152             1997 Session Laws of Kansas             Ch. 50

Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 1996 Supp. 40-433 is hereby amended to read as
follows: 40-433. No policy of group life insurance shall be delivered in
this state unless it conforms to one of the following descriptions:

(1) A policy issued by an insurance company organized under the laws
of the state of Kansas on its employees and agents, which agents for the
purpose of this act only shall be deemed employees, the beneficiaries
under such policies to be persons designated by each insured, or a policy
issued to an employer, or to the trustees of a fund established by an
employer, which employer or trustees shall be deemed the policyholder,
to insure employees of the employer for the benefit of persons other than
the employer, both subject to the following requirements: (a) The em-
ployees eligible for insurance under the policy shall be all of the employ-
ees of the employer, or all of any class or classes thereof determined by
conditions pertaining to their employment. The policy may provide that
the term ``employees'' shall include the employees of one or more sub-
sidiary corporations, and the employees, individual proprietors, and part-
ners of one or more affiliated corporations, proprietors or partnerships if
the business of the employer and of such affiliated corporations, propri-
etors or partnerships is under common control through stock ownership,
contract or otherwise. The policy may provide that the term ``employees''
shall include the individual proprietor or partners if the employer is an
individual proprietor or a partnership. The policy may provide that the
term ``employees'' shall include retired employees. No director of a cor-
porate employer shall be eligible for insurance under the policy unless
such person is otherwise eligible as a bona fide employee of the corpo-
ration by performing services other than the usual duties of a director.
No individual proprietor or partner shall be eligible for insurance under
the policy unless the proprietor or partner is actively engaged in and
devotes a substantial part of their time to the conduct of the business of

Ch. 50             1997 Session Laws of Kansas             153

the proprietor or partnership. A policy issued to insure the employees of
a public body may provide that the term ``employees'' shall include
elected or appointed officials. (b) The premium for the policy shall be
paid by the policyholder, either wholly from the employer's funds or funds
contributed by the employer, or partly from such funds and partly from
funds contributed by the insured employees. No policy shall be issued on
which the entire premium is to be derived from funds contributed by the
insured employees. A policy on which part of the premium is to be derived
from funds contributed by the insured employees may be placed in force
only if at least 75% of the then eligible employees, excluding any as to
whom evidence of individual insurability is not satisfactory to the insurer,
elect to make the required contribution. A policy on which no part of the
premium is to be derived from funds contributed by the insured em-
ployees shall insure all eligible employees, or all except any as to whom
evidence of individual insurability is not satisfactory to the insurer. (c)
The policy shall cover at least three employees at date of issue. (d) The
amounts of insurance under the policy shall be based upon some plan,
precluding individual selection either by the employees or by the em-
ployer or trustees.

(2) A policy issued to a creditor, who shall be deemed the policyhol-
der, to insure debtors of the creditor, subject to the following require-
ments: (a) The debtors eligible for insurance under the policy shall be all
of the debtors of the creditor whose indebtedness is repayable in install-
ments, or all of any class or classes thereof determined by conditions
pertaining to the indebtedness or to the purchase giving rise to the in-
debtedness. (b) The premium for the policy shall be paid by the policy-
holder, either from the creditor's funds or from charges collected from
the insured debtors, or from both. A policy on which part or all of the
premium is to be derived from the collection from the insured debtors
of identifiable charges not required of uninsured debtors shall not in-
clude, in the class or classes of debtors eligible for insurance, debtors
under obligations outstanding at its date of issue without evidence of
individual insurability unless at least 75% of the then eligible debtors elect
to pay the required charges. A policy on which no part of the premium
is to be derived from the collection of such identifiable charges shall
insure all eligible debtors, or all except any as to whom evidence of in-
dividual insurability is not satisfactory to the insurer. (c) The policy may
be issued only if the group of eligible debtors is then receiving new en-
trants at the rate of at least 100 persons yearly, or may reasonably be
expected to receive at least 100 new entrants during the first policy year,
and only if the policy reserves to the insurer the right to require evidence
of individual insurability if less than 75% of the new entrants become
insured. (d) The amount of insurance on the life of any debtor shall at
no time, under one or more policies, exceed the amount owed by that
debtor which is repayable in installments to the creditor, or $100,000,

154             1997 Session Laws of Kansas             Ch. 50

whichever is less. (e) The insurance shall be payable to the policyholder.
Such payment shall reduce or extinguish the unpaid indebtedness of the
debtor to the extent of such payment.

(3) A policy issued to a labor union, which shall be deemed the pol-
icyholder, to insure members of such union for the benefit of persons
other than the union or any of its officials, representatives or agents,
subject to the following requirements: (a) The members eligible for in-
surance under the policy shall be all of the members of the union, or all
of any class or classes thereof determined by conditions pertaining to their
employment, or to membership in the union, or both.

(b) The premium for the policy shall be paid by the policyholder,
either wholly from the union's funds, or partly from such funds and partly
from funds contributed by the insured members specifically for their
insurance. No policy shall be issued on which the entire premium is to
be derived from funds contributed by the insured members specifically
for their insurance. A policy on which part of the premium is to be derived
from funds contributed by the insured members specifically for their
insurance may be placed in force only if at least 75% of the then eligible
members excluding any as to whom evidence of individual insurability is
not satisfactory to the insurer, elect to make the required contributions.
A policy on which no part of the premium is to be derived from funds
contributed by the insured members specifically for their insurance shall
insure all eligible members, or all except any as to whom evidence of
individual insurability is not satisfactory to the insurer.

(c) The policy shall cover at least 25 members at date of issue.

(d) The amounts of insurance under the policy shall be based upon
some plan precluding individual selection either by the members or by
the union.

(4) A policy issued to the trustees of a fund established in this state
by two or more employers if a majority of the employees to be insured
of each employer are located within the state, or to the trustees of a fund
established by one or more labor unions, or by one or more employers
and one or more labor unions, which trustees shall be deemed the poli-
cyholder, to insure employees of the employers or members of the unions
for the benefit of persons other than the employers or the unions, subject
to the following requirements: (a) The persons eligible for insurance shall
be all of the employees of the employers or all of the members of the
unions, or all of any class or classes thereof determined by conditions
pertaining to their employment, or to membership in the unions, or to
both. The policy may provide that the term ``employees'' shall include
retired employees and the individual proprietor or partners if any em-
ployer is an individual proprietor or a partnership. No director of a cor-
porate employer shall be eligible for insurance under the policy unless
such person is otherwise eligible as a bona fide employee of the corpo-
ration by performing services other than the usual duties of a director.

Ch. 50             1997 Session Laws of Kansas             155

No individual proprietor or partner shall be eligible for insurance under
the policy unless the proprietor or partner is actively engaged in and
devotes a substantial part of their time to the conduct of the business of
the proprietor or partnership. The policy may provide that the term ``em-
ployees'' shall include the trustees or their employees, or both, if their
duties are principally connected with such trusteeship. (b) The premium
for the policy shall be paid by the trustees either wholly from funds con-
tributed by the employer or employers of the insured persons, or by the
union or unions, or by both, or partly from such funds and partly from
funds contributed by the insured employees. No policy shall be issued on
which the entire premium is to be derived from funds contributed by the
insured persons. The policy shall insure all eligible persons, or all except
any as to whom evidence of individual insurability is not satisfactory to
the insurer. (c) The policy shall cover at date of issue at least 100 persons
and not less than an average of five persons per employer unit. (d) The
amounts of insurance under the policy shall be based upon some plan
precluding individual selection either by the insured persons or by the
policyholder, employers, or union.

(5) A policy issued to an association which has been organized and is
maintained for purposes other than that of obtaining insurance, insuring
at least 25 members, employees, or employees of members of the asso-
ciation for the benefit of persons other than the association or its officers.
The term ``employees'' as used herein shall be deemed to include retired
employees. The premiums for the policies shall be paid by the policy-
holder, either wholly from association funds, or funds contributed by the
members of such association or by employees of such members or any
combination thereof. The amounts of insurance under the policy shall be
based upon some plan precluding individual selection either by the in-
sured person or by the association or by the member.

(6) Any policy issued pursuant to this section may be extended to
insure the employees against loss due to the death of their spouses or the
employees' children under 21 years of age, or employees' children 21
years or older who are attending an educational institution and relying
upon the insured employees for financial support, their children, their
grandchildren, their spouse's children, their spouse's grandchildren, their
parents, their spouse's parents, or any class or classes thereof, subject to
the following requirements:

(a) The premium for the insurance shall be paid by the policyholder,
either from the employer's funds or from funds contributed by the in-
sured employees, or from both. If any part of the premium is to be derived
from funds contributed by the insured employees, the insurance with
respect to spouses and children, their children, their grandchildren, their
spouse's children, their spouse's grandchildren, their parents and their
spouse's parents may be placed in force only if at least 75% of the then
eligible employees, excluding any as to whose family members' evidence

156             1997 Session Laws of Kansas             Ch. 50

of insurability is not satisfactory to the insurer, elect to make the required
contribution. If no part of the premium is to be derived from funds con-
tributed by the employees, all eligible employees, excluding any as to
whose family members' evidence of insurability is not satisfactory to the
insurer, shall be insured with respect to their spouses and children, their
children, their grandchildren, their spouse's children, their spouse's
grandchildren, their parents, their spouse's parents.

(b) The amounts of insurance shall be based upon some plan pre-
cluding individual selection either by the employees or by the policyhol-
der, or employer and shall not exceed with respect to any spouse or child,
child or parent 50% of the insurance on the life of such insured employee.

(c) Upon termination of the insurance with respect to the spouse of
an employee by reason of the employee's termination of employment or
death, the spouse insured pursuant to this section shall have the same
conversion rights as to the insurance on such spouse's life as is provided
for the employee under K.S.A. 40-434 and amendments thereto.

(d) Notwithstanding the provisions of K.S.A. 40-434 and amend-
ments thereto only one certificate need be issued for delivery to an in-
sured person if a statement concerning any dependent's coverage is in-
cluded in such certificate.

(7) A policy may be issued to any other group which the commis-
sioner of insurance finds is the proper subject of a group life insurance
policy or contract. Any such group shall be subject to any appropriate
conditions or provisions relating thereto which the commissioner may
establish or require, consistent with the provisions of this act, and such
conditions and provisions shall be included in the policy or contract.

Sec. 2. K.S.A. 1996 Supp. 40-433 is hereby repealed.

Sec. 3. This act shall take effect and be in force from and after its
publication in the statute book.

Approved April 4, 1997.