and the society has been afforded a reasonable opportunity to answer any such financial statement, report or finding and to make such showing in connection therewith as it may desire.

      (1949 Rev., S. 6266; 1957, P.A. 448, S. 37; P.A. 90-243, S. 145.)

      History: P.A. 90-243 substituted "foreign" for "nonresident" and "alien" for "foreign" societies; Sec. 38-240 transferred to Sec. 38a-618 in 1991.

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      Sec. 38a-619. (Formerly Sec. 38-241). Decisions of commissioner subject to Superior Court review. All decisions and findings of the commissioner made under the provisions of sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800 shall be subject to review by proper proceedings in the Superior Court.

      (1957, P.A. 448, S. 31.)

      History: Sec. 38-241 transferred to Sec. 38a-619 in 1991.

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      Sec. 38a-620. (Formerly Sec. 38-242). Injunction or quo warranto action against domestic society. When the commissioner upon investigation finds that a domestic society: (a) Has exceeded its powers; (b) has failed to comply with any provision of sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800; (c) is not fulfilling its contracts in good faith; (d) has a membership of less than four hundred after an existence of one year or more, or (e) is conducting business fraudulently or in a manner hazardous to its members, creditors, the public or the business, he shall notify the society of his findings, state in writing the reasons for his dissatisfaction and require the society to show cause on a date named why it should not be enjoined from carrying on any business until the violation complained of has been corrected or why an action in quo warranto should not be commenced against the society. If on such date the society does not present good and sufficient reasons why it should not be so enjoined or why such action should not be commenced, the commissioner may present the facts relating thereto to the Attorney General who shall, if he deems the circumstances warrant, commence an action in the superior court for the judicial district of Hartford to enjoin the society from transacting business or in quo warranto. The court shall thereupon notify the officers of the society of a hearing. If, after a hearing, it appears that the society should be so enjoined or liquidated or a receiver appointed, the court shall enter the necessary order. No society so enjoined shall have the authority to do business until: (a) The commissioner finds that the violation complained of has been corrected; (b) the costs of such action have been paid by the society if the court finds that the society was in default as charged; (c) the court has dissolved its injunction; and (d) the commissioner has reinstated the certificate of authority. If the court orders the society liquidated, it shall be enjoined from carrying on any further business, whereupon the receiver of the society shall proceed at once to take possession of the books, papers, money and other assets of the society and, under the direction of the court, proceed forthwith to close the affairs of the society and to distribute its funds to those entitled thereto. Whenever a receiver is to be appointed for a domestic society, the court shall appoint the commissioner as such receiver. The provisions of this section relating to hearing by the commissioner, action by the Attorney General at the request of the commissioner, hearing by the court, injunction and receivership shall be applicable to a society which voluntarily determines to discontinue business.

      (1949 Rev., S. 6264; 1957, P.A. 448, S. 26; P.A. 78-280, S. 6, 127; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 95-220, S. 4-6.)

      History: P.A. 78-280 substituted "judicial district of Hartford-New Britain" for "Hartford county"; P.A. 88-230 replaced "judicial district of Hartford-New Britain" with "judicial district of Hartford", effective September 1, 1991; P.A. 90-98 changed effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; Sec. 38-242 transferred to Sec. 38a-620 in 1991; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 95-220 changed the effective date of P.A. 88-230 from September 1, 1996, to September 1, 1998, effective July 1, 1995.

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      Sec. 38a-621. (Formerly Sec. 38-243). Petition for injunction to be made only by Attorney General. No application or petition for injunction against any domestic, foreign or alien society, or branch thereof, shall be recognized in any court of this state unless made by the Attorney General upon request of the commissioner.

      (1957, P.A. 448, S. 30; P.A. 90-243, S. 146.)

      History: P.A. 90-243 substituted "foreign" for "nonresident" and "alien" for "foreign" societies; Sec. 38-243 transferred to Sec. 38a-621 in 1991.

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      Sec. 38a-622. (Formerly Sec. 38-244). Misrepresentations, false statements prohibited. Penalties. No person shall cause or permit to be made, issued or circulated in any form: (a) Any misrepresentation or false or misleading statement concerning the terms, benefits or advantages of any fraternal insurance contract issued or to be issued in this state, or the financial condition of any society; (b) any false or misleading estimate or statement concerning the dividends or shares of surplus paid or to be paid by any society on any insurance contract; or (c) any incomplete comparison of an insurance contract of one society with an insurance contract of another society or insurer for the purpose of inducing the lapse, forfeiture or surrender of any insurance contract. A comparison of insurance contracts is incomplete if it does not compare in detail: (1) The gross rates, and the gross rates less any dividend or other reduction allowed at the date of the comparison; (2) any increase in cash values, and all the benefits provided by each contract for the possible duration thereof as determined by the life expectancy of the insured; or if it omits from consideration; (3) any benefit or value provided in the contract; (4) any differences as to amount or period of rates; or (5) any differences in limitations or conditions or provisions which directly or indirectly affect the benefits. In any determination of the incompleteness or misleading character of any comparison or statement, it shall be presumed that the insured had no knowledge of any of the contents of the contract involved. Any person who violates any provision of this section, or knowingly receives any compensation or commission by or in consequence of such violation, shall be fined not less than two thousand dollars or more than ten thousand dollars or be imprisoned not less than thirty days or more than one year, or be both fined and imprisoned, and shall, in addition, be liable for civil penalty in the amount of three times the sum received by such violator as compensation or commission, which penalty may be sued for and recovered by any person or society aggrieved for his or its own use and benefit in accordance with the provisions of civil practice.

      (1957, P.A. 448, S. 38; P.A. 08-178, S. 20.)

      History: Sec. 38-244 transferred to Sec. 38a-622 in 1991; P.A. 08-178 made technical changes and increased minimum fine from $100 to $2,000 and maximum fine from $500 to $10,000.

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      Sec. 38a-623. (Formerly Sec. 38-245). Discrimination, rebates prohibited. No society doing business in this state shall make or permit any unfair discrimination between insured members of the same class and equal expectation of life in the premiums charged for certificates of insurance, in the dividends or other benefits payable thereon or in any other of the terms and conditions of the contracts it makes. No society, by itself, or any other party, and no agent or solicitor, personally, or by any other party, shall offer, promise, allow, give, set off or pay, directly or indirectly, any valuable consideration or inducement to or for insurance, on any risk authorized to be taken by such society, which is not specified in the certificate. No member shall receive or accept, directly or indirectly, any rebate of premium, or part thereof, or agent's or solicitor's commission thereon, payable on any certificate or receive or accept any favor or advantage or share in the dividends or other benefits to accrue on, or any valuable consideration or inducement not specified in, the contract of insurance.

      (1957, P.A. 448, S. 39.)

      History: Sec. 38-245 transferred to Sec. 38a-623 in 1991.

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      Sec. 38a-624. (Formerly Sec. 38-246). Exemption from insurance laws. Except as herein provided, societies shall be governed by sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800 and shall be exempt from all other provisions of the insurance laws of this state, not only in governmental relations with the state, but for every other purpose. No law enacted after January 1, 1958, shall apply to them, unless they are expressly designated therein.

      (1949 Rev., S. 6225; 1957, P.A. 448, S. 41.)

      History: Sec. 38-246 transferred to Sec. 38a-624 in 1991.

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      Sec. 38a-624a. Effect of marriage laws on determination of members or beneficiaries or provision of insurance. The marriage laws of this state shall not be construed to affect the ability of a fraternal benefit society to determine the admission of members as provided in section 38a-598 or to determine the scope of beneficiaries in accordance with section 38a-636, and shall not require a fraternal benefit society that has been established and is operating for charitable and educational purposes and which is operated, supervised or controlled by or in connection with a religious organization to provide insurance benefits to any person if to do so would violate the fraternal benefit society's free exercise of religion as guaranteed by the first amendment to the Constitution of the United States and section 3 of article first of the Constitution of the state.

      (P.A. 09-13, S. 18.)

      History: P.A. 09-13 effective April 23, 2009.

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      Sec. 38a-625. (Formerly Sec. 38-247). Exempt societies. Nothing contained in sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800 shall be so construed as to affect or apply to: (a) Grand or subordinate lodges of societies, orders or associations doing business in this state on January 1, 1958, which provide benefits exclusively through local or subordinate lodges; (b) orders, societies or associations which admit to membership only persons engaged in one or more crafts or hazardous occupations, in the same or similar lines of business, and the ladies' societies or ladies' auxiliaries to such orders, societies or associations; (c) domestic societies which limit their membership to employees of a particular city or town, designated firm, business house or corporation which provide for a death benefit of not more than four hundred dollars or disability benefits of not more than three hundred fifty dollars to any person in any one year, or both; (d) domestic societies or associations of a purely religious, charitable or benevolent description, which provide for a death benefit of not more than four hundred dollars or for disability benefits of not more than three hundred fifty dollars to any one person in any one year or both; or (e) nonprofit voluntary associations which provide ambulance service, and are financed by subscription or gifts only. Any such society or association described in subdivision (c) or (d), which provides for death or disability benefits for which benefit certificates are issued, and any such society or association included in subdivision (d) which has more than one thousand members, shall not be exempted from the provisions of sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800 but shall comply with all requirements hereof. No society which, by the provisions of this section, is exempt from the requirements of said sections, except any society described in subdivision (b), shall give or allow, or promise to give or allow, to any person any compensation for procuring new members. Every society which provides for benefits in case of death or disability resulting solely from accidents, and which does not obligate itself to pay natural death or sick benefits, shall have all the privileges and be subject to all the applicable provisions and regulations of said sections, except that the provisions hereof relating to medical examination, valuations of benefit certificates and incontestability shall not apply to such society. The commissioner may require from any society or association, by examination or otherwise, such information as will enable him to determine whether such society or association is exempt from the provisions of said sections. Societies, exempted under the provisions of this section, shall also be exempt from all other provisions of the insurance laws of this state.

      (1949 Rev., S. 6268, 6274; 1953, S. 2852d; 1957, P.A. 448, S. 42; 1963, P.A. 186.)

      History: 1963 act exempted nonprofit voluntary associations providing ambulance service which are financed solely by subscription or gifts from provisions of chapter; Sec. 38-247 transferred to Sec. 38a-625 in 1991.

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      Sec. 38a-626. (Formerly Sec. 38-248). Penalties. Any person who wilfully makes a false or fraudulent statement in or relating to an application for membership or for the purpose of obtaining money from or a benefit in any society shall be fined not less than two thousand dollars or more than ten thousand dollars or imprisoned not less than thirty days or more than one year or both. Any person who wilfully makes a false or fraudulent statement in any verified report or declaration under oath required or authorized by sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800, or of any material fact or thing contained in a sworn statement concerning the death or disability of a member for the purpose of procuring payment of a benefit named in the certificate, shall be guilty of false statement and shall be subject to the penalties therefor. Any person who solicits membership for, or in any manner assists in procuring membership in, any society not licensed to do business in this state shall be fined not less than one thousand dollars or more than four thousand dollars. Any person guilty of a wilful violation of, or neglect or refusal to comply with, the provisions of said sections for which a penalty is not otherwise prescribed shall be fined not more than four thousand dollars.

      (1949 Rev., S. 6271; 1957, P.A. 448, S. 43; 1971, P.A. 871, S. 117; P.A. 08-178, S. 21.)

      History: 1971 act replaced perjury penalty prescribed by Sec. 53-143 with false statement penalty; Sec. 38-248 transferred to Sec. 38a-626 in 1991; P.A. 08-178 made technical changes, increased minimum fine for making a false or fraudulent statement from $100 to $2,000 and maximum fine from $500 to $10,000, increased minimum fine for soliciting membership for any society not licensed to do business in this state from $50 to $1,000 and maximum fine from $200 to $4,000, and increased maximum fine for other section violations for which a penalty is not otherwise prescribed from $200 to $4,000.

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      Secs. 38a-627 to 38a-630. Reserved for future use.

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PART II
BENEFITS

      Sec. 38a-631. (Formerly Sec. 38-224). Types of benefits authorized. (1) A society authorized to do business in this state may provide for the payment of: (a) Death benefits in any form; (b) endowment benefits; (c) annuity benefits; (d) temporary or permanent disability benefits as a result of disease or accident; (e) hospital, medical or nursing benefits due to sickness or bodily infirmity or accident; and (f) monument or tombstone benefits to the memory of deceased members not exceeding in any case the sum of three hundred dollars.

      (2) Such benefits may be provided on the lives of members or, upon application of a member, on the lives of the member's family, including the member, the member's spouse and minor children, in the same or separate certificates.

      (1949 Rev., S. 6244; 1957, P.A. 448, S. 14; March, 1958, P.A. 9, S. 1; 1959, P.A. 61, S. 5.)

      History: 1959 act repealed former age limit requirements in Subdiv.(1)(d), (e) and (f) and clarified the application of Subdiv. (2) to the lives of members or their families; Sec. 38-224 transferred to Sec. 38a-631 in 1991.

      See Sec. 38a-444 re interest rates on loans.

      See Sec. 38a-504 re insurance policy or contract requirements covering surgical removal of tumors and treatment of leukemia.


      Annotation to former section 38-224:

      "Endowment" defined; held not to include a variable endowment plan in which a portion of premiums is allocated to a fund for investment and a number of units in such invested fund is then attributed to the insured. 144 C. 346.


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      Sec. 38a-632. (Formerly Sec. 38-224a). Additional benefits from special account. A society may pay benefits, other than insurance benefits, to its members from any special account or fund maintained for such purpose; provided, if such benefits are of such a nature that they could constitute benefits within the classes of insurance set forth in section 38a-631, a society making such payments may not: (a) Make any separate charge therefor; (b) issue any certificate, policy or other document promising such payments; (c) provide in its constitution, laws or any other document that such payments may be received by the member as a matter of right; or (d) advertise such payments as insurance or as payments to which the member has any right. The society shall maintain a separate accounting of all disbursements made under this section and report them in its annual statement.

      (1959, P.A. 624, S. 1.)

      History: Sec. 38-224a transferred to Sec. 38a-632 in 1991.

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      Sec. 38a-633. (Formerly Sec. 38-225). Insurance and branches for children. A society may provide for benefits on the lives of children under the minimum age for adult membership but not greater than eighteen years of age at time of application therefor, upon the application of some adult person, as its laws or rules may provide, which benefits shall be in accordance with the provisions of subsection (1) of section 38a-631. A society may, at its option, organize and operate branches for such children. Membership and initiation in local lodges shall not be required of such children, nor shall they have a voice in the management of the society. A society may provide for the designation and changing of designation of beneficiaries in the certificates providing for such benefits and may provide in all other respects for the regulation, government and control of such certificates and all rights, obligations and liabilities incident thereto and connected therewith.

      (1957, P.A. 448, S. 15; 1959, P.A. 61, S. 6; 1972, P.A. 127, S. 65.)

      History: 1959 act specified "subsection (1)" of Sec. 38-224; 1972 act changed age of majority from 21 to 18; Sec. 38-225 transferred to Sec. 38a-633 in 1991.

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      Sec. 38a-634. (Formerly Sec. 38-226). Nonforfeiture benefits, cash surrender values and certificate loans. A society may grant paid-up nonforfeiture benefits, cash surrender values, certificate loans and such other options as its laws may permit. As to certificates issued on and after January 1, 1958, a society shall grant at least one paid-up nonforfeiture benefit, except in the case of pure endowment, annuity or reversionary annuity contracts, reducing term insurance contracts or contracts of term insurance of uniform amount of fifteen years or less expiring before age sixty-six.

      (1957, P.A. 448, S. 16.)

      History: Sec. 38-226 transferred to Sec. 38a-634 in 1991.

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      Sec. 38a-635. (Formerly Sec. 38-227). Officers and members not liable for benefits. The officers and members of the supreme, grand or any subordinate body of a society shall not be personally liable for payment of any benefits provided by a society.

      (1949 Rev., S. 6240; 1957, P.A. 448, S. 13.)

      History: Sec. 38-227 transferred to Sec. 38a-635 in 1991.

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      Sec. 38a-636. (Formerly Sec. 38-228). Beneficiaries. Funeral benefits. (a) A member of a fraternal benefit society shall have the right at all times to change the beneficiary or beneficiaries in accordance with the constitution, laws or rules of the society. Every society by its constitution, laws or rules may limit the scope of beneficiaries and shall provide that no beneficiary shall have or obtain any vested interest in the proceeds of any certificate until the certificate has become due and payable in conformity with the provisions of the insurance contract.

      (b) A society may make provision for the payment of funeral benefits to the extent of such portion of any payment under a certificate as might reasonably appear to be due any person equitably entitled thereto by reason of having incurred expense occasioned by the burial of the member, provided the portion so paid shall not exceed the sum of five hundred dollars. Any society may pay the benefits due minors in monthly installments of not over twenty-five dollars per month for each minor beneficiary to the person or persons who, in the opinion of the society, are caring for and supporting such beneficiary, and such payment shall be a complete discharge of the society's liability to the extent of such payments.

      (c) If, at the death of any member, there is no lawful beneficiary to whom the insurance benefits shall be payable, the amount of such benefits, except to the extent that funeral benefits may be paid as hereinbefore provided, shall be payable to the personal representative of the deceased member.

      (1949 Rev., S. 6247; 1949, 1953, S. 2848d; 1957, P.A. 448, S. 17; P.A. 75-420, S. 4, 6; P.A. 77-614, S. 587, 608, 610; P.A. 78-303, S. 85, 136; P.A. 86-290, S. 5, 10; P.A. 90-243, S. 136.)

      History: P.A. 75-420 replaced welfare commissioner with commissioner of social services; P.A. 77-614 and 78-303 replaced commissioner of social services with commissioner of income maintenance, effective January 1, 1979; P.A. 86-290 deleted provision allowing assignment of insurance to income maintenance commissioner; P.A. 90-243 divided section into Subsecs. and added reference to "fraternal benefit" society in Subsec. (a); Sec. 38-228 transferred to Sec. 38a-636 in 1991.

      Annotations to former section 38-228:

      When money is due to beneficiary it becomes his property. 64 C. 250. Right to change beneficiary. 70 C. 537; 74 C. 468; 92 C. 490. Beneficiary determined at death. Provision of charter requiring payment to "immediate family" construed. 70 C. 545; 80 C. 212. Provisions of will cannot affect designation of beneficiary. 71 C. 719. Money not property before it comes due. 82 C. 315; 90 C. 511. Beneficiaries restricted to those designated in statute; effect of payment of dues by one not so designated. 82 C. 315; 87 C. 644. Notice of designation not necessary when; extent of power of member to designate; right to change designation. 90 C. 426. Provision for payment to "legal representatives" of deceased member considered. Id., 511. Change of beneficiary must be made in accordance with bylaws. 91 C. 115. Where there are living persons within the designated classes, naming of estate is void and next of kin among such persons will take. 117 C. 48. Member of association has no property rights in fund, only power of appointing beneficiary. Id., 53.


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      Sec. 38a-637. (Formerly Sec. 38-229). Money or other benefits not liable to attachment. No money or other benefit, charity, relief or aid to be paid, provided or rendered by any society shall be liable to attachment, garnishment or other process, or to be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary, or any other person who may have a right thereunder, either before or after payment by the society.

      (1949 Rev., S. 6245; 1953, S. 2847d; 1957, P.A. 448, S. 18; P.A. 75-420, S. 4, 6; P.A. 77-614, S. 587, 608, 610; P.A. 78-303, S. 85, 136; P.A. 86-290, S. 6, 10.)

      History: P.A. 75-420 replaced welfare commissioner with commissioner of social services; P.A. 77-614 and P.A. 78-303 replaced commissioner of social services with commissioner of income maintenance, effective January 1, 1979; P.A. 86-290 deleted reference to assignments to the commissioner of income maintenance under Sec. 17-114; Sec. 38-229 transferred to Sec. 38a-637 in 1991.

      Annotation to former section 38-229:

      What societies included under former law. 76 C. 132.


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      Sec. 38a-638. (Formerly Sec. 38-230). Benefit certificate. (a) Every society authorized to do business in this state shall issue to each benefit member a certificate specifying the amount of benefits provided thereby. The certificate, together with any riders or endorsements attached thereto, the charter or articles of incorporation, the constitution and laws of the society, the application for membership and declaration of insurability, if any, signed by the applicant, and all amendments to each thereof shall constitute the agreement, as of the date of issuance, between the society and the member, and the certificate shall so state. A copy of the application for membership and of the declaration of insurability, if any, shall be endorsed upon or attached to the certificate.

      (b) All statements purporting to be made by the member shall be representations and not warranties. Any waiver of this provision shall be void.

      (c) Any changes, additions or amendments to the charter or articles of incorporation, constitution or laws duly made or enacted subsequent to the issuance of the certificate shall bind the member and the beneficiaries, and shall govern and control the agreement in all respects the same as though such changes, additions or amendments had been made prior to and were in force at the time of the application for membership, except that no change, addition or amendment shall destroy or diminish benefits which the society contracted to give the member as of the date of issuance.

      (d) Copies of any of the documents mentioned in this section, certified by the secretary or corresponding officer of the society, shall be received in evidence of the terms and conditions thereof.

      (e) A society shall provide in its constitution or laws that, if its reserves as to all or any class of certificates become impaired, its board of directors or corresponding body may require that there shall be paid by the member to the society the amount of the member's equitable proportion of such deficiency as ascertained by its board, and that, if the payment is not made, it shall stand as an indebtedness against the certificate and draw interest not to exceed five per cent per annum compounded annually.

      (1949 Rev., S. 6249; 1951, S. 2851d; 1957, P.A. 448, S. 19; 1959, P.A. 61, S. 7; P.A. 90-243, S. 137.)

      History: 1959 act deleted requirement that society's "certificates" provide for payment of member's equitable proportion of deficiency when reserves become impaired; P.A. 90-243 divided section into Subsecs.; Sec. 38-230 transferred to Sec. 38a-638 in 1991.

      Annotation to former section 38-230:

      Phrase "amount of benefits", as used in first sentence, implies an amount in dollars readily ascertainable by the insured. 144 C. 346.


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      Sec. 38a-639. (Formerly Sec. 38-231). Certificate provisions. (a) No life benefit certificate may be delivered or issued for delivery in this state unless a copy of the form has been filed with, and approved by, the commissioner.

      (b) The certificate shall contain in substance the following standard provisions or, in lieu thereof, provisions which are more favorable to the member: (1) Title on the face and filing page of the certificate clearly and correctly describing its form; (2) a provision stating the amount of rates, premiums or other required contributions, by whatever name known, which are payable by the insured under the certificate; (3) a provision that the member is entitled to a grace period of not less than a full month, or thirty days at the option of the society, in which the payment of any premium, after the first, may be made. During such grace period the certificate shall continue in full force, but, in case the certificate becomes a claim during the grace period before the overdue payment is made, the amount of such overdue payment or payments may be deducted in any settlement under the certificate; (4) a provision that the member shall be entitled to have the certificate reinstated at any time within three years from the due date of the premium in default, unless the certificate has been completely terminated through the application of a nonforfeiture benefit, cash surrender value or certificate loan, upon the production of evidence of insurability satisfactory to the society and the payment of all overdue premiums and any other indebtedness to the society upon the certificate, together with interest on such premiums and such indebtedness, if any, at a rate not exceeding six per cent per annum compounded annually; (5) except in the case of pure endowment, annuity or reversionary annuity contracts, reducing term insurance contracts, or contracts of term insurance of uniform amount of fifteen years or less expiring before age sixty-six, a provision that, in the event of default in payment of any premium after three full years' premiums have been paid or after premiums for a lesser period have been paid if the contract so provides, the society 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 the plan stipulated in the certificate, effective as of such due date. The certificate may provide, if the society's laws so specify or if the member so elects prior to the expiration of the grace period of any overdue premium, that default shall not occur so long as premiums can be paid under the provisions of an arrangement for automatic premium loan as may be set forth in the certificate; (6) a provision that one paid-up nonforfeiture benefit as specified in the certificate shall become effective automatically unless the member elects another available paid-up nonforfeiture benefit, not later than sixty days after the due date of the premium in default; (7) a statement of the mortality table and rate of interest used in determining all paid-up nonforfeiture benefits and cash surrender options available under the certificate, and a brief general statement of the method used in calculating such benefits; (8) a table showing in figures the value of every paid-up nonforfeiture benefit and cash surrender option available under the certificate for each certificate anniversary either during the first twenty certificate years or during the term of the certificate, whichever is shorter; (9) a provision that the certificate shall be incontestable after it has been in force during the lifetime of the member for a period of two years from its date of issue except for nonpayment of premiums, violation of the provisions of the certificate relating to military, aviation or naval service and violation of the provisions relating to suspension or expulsion as substantially set forth in the certificate. At the option of the society, supplemental provisions relating to benefits in the event of temporary or permanent disability or hospitalization and provisions which grant additional insurance specifically against death by accident or accidental means may also be excepted. The certificate shall be incontestable on the ground of suicide after it has been in force during the lifetime of the member for a period of two years from the date of issue. The certificate may provide, as to statements made to procure reinstatement, that the society shall have the right to contest a reinstated certificate within a period of two years from the date of reinstatement with the same exceptions as herein provided; (10) a provision that in case the age or sex of the member or of any other person is considered in determining the premium and it is found at any time before final settlement under the certificate that the age or sex has been misstated, and the discrepancy and premium involved have not been adjusted, the amount payable shall be such as the premium would have purchased at the correct age and sex; but, if the correct age was not an insurable age under the society's charter or laws, only the premiums paid to the society, less any payments previously made to the member, shall be returned or, at the option of the society, the amount payable under the certificate shall be such as the premium would have purchased at the correct age according to the society's promulgated rates and any extension thereof based on actuarial principles; (11) a provision or provisions which recite fully, or which set forth the substance of, all sections of the charter, constitution, laws, rules or regulations of the society, in force at the time of issuance of the certificate, the violation of which will result in the termination of, or in the reduction of, the benefit or benefits payable under the certificate; (12) if the constitution or laws of the society provide for expulsion or suspension of a member, any member so expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentations in such member's application for membership, shall have the privilege of maintaining his insurance in force by continuing payment of the required premium; and (13), in the case of a certificate issued by a foreign or alien society, a provision that the rights or obligations of the member or of any person rightfully claiming under the certificate shall be governed by the laws of this state. Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance or because the certificate is an annuity certificate may, to the extent inapplicable, be omitted from the certificate.

      (c) No life benefit certificate shall be delivered or issued for delivery in this state containing in substance any of the following provisions: (1) Any provision limiting the time within which any action at law or in equity may be commenced to less than two years after the cause of action shall accrue; (2) any provision by which the certificate purports to be issued or to take effect more than six months before the original application for the certificate was made, except in case of transfer from one form of certificate to another in connection with which the member is to receive credit for any reserve accumulation under the form of certificate from which the transfer is made; or (3) any provision for forfeiture of the certificate for failure to repay any loan thereon or to pay interest on such loan while the total indebtedness, including interest, is less than the loan value of the certificate.

      (1949 Rev., S. 6249; 1951, S. 2851d; 1957, P.A. 448, S. 20; 1959, P.A. 61, S. 8; 1967, P.A. 93; P.A. 90-243, S. 138.)

      History: 1959 act amended Subsec. (1)(j) to include misstatement of sex and to substitute "any other person" for "the beneficiary"; 1967 act required that copy of certificate form be "approved by", as well as filed with, the commissioner; P.A. 90-243 divided section into Subsecs. and made technical changes, substituting "may" for "shall", "foreign" for "nonresident" and "alien" for "foreign"; Sec. 38-231 transferred to Sec. 38a-639 in 1991.

      Annotations to former section 38-231:

      Bylaws: Member bound by them and amendments thereto. 71 C. 719; 76 C. 52; 77 C. 58; 84 C. 96. Expulsion and reinstatement: Discussed. 76 C. 249; 89 C. 249. One forbidding member to engage in liquor business upheld. 84 C. 346. Waiver of. Id. One providing for expulsion of member for misrepresentation upheld. 89 C. 249.


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      Sec. 38a-640. (Formerly Sec. 38-232). Forms of certificates to be filed with the commissioner. Approval. (a) No domestic, foreign or alien society authorized to do business in this state shall issue or deliver in this state any certificate or other evidence of any contract of accident insurance or health insurance or of any total and permanent disability insurance contract unless and until the form thereof, together with the form of application and all riders or endorsements for use in connection therewith, have been filed with the commissioner and approved by him as conforming to regulations adopted by him and as not inconsistent with any other provision of law applicable thereto.

      (b) The commissioner shall adopt regulations in accordance with the provisions of chapter 54, establishing a procedure for review of such contracts. If the commissioner finds that any such contract or endorsement is not in accordance with any provision of law, he shall issue an order disapproving the use of such form and stating his reasons therefor. The provisions of section 38a-19 shall apply to any such order issued by the commissioner. The commissioner may approve any such form which in his opinion contains provisions on any one or more of the several requirements made by him which are more favorable to the members than the one or ones so required.

      (c) Pursuant to the foregoing provisions the commissioner may, from time to time, adopt, alter and supersede reasonable regulations prescribing the required, optional and prohibited provisions in such contracts, and such regulations shall conform, as far as practical, to the provisions of sections 38a-482 and 38a-483. When the commissioner deems the provisions of the foregoing sections inapplicable, either in part or in their entirety, he may prescribe the portions or summary thereof of the contract to be printed on the certificate issued to the member.

      (1957, P.A. 448, S. 21; P.A. 88-326, S. 7; P.A. 90-243, S. 139.)

      History: P.A. 88-326 required the commissioner to adopt regulations establishing a procedure for policy review and rephrased existing provisions; P.A. 90-243 divided section into Subsecs. and substituted "foreign" for "nonresident" and "alien" for "foreign" societies; Sec. 38-232 transferred to Sec. 38a-640 in 1991.

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      Secs. 38a-641 to 38a-644. Reserved for future use.

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