Chapter 743 — Health and Life Insurance
2009 EDITION
HEALTH AND LIFE INSURANCE
INSURANCE
GENERAL PROVISIONS
743.010 Health insurance policy and health benefit plan forms; rules
743.013 Disclosure of differences in replacement health insurance policies; nonduplication for persons 65 and older; rules
743.015 Filing and approval of credit life and credit health insurance forms; filing of rates
743.018 Filing of rates for life and health insurance; rules
743.019 Public comment on proposed rates for health insurance
743.020 Rate filing to include statement of administrative expenses; rules
743.024 Personal insurance, insurable interest and beneficiaries
743.027 Consent of individual required for life and health insurance; exceptions
743.028 Uniform health insurance claim forms
743.030 Life insurance for benefit of charity
743.039 Alteration of application for life or health insurance
743.041 Payment discharges insurer
743.043 Assignment of policies
743.046 Exemption of proceeds of individual life insurance other than annuities
743.047 Exemption of proceeds of group life insurance
743.049 Exemption of proceeds of annuity policies; assignability of rights
743.050 Exemption of proceeds of health insurance
743.053 Prohibition on requirement that death or dismemberment occur in less than 180 days after accident
POLICY LANGUAGE SIMPLIFICATION
743.100 Short title
743.101 Purpose
743.103 Definitions for ORS 743.100 to 743.109
743.104 Scope of ORS 743.100 to 743.109
743.106 Reading ease standards for life and health insurance policies
743.107 When director may authorize lower standards
743.109 Approval of certain policy forms containing specified provisions; conditions for approval
INDIVIDUAL LIFE INSURANCE AND ANNUITIES
(Generally)
743.150 Scope of ORS 743.150, 743.153 and 743.156
743.153 Statement of benefits
743.154 Acceleration of death benefits; rules
743.156 Statement of premium
(Individual Life Insurance Policies)
743.159 Scope of ORS 743.162 to 743.243
743.162 Payment of premium
743.165 Grace period
743.168 Incontestability
743.171 Incontestability and limitation of liability after reinstatement
743.174 Entire contract
743.177 Statements of insured
743.180 Misstatement of age
743.183 Dividends
743.186 Policy loan
743.187 Maximum interest rate on policy loan; adjustable interest rate
743.189 Reinstatement
743.192 Payment of claim; payment of interest upon failure to pay proceeds
743.195 Installment payments
743.198 Title
743.201 Beneficiary of industrial policies
743.204 Standard Nonforfeiture Law for Life Insurance; applicability
743.207 Required provisions relating to nonforfeiture
743.210 Determination of cash surrender values; applicability to certain policies
743.213 Determination of paid-up nonforfeiture benefits
743.215 Calculation of adjusted premiums
743.216 Adjusted premiums; applicability
743.218 Requirements for determination of future premium amounts or minimum values
743.219 Supplemental rules for calculating nonforfeiture benefits
743.221 Cash surrender values upon default in premium payment
743.222 Policy benefits and premiums that shall be disregarded in calculating cash surrender values and paid-up nonforfeiture benefits
743.225 Prohibited provisions
743.228 Acts of corporate insured or beneficiary with respect to policy
743.230 Variable life policy provisions
743.231 “Profit-sharing policy” defined
743.234 “Charter policy” or “founders policy” defined
743.237 “Coupon policy” defined
743.240 Profit-sharing, charter or founders policies prohibited
743.243 Restrictions on form of coupon policy
743.245 Variable life insurance policy provisions
743.247 Notice to variable life insurance policyholders
(Individual Annuity and Pure Endowment Policies)
743.252 Scope of ORS 743.255 to 743.273
743.255 Grace period for annuities
743.258 Incontestability
743.261 Entire contract
743.264 Misstatement of age or sex
743.267 Dividends
743.268 Advancement of policy loans
743.269 Periodic payments for period certain
743.270 Reinstatement
743.271 Periodic stipulated payments on variable annuities
743.272 Computing benefits
743.273 Standard provisions of reversionary annuities
743.275 Standard Nonforfeiture Law for Individual Deferred Annuities; application
743.278 Required provisions in annuity policies; exception
743.284 Computation of benefits
743.287 Commencement of annuity payments at optional maturity dates; calculation of benefits
743.290 Notice of nonpayment of certain benefits to be included in annuity policy
743.293 Minimum forfeiture amounts for annuity policies; rules
743.295 Effect of certain life insurance and disability benefits on minimum nonforfeiture amounts
GROUP LIFE INSURANCE
743.303 Requirements for issuance of group life insurance policies
743.306 Required provisions in group life insurance policies
743.309 Nonforfeiture provisions
743.312 Grace period
743.315 Incontestability
743.318 Application; representations by policyholders and insureds
743.321 Evidence of insurability
743.324 Misstatement of age
743.327 Payments under policy; payment of interest upon failure to pay proceeds
743.330 Issuance of certificates
743.333 Termination of individual coverage
743.336 Termination of policy or class of insured persons
743.339 Death during period for conversion to individual policy
743.342 Statement furnished to insured under credit life insurance policy
743.345 Assignability of group life policies
743.348 Certain sales practices prohibited
743.351 Eligibility of association to be group life policyholder; rules
743.354 Requirements for certain group life policies issued to trustees of certain funds; rules
743.356 Continuing coverage upon replacement of group life policy
743.358 Borrowing by certificate holders under group life policy
743.360 Alternative group life insurance coverage
CREDIT LIFE AND CREDIT HEALTH INSURANCE
743.371 Definitions for credit life and credit health insurance provisions
743.372 Applicability of credit life and credit health insurance provisions
743.373 Forms of credit life and credit health insurance
743.374 Limits on amount of credit life insurance
743.375 Limit on amount of credit health insurance
743.376 Duration of credit life and credit health insurance
743.377 Credit life and credit health insurance policy or group certificate; contents; delivery of policy, certificate or copy of application
743.378 Charges and refunds to debtor
743.379 Status of remuneration to creditor
743.380 Claim report and payment
HEALTH INSURANCE
(Individual)
743.402 Exceptions to individual health insurance policy requirements
743.405 General requirements
743.408 Mandatory provisions
743.411 Entire contract; changes
743.414 Time limit on certain defenses; incontestability
743.417 Grace period
743.420 Reinstatement
743.423 Notice of claim
743.426 Claim forms
743.429 Proofs of loss
743.432 Time of payment of claims
743.435 Payment of claims
743.438 Physical examinations and autopsy
743.441 Legal actions
743.444 Change of beneficiary
743.447 Optional provisions
743.450 Change of occupation
743.453 Misstatement of age
743.456 Other insurance in same insurer
743.459 Insurance with other insurers; expense incurred benefits
743.462 Insurance with other insurers; other than expense incurred benefits
743.465 Relation of earnings to insurance
743.468 Unpaid premium
743.471 Cancellation
743.472 Permissible reasons for cancellation or refusal to renew
743.474 Conformity with state statutes
743.477 Illegal occupation
743.483 Arrangement of provisions
743.486 Scope of term “insured” in statutory policy provisions
743.489 Extension of coverage beyond policy period; effect of misstatement of age
743.492 Policy return and premium refund provision
743.495 Use of terms “noncancelable” or “guaranteed renewable”; synonymous terms
743.498 Statement in policy of cancelability or renewability
(Group and Blanket)
743.522 “Group health insurance” described
743.523 Certain sales practices prohibited
743.524 Eligibility of association to be group health policyholder; rules
743.526 Determination of whether trustees are policyholders; consequences; rules
743.527 When group health insurance policies to continue in effect upon payment of premium by insured individual
743.528 Required provisions in group health insurance policies
743.529 Continuation of benefits after termination of group health insurance policy; rules
743.530 Continuation of benefits after injury or illness covered by workers’ compensation
743.531 Direct payment of hospital and medical services; rate limitations
743.533 Leased workers; offering group health insurance
743.534 “Blanket health insurance” defined
743.537 Required provisions for blanket health insurance policies
743.540 Application and certificates not required for blanket health insurance policies
743.543 Payment of benefits under blanket health insurance policies
743.546 Exemption of policy form approval for blanket health insurance policies
743.549 Restriction on reduction of benefits provisions in group and blanket health insurance policies
743.550 Student health insurance
743.552 Guidelines for application of ORS 743.549; rules
743.560 Minimum grace period; notice upon termination of policy; effect of failure to notify
743.562 Applicability of ORS 743.560
743.565 Separate notice to policyholder required before cancellation of individual or group health insurance policy for nonpayment of premium
743.566 Rules for certain notice requirements
(Continuation)
743.600 Availability of continued coverage under group policy for surviving, divorced or separated spouse 55 or older
743.601 Procedure for obtaining continuation of coverage under ORS 743.600
743.602 Premium for continuation of coverage under ORS 743.600; termination of right to continuation
743.610 Continuation of coverage under group policy upon termination of employment or membership or dissolution of marriage; applicability of waiting period to rehired employee
(Long Term Care)
743.650 Long Term Care Insurance Act; purpose; application
743.652 Definitions for ORS 743.650 to 743.664
743.653 Prohibition on certain policies
743.655 Rules; disclosure; contents of policy
743.656 Eligibility for benefits; providers required to be covered
743.662 Rescission of policy and denial of claims
743.664 Offer of nonforfeiture benefit; rules
(Medicare Supplement)
743.680 Definitions for ORS 743.680 to 743.689
743.682 Application of ORS 743.680 to 743.689
743.683 Policy contents; standards for benefit and claims payments; rules
743.684 Filing of policy; loss ratio standards; insurance producer compensation
743.685 Outline of coverage; information brochure; rules
743.686 Right to return of policy; premium refund
743.687 Advertising
743.688 Rules
743.689 Director’s authority upon violation of ORS 743.680 to 743.689
(Small Employer, Group, Individual and Portability Health Insurance, Generally)
743.730 Definitions for ORS 743.730 to 743.773
743.731 Purposes
743.733 Issuance of group health benefit plan to affiliated group of employers; determination of number of employees for purpose of determining eligibility; small employer carrier
743.734 Group health benefit plans subject to provisions of specified laws; exemptions
743.736 Requirements for basic health benefit plans; approval of plans and forms; offering of plan by carriers
743.737 Requirements for small employer health benefit plans
743.745 Health Insurance Reform Advisory Committee; appointment; duties
743.748 Submission of information by carriers offering health benefit plans
743.749 Certifications and disclosure of coverage
743.751 Use of health statements in group health benefit plans
743.752 Coverage in group health benefit plans; consideration of prospective enrollee health status restricted; effect of discontinuing offer of plans; exceptions; coverage by multiple employer welfare arrangements
743.754 Requirements for group health benefit plans
743.757 Health benefit coverage for guaranteed association
743.758 Implementation of Health Insurance Portability and Accountability Act of 1996; rules
743.760 Approval of portability plans; offering of plans by carriers; required provisions; actuarial certification
743.761 Satisfaction of requirements of ORS 743.760 by carrier offering individual health benefit plans; rules
743.766 Use of health statements in individual health benefit plans; exclusions or limitations on coverage; eligibility to apply for Oregon Medical Insurance Pool; renewal; discontinuation of coverage
743.767 Premium rates for individual health benefit plans
743.769 Carrier marketing of individual health benefit plans; rules; duties of carrier regarding applications; effect of discontinuing offer of plans
743.773 Rules for ORS 743.766 to 743.769
743.775 Submission of information by carriers offering individual health benefit plans
743.787 Definitions for ORS 743.788
743.788 Prescription drug identification card
743.790 Rules for prescription drug identification cards
MISCELLANEOUS
743.801 Definitions
743.803 Medical services contract provisions; nonprovider party prohibitions; future contracts
743.804 Requirements for insurer offering health benefit plan
743.806 Utilization review requirements for medical services contracts to which insurer not party
743.807 Utilization review requirements for insurers offering health benefit plan
743.808 Requirements for insurers that require designation of participating primary care physician; exceptions
743.811 Applicability
743.814 Requirements for insurers offering managed health insurance; quality assessment; rules
743.817 Requirements for insurers offering managed health or preferred provider organization insurance; rules; opportunity to participate
743.818 Data reporting
743.819 Reporting requirements; rules
743.821 Required managed health insurance contract provision; enrollee liability
743.823 Enforcement of Newborns’ and Mothers’ Health Protection Act of 1996
743.824 Cash dividends for healthy behaviors
743.827 Health Care Consumer Protection Advisory Committee
743.829 Decisions regarding health care facility length of stay, level of care and follow-up care
743.831 Consortium established; managed health care performance
743.834 Insurer prohibited practices; patient communication and referral
743.837 Prior authorization requirements
743.839 Disclosure of information
743.842 Emergency eye care services without referral from primary care provider
RIGHTS OF ENROLLEES
743.845 Designation of women’s health care provider as primary care provider; direct access to women’s health care provider
743.847 Medicaid not considered in coverage eligibility determination; claims by state Medicaid agency; prohibited ground for denial of enrollment of child; insurer duties
743.854 Continuity of care
743.856 Referrals to specialists
743.857 External review
743.858 Director to contract with independent review organizations to provide external review; rules
743.859 Inclusion of statements regarding external review in health benefit plans
743.861 Enrollee application for external review
743.862 Duties of independent review organizations
743.863 Civil penalty for failure to comply by insurer that agreed to be bound by decision
743.864 Private right of action
743.871 Definitions for ORS 743.871 to 743.893
743.874 Estimate of costs for in-network procedure or service
743.876 Estimate of costs for out-of-network procedure or service
743.878 Submission of methodology used to determine insurer’s allowable charges
743.883 Alternative mechanism for disclosure of costs and charges
743.893 Rules
PAYMENT OF CLAIMS
743.911 Payment or denial of health benefit plan claims; rules
743.912 Refund of paid claims
743.913 Interest on unpaid claims
743.917 Underpayment of claims
743.918 Claims submitted during credentialing period
ASSESSMENT ON CLAIMS ADMINISTERED BY PUBLIC EMPLOYEES’ BENEFIT BOARD
743.951 Payment procedures; right to hearing
ASSESSMENT ON PREMIUMS
743.960 Definitions for ORS 743.960 and 743.961
743.961 Payment procedures
743.965 Incorrect payments; right to hearing
743.990 Penalties
743.003 [1967 c.359 §335; renumbered 742.001 in 1989]
743.006 [Formerly 736.300; renumbered 742.003 in 1989]
743.009 [1967 c.359 §337; 1969 c.336 §11; 1973 c.608 §1; renumbered 742.005 in 1989]
GENERAL PROVISIONS
743.010 Health insurance policy and health benefit plan forms; rules. In addition to all other powers of the Director of the Department of Consumer and Business Services with respect thereto, the director may issue rules with respect to policy forms and health benefit plan forms described in ORS 742.005 (6)(a) and (b):
(1) Establishing minimum benefit standards;
(2) Requiring the ratio of benefits to premiums to be not less than a specified percentage in order to be considered reasonable, and requiring the periodic filing of data that will demonstrate the insurer’s compliance; and
(3) Establishing requirements intended to discourage duplication or overlapping of coverage and replacement, without regard to the advantage to policyholders, of existing policies by new policies. [1979 c.857 §2; 1997 c.96 §1; 1999 c.987 §4a]
743.011 [1985 c.827 §2; repealed by 1989 c.255 §15]
743.012 [1967 c.359 §338; 1989 c.700 §13; renumbered 742.007 in 1989]
743.013 Disclosure of differences in replacement health insurance policies; nonduplication for persons 65 and older; rules. (1) The Director of the Department of Consumer and Business Services shall adopt by rule requirements for disclosure by group and individual health insurers to individual and group health insurance policyholders the difference between coverage under the existing policy and coverage being offered to replace that coverage.
(2) The provisions of this section do not apply to disability income insurance.
(3) The director shall adopt by rule requirements for nonduplication and replacement of major medical, Medicare supplement, long term care and special illness policies for applicants 65 years of age and older. The insurance producer shall offer to compare for any applicants 65 years of age and older the applicant’s existing policy or policies and coverage being offered to replace or supplement the applicant’s existing coverage. [1989 c.474 §2; 2003 c.364 §106]
743.015 Filing and approval of credit life and credit health insurance forms; filing of rates. (1) All credit life and credit health insurance policies subject to ORS 743.371 to 743.380, and all certificates of insurance, notices of proposed insurance, applications for insurance, indorsements and riders used in connection with such kinds of policies, delivered or issued for delivery in this state and the schedules of premium rates pertaining thereto shall be filed with the Director of the Department of Consumer and Business Services. Such forms are subject to approval, disapproval or withdrawal of approval by the director as provided in ORS 742.003, 742.005 and 742.007.
(2) An insurer may revise the schedules of premium rates from time to time and shall file the revised schedules with the director. An insurer may not issue any credit life or credit health insurance policy for which the premium rate exceeds that determined by the schedules of the insurer as then on file with the director.
(3) If a group policy of credit life or credit health insurance has been or is delivered in another state, the insurer shall file only the group certificate, the individual application and the notice of proposed insurance delivered or issued for delivery in this state as specified in ORS 743.377 (2) and (4). The director shall approve the group certificate, the individual application and the notice of proposed insurance if the forms conform with the requirements specified in ORS 743.377 (2) and (4) and the schedules of premium rates applicable to the insurance evidenced by the certificate or notice are not in excess of the insurer’s schedules of premium rates filed with the director. [Formerly 739.595; 1969 c.336 §12; 1971 c.231 §20; 2005 c.185 §3]
743.018 Filing of rates for life and health insurance; rules. (1) Except for group life and health insurance, and except as provided in ORS 743.015, every insurer shall file with the Director of the Department of Consumer and Business Services all schedules and tables of premium rates for life and health insurance to be used on risks in this state, and shall file any amendments to or corrections of such schedules and tables. Premium rates are subject to approval, disapproval or withdrawal of approval by the director as provided in ORS 742.003, 742.005 and 742.007.
(2) Except as provided in ORS 743.737 and 743.760 and subsection (3) of this section, a rate filing by a carrier for any of the following health benefit plans subject to ORS 743.730 to 743.773 shall be available for public inspection immediately upon submission of the filing to the director:
(a) Health benefit plans for small employers.
(b) Portability health benefit plans.
(c) Individual health benefit plans.
(3) The director may by rule:
(a) Specify all information a carrier must submit as part of a rate filing under this section; and
(b) Identify the information submitted that will be exempt from disclosure under this section because the information constitutes a trade secret and would, if disclosed, harm competition.
(4) The director, after conducting an actuarial review of the rate filing, may approve a proposed premium rate for a health benefit plan for small employers or for an individual health benefit plan if, in the director’s discretion, the proposed rates are:
(a) Actuarially sound;
(b) Reasonable and not excessive, inadequate or unfairly discriminatory; and
(c) Based upon reasonable administrative expenses.
(5) In order to determine whether the proposed premium rates for a health benefit plan for small employers or for an individual health benefit plan are reasonable and not excessive, inadequate or unfairly discriminatory, the director may consider:
(a) The insurer’s financial position, including but not limited to profitability, surplus, reserves and investment savings.
(b) Historical and projected administrative costs and medical and hospital expenses.
(c) Historical and projected loss ratio between the amounts spent on medical services and earned premiums.
(d) Any anticipated change in the number of enrollees if the proposed premium rate is approved.
(e) Changes to covered benefits or health benefit plan design.
(f) Changes in the insurer’s health care cost containment and quality improvement efforts since the insurer’s last rate filing for the same category of health benefit plan.
(g) Whether the proposed change in the premium rate is necessary to maintain the insurer’s solvency or to maintain rate stability and prevent excessive rate increases in the future.
(h) Any public comments received under ORS 743.019 pertaining to the standards set forth in subsection (4) of this section and this subsection.
(6) With the written consent of the insurer, the director may modify a schedule or table of premium rates filed in accordance with subsection (1) of this section.
(7) The requirements of this section do not supersede other provisions of law that require insurers, health care service contractors or multiple employer welfare arrangements providing health insurance to file schedules or tables of premium rates or proposed premium rates with the director or to seek the director’s approval of rates or changes to rates. [1967 c.359 §340; 2007 c.391 §1; 2009 c.595 §31]
Note: The amendments to 743.018 by section 31, chapter 595, Oregon Laws 2009, apply to rate filings submitted on or after April 1, 2010. See section 30, chapter 595, Oregon Laws 2009. The text that applies to rate filings submitted before April 1, 2010, is set forth for the user’s convenience.
743.018. (1) Except for group life and health insurance, and except as provided in ORS 743.015, every insurer shall file with the Director of the Department of Consumer and Business Services all schedules and tables of premium rates for life and health insurance to be used on risks in this state, and shall file any amendments to or corrections of such schedules and tables.
(2) Except as provided in ORS 743.737 and 743.760 and subsection (3) of this section, a rate filing by a carrier for any of the following health benefit plans subject to ORS 743.730 to 743.773 shall be available for public inspection immediately upon submission of the filing to the director:
(a) Health benefit plans for small employers.
(b) Portability health benefit plans.
(c) Individual health benefit plans.
(3) The director, upon request by a carrier, may exempt from disclosure any part of the filing that the director determines to contain trade secrets and that would, if disclosed, harm competition. The part that the director determines to be exempt from disclosure shall be considered confidential for purposes of ORS 705.137. The director may not disclose a part of a filing subject to a carrier’s request pending the director’s determination under this subsection.
743.019 Public comment on proposed rates for health insurance. (1) When an insurer files a schedule or table of premium rates for individual, portability or small employer health insurance under ORS 743.018, the Director of the Department of Consumer and Business Services shall open a 30-day public comment period on the rate filing that begins on the date the insurer files the schedule or table of premium rates. The director shall post all comments to the website of the Department of Consumer and Business Services without delay.
(2) The director shall give written notice to an insurer approving or disapproving a rate filing or, with the written consent of the insurer, modifying a rate filing submitted under ORS 743.018 no later than 10 business days after the close of the public comment period. The notice shall comply with the requirements of ORS 183.415. [2009 c.595 §28]
Note: 743.019 and 743.020 apply to rate filings submitted to the Department of Consumer and Business Services on or after April 1, 2010. See section 30, chapter 595, Oregon Laws 2009.
Note: 743.019 and 743.020 were added to and made a part of ORS chapter 743 by legislative action but were not added to any smaller series therein. See Preface to Oregon Revised Statutes for further explanation.
743.020 Rate filing to include statement of administrative expenses; rules. An insurer licensed by the Department of Consumer and Business Services shall include in any rate filing under ORS 743.018 with respect to individual and small employer health insurance policies a statement of administrative expenses in the form and manner prescribed by the department by rule. The statement must include, but is not limited to:
(1) A statement of administrative expenses on a per member per month basis; and
(2) An explanation of the basis for any proposed premium rate increases or decreases. [2009 c.595 §29]
Note: See notes under 743.019.
743.021 [1967 c.359 §341; 1971 c.231 §21; 1973 c.525 §1; renumbered 742.009 in 1989]
743.024 Personal insurance, insurable interest and beneficiaries. (1) Any individual of competent legal capacity may procure or effect an insurance policy on the individual’s own life or body for the benefit of any person. However, except as provided in ORS 743.030, no person shall procure or cause to be procured any insurance policy upon the life or body of another unless the benefits under such policy are payable to the individual insured or the personal representatives of the individual, or to a person having, at the time such policy was entered into, an insurable interest in the individual insured.
(2) If the beneficiary, assignee or other payee under any policy made in violation of this section receives from the insurer any benefits thereunder accruing upon the death, disablement or injury of the individual insured, the individual insured or the individual’s executor or administrator, as the case may be, may maintain an action to recover such benefits from the person so receiving them.
(3) An insurer shall be entitled to rely upon all statements, declarations and representations made by an applicant for insurance relative to the matter of insurable interest. No insurer shall incur legal liability, except as set forth in the policy, by virtue of any untrue statements, declarations or representations so relied upon in good faith by the insurer.
(4) This section does not apply to annuity policies. [1967 c.359 §342]
743.027 Consent of individual required for life and health insurance; exceptions. A life or health insurance policy upon an individual, except a policy of group life insurance or of group or blanket health insurance, may not be made or effectuated unless at the time of the making of the policy the individual insured, being of competent legal capacity to contract, applies therefor or has consented thereto in writing, except in the following cases:
(1) A spouse may effectuate such insurance upon the other spouse.
(2) Any person having an insurable interest in the life of a minor, or any person upon whom a minor is dependent for support and maintenance, may effectuate insurance upon the life of or pertaining to such minor.
(3) Family policies may be issued insuring any two or more members of a family on an application signed by either parent, a stepparent, or by a husband or wife.
(4) A person may effectuate insurance that provides for the funeral expenses of an adult who is dependent upon the person for support and maintenance.
(5) A person may effectuate insurance that provides for the funeral expenses of an adult if the person:
(a) Is closely related to the adult by blood or by law or has a substantial interest in the adult engendered by love and affection; and
(b) Has a lawful and substantial interest in having the life, health and bodily safety of the adult continue. [1967 c.359 §342a; 1991 c.182 §2; 2009 c.331 §1]
743.028 Uniform health insurance claim forms. The Director of the Department of Consumer and Business Services shall prescribe uniform health insurance claim forms which shall be used by all insurers transacting health insurance in this state and by all state agencies that require health insurance claim forms for their records. [1973 c.109 §2]
743.030 Life insurance for benefit of charity. (1) Life insurance policies may be effected although the person paying the consideration has no insurable interest in the life of the person insured if a charitable, benevolent, educational or religious institution is designated irrevocably as the beneficiary.
(2) In making such policies the person paying the premium shall make and sign the application therefor as owner. The application also must be signed by the person whose life is to be insured. Such a policy shall be valid and binding between and among all of the parties thereto.
(3) The person paying the consideration for such insurance shall have all rights conferred by the policy to loan value at any time during the premium-paying period, but not at maturity, notwithstanding such person has no insurable interest in the life of the person insured. [Formerly 739.420]
743.033 [1967 c.359 §344; renumbered 742.011 in 1989]
743.036 [Formerly 736.330; 1973 c.823 §149; repealed by 1973 c.827 §83]
743.037 [1973 c.521 §2; renumbered 743.721 in 1989]
743.039 Alteration of application for life or health insurance. (1) An application for a life insurance policy may not provide for alterations by any person other than the applicant in either the application or the policy to be issued thereon with respect to the amount of insurance, classification of risk, plan of insurance or the benefits unless the application contains a statement that no such changes are effective until approved in writing by the applicant.
(2) No alteration of any written application for any health insurance policy shall be made by any person other than the applicant without the written consent of the applicant, except that insertions may be made by the insurer, for administrative purposes only, in such manner as to indicate clearly that such insertions are not to be ascribed to the applicant. [1967 c.359 §346]
743.041 Payment discharges insurer. Whenever the proceeds of or payments under a life or health insurance policy become payable in accordance with the terms of such policy, or the exercise of any right or privilege under such policy, and the insurer makes payment in accordance with the terms of the policy or in accordance with any written assignment of the policy, the person so designated as being entitled to the proceeds or payments shall be entitled to receive them and to give full acquittance therefor, and such payments shall fully discharge the insurer from all claims under the policy unless, before payment is made, the insurer has received at its home office written notice by or on behalf of some other person that such other person claims to be entitled to such proceeds or payments or some interest in the policy. [Formerly 743.084]
743.042 [1967 c.359 §347; 1985 c.465 §1; renumbered 742.013 in 1989]
743.043 Assignment of policies. A policy may be assignable or not assignable, as provided by its terms. Subject to its terms relating to assignability, any life or health insurance policy, under the terms of which the beneficiary may be changed upon the sole request of the insured or owner, may be assigned either by pledge or transfer of title, by an assignment executed by the insured or owner alone and delivered to the insurer, whether or not the pledgee or assignee is the insurer. Any such assignment shall entitle the insurer to deal with the assignee as the owner or pledgee of the policy in accordance with the terms of the assignment, until the insurer has received at its home office written notice of termination of the assignment or pledge, or written notice by or on behalf of some other person claiming some interest in the policy in conflict with the assignment. [Formerly 743.087]
743.045 [Formerly 736.305; 1971 c.231 §22; 1985 c.465 §2; renumbered 742.016 in 1989]
743.046 Exemption of proceeds of individual life insurance other than annuities. (1) When a policy of insurance is effected by any person on any person’s own life or on another life in favor of some person other than that person having an insurable interest in the life insured, the lawful beneficiary thereof, other than that person or that person’s legal representative, is entitled to its proceeds against the creditors or representatives of the person effecting the policy.
(2) The person to whom a policy of life insurance is made payable may maintain an action thereon in the person’s own name.
(3) A policy of life insurance payable to a beneficiary other than the estate of the insured, having by its terms a cash surrender value available to the insured, is exempt from execution issued from any court in this state and in the event of bankruptcy of such insured is exempt from all demands in legal proceeding under such bankruptcy.
(4) Subject to the statute of limitations, the amount of any premiums paid in fraud of creditors for such insurance, with interest thereon, shall inure to their benefit from the proceeds of the policy. The insurer issuing the policy shall be discharged of all liability thereon by payment of its proceeds in accordance with its terms unless, before such payment, the insurer has received at its home office written notice by or in behalf of some creditor, with specifications of the amount claimed, claiming to recover for certain premiums paid in fraud of creditors.
(5) The insured under any policy within this section shall not be denied the right to change the beneficiary when such right is expressly reserved in the policy.
(6) This section does not apply to annuity policies. [Formerly 739.405 and then 743.099]
743.047 Exemption of proceeds of group life insurance. (1) A policy of group life insurance or the proceeds thereof payable to a person or persons other than the individual insured or the individual’s estate shall be exempt from debts and claims of creditors or representatives of the individual insured and, in the event of bankruptcy of the individual insured, from all demands in legal proceedings under such bankruptcy.
(2) The provisions of subsection (1) of this section do not apply to group life insurance issued to a creditor covering the creditor’s debtors to the extent that such proceeds are applied to payment of the obligation for the purpose of which the insurance was so issued. [Formerly 743.102]
743.048 [Formerly 736.315; renumbered 742.018]
743.049 Exemption of proceeds of annuity policies; assignability of rights. (1) The benefits, rights, privileges and options which are due or prospectively due an annuitant under any annuity policy issued before, on or after June 8, 1967, shall not be subject to execution, nor shall the annuitant be compelled to exercise any such rights, powers or options, nor shall creditors be allowed to interfere with or terminate the policy, except:
(a) As to amounts paid for or as premium on any such annuity with intent to defraud creditors, with interest thereon, and of which the creditor has given the insurer written notice at its home office prior to the making of the payments to the annuitant out of which the creditor seeks to recover. Any such notice shall specify the amount claimed or such facts as will enable the insurer to ascertain such amount, and shall set forth such facts as will enable the insurer to ascertain the annuity policy, the annuitant and the payments sought to be avoided on the ground of fraud.
(b) The total exemption of benefits presently due and payable to any annuitant periodically or at stated times under all annuity policies under which the person is an annuitant shall not at any time exceed $500 per month for the length of time represented by such installments. Such periodic payments in excess of $500 per month shall be subject to garnishee execution to the same extent as are wages and salaries.
(c) If the total benefits presently due and payable to any annuitant under all annuity policies under which the person is an annuitant shall at any time exceed payment at the rate of $500 per month, the court may order such annuitant to pay to a judgment creditor or apply on the judgment, in installments, the portion of such excess benefits as to the court may appear just and proper, after due regard for the reasonable requirements of the judgment debtor and family, if dependent upon the judgment debtor, as well as any payments required to be made by the annuitant to other creditors under prior court orders.
(2) If the policy so provides, the benefits, rights, privileges or options accruing under the policy to a beneficiary or assignee shall not be transferable nor subject to commutation, and if the benefits are payable periodically or at stated times, the same exemptions and exceptions contained in this section for the annuitant shall apply with respect to such beneficiary or assignee. [Formerly 743.105; 1991 c.182 §3]
743.050 Exemption of proceeds of health insurance. Except as may otherwise be expressly provided by the policy, the proceeds or avails of all health insurance policies and of provisions providing benefits on account of the insured’s disability which are supplemental to life insurance policies, issued before, on or after June 8, 1967, shall be exempt from all liability for any debt of the insured, and from any debt of the beneficiary existing at the time the proceeds are made available for the use of the beneficiary. [Formerly 743.108]
743.051 [1967 c.359 §350; renumbered 742.021 in 1989]
743.052 [1971 c.372 §2; renumbered 743.719 in 1989]
743.053 Prohibition on requirement that death or dismemberment occur in less than 180 days after accident. A life insurance policy or health insurance policy, whether group or individual, that contains provisions providing benefits in case of death or dismemberment by accident shall not require that the death or dismemberment occur less than 180 days after the date of the accident in order for benefits to be paid under the policy. [1991 c.182 §8]
743.054 [1967 c.359 §351; renumbered 742.023 in 1989]
743.055 [1991 c.875 §2; repealed by 1995 c.506 §11]
743.057 [1967 c.359 §352; renumbered 742.026 in 1989]
743.060 [1967 c.359 §353; renumbered 742.028 in 1989]
743.063 [1967 c.359 §354; renumbered 742.033 in 1989]
743.066 [1967 c.359 §355; 1971 c.231 §23; renumbered 742.036 in 1989]
743.069 [1967 c.359 §356; renumbered 742.038 in 1989]
743.072 [Formerly 736.310; 1971 c.231 §24; 1973 c.149 §1; renumbered 742.041 in 1989]
743.075 [1967 c.359 §358; 1975 c.391 §1; 1977 c.742 §8; renumbered 742.043 in 1989]
743.078 [1967 c.359 §359; renumbered 742.046 in 1989]
743.080 [1971 c.231 §5; 1983 c.249 §1; renumbered 742.048 in 1989]
743.081 [1967 c.359 §360; renumbered 742.051 in 1989]
743.084 [1967 c.359 §361; renumbered 743.041 in 1989]
743.087 [1967 c.359 §362; renumbered 743.043 in 1989]
743.090 [Formerly 736.335; repealed by 1973 c.827 §83]
743.093 [1967 c.359 §364; renumbered 742.053 in 1989]
743.096 [1967 c.359 §365; renumbered 742.056 in 1989]
743.099 [Formerly 739.405; renumbered 743.046 in 1989]
POLICY LANGUAGE SIMPLIFICATION
743.100 Short title. ORS 743.100 to 743.109 may be cited as the Life and Health Insurance Policy Language Simplification Act. [Formerly 743.350]
743.101 Purpose. (1) The purpose of the Life and Health Insurance Policy Language Simplification Act is to establish minimum standards for language used in policies and certificates of life insurance and health insurance delivered or issued for delivery in this state in order to facilitate ease of reading.
(2) ORS 743.100 to 743.109 is not intended to increase the risk assumed by insurers or to supersede their obligation to comply with the substance of other Insurance Code provisions applicable to insurance policies. ORS 743.100 to 743.109 is not intended to impede flexibility and innovation in the development of policy forms or content or to lead to the standardization of policy forms or content. [Formerly 743.353]
743.102 [1967 c.359 §367; renumbered 743.047 in 1989]
743.103 Definitions for ORS 743.100 to 743.109. As used in ORS 743.100 to 743.109, “policy” has the meaning given in ORS 731.122 and, in addition, includes a certificate issued pursuant to a group insurance policy delivered or issued for delivery in this state. [Formerly 743.357]
743.104 Scope of ORS 743.100 to 743.109. (1) ORS 743.100 to 743.109 apply to all policies delivered or issued for delivery in this state, except:
(a) Any policy that is a security subject to federal jurisdiction.
(b) Any group policy covering a group of 1,000 or more lives at date of issue, other than a group credit life insurance policy or a group credit health insurance policy. However, this paragraph shall not exempt any certificate issued pursuant to a group policy.
(c) Any group annuity contract that serves as a funding vehicle for a pension, profit-sharing or deferred compensation plan.
(d) Any form used in connection with, as a conversion from, as an addition to, or, pursuant to a contractual provision, in exchange for, a policy delivered or issued for delivery on a form approved or permitted to be issued prior to the date the form must be approved under section 9, chapter 708, Oregon Laws 1979.
(e) The renewal of a policy delivered or issued for delivery prior to the date the policy form must be approved under section 9, chapter 708, Oregon Laws 1979.
(f) Any certificate issued pursuant to a group policy not delivered or issued for delivery in this state.
(2) A non-English language policy will be deemed to comply with ORS 743.106 if the insurer certifies that the policy is translated from an English language policy that complies with ORS 743.106. [Formerly 743.362]
743.105 [1967 c.359 §368; renumbered 743.049 in 1989]
743.106 Reading ease standards for life and health insurance policies. (1) No policy form shall be delivered or issued for delivery in this state unless:
(a) The policy text achieves a score of 40 or more on the Flesch reading ease test, or an equivalent score on any comparable test as provided in subsection (3) of this section;
(b) The policy, except for specification pages, schedules and tables is printed in not less than 10-point type, one point leaded;
(c) The style, arrangement and overall appearance of the policy give no undue prominence to any portion of the text, including the text of any indorsements or riders; and
(d) The policy contains a table of contents or an index of the principal sections of the policy, if the policy has more than 3,000 words of text printed on three or less pages, or regardless of the number of words if the policy has more than three pages.
(2) For the purposes of this section, a Flesch reading ease test score shall be calculated as follows:
(a) For policy forms containing 10,000 words or less of text, the entire form shall be analyzed. For policy forms containing more than 10,000 words, two 200-word samples per page may be analyzed instead of the entire form. The samples shall be separated by at least 20 printed lines.
(b) The number of words and sentences in the text shall be counted and the total number of words divided by the total number of sentences. The figure obtained shall be multiplied by a factor of 1.015.
(c) The total number of syllables in the text shall be counted and divided by the total number of words. The figure obtained shall be multiplied by a factor of 84.6.
(d) The sum of the figures computed under paragraphs (b) and (c) of this subsection subtracted from 206.835 equals the Flesch reading ease test score for the policy form.
(e) For purposes of paragraphs (b) and (c) of this subsection, the following procedures shall be used:
(A) A contraction, hyphenated word or numbers and letters, when separated by spaces, shall be counted as one word.
(B) A unit of words ending with a period, semicolon or colon shall be counted as a sentence.
(C) A “syllable” means a unit of spoken language consisting of one or more letters of a word as divided by an accepted dictionary. If the dictionary shows two or more equally acceptable pronunciations of a word, the pronunciation containing fewer syllables may be used.
(f) As used in this section, “text” includes all written matter except the following:
(A) The name and address of the insurer; the name, number or title of the policy; the table of contents or index; captions and subcaptions; specification pages; schedules or tables; and
(B) Policy language drafted to conform to the requirements of any state or federal law, regulation or agency interpretation; policy language required by any collectively bargained agreement; medical terminology; and words that are defined in the policy. However, the insurer shall identify the language or terminology excepted by this subparagraph and shall certify in writing that the language or terminology is entitled to be excepted by this subparagraph.
(3) Any other reading test may be approved by the Director of the Department of Consumer and Business Services as an alternative to the Flesch reading ease test if it is comparable in result to the Flesch reading ease test.
(4) Each policy filing shall be accompanied by a certificate signed by an officer of the insurer stating that the policy meets the minimum required reading ease score on the test used, or stating that the score is lower than the minimum required but should be authorized in accordance with ORS 743.107. To confirm the accuracy of a certification, the director may require the submission of further information.
(5) At the option of the insurer, riders, indorsements, applications and other forms made a part of the policy may be scored as separate forms or as part of the policy with which they may be used. [Formerly 743.365]
743.107 When director may authorize lower standards. The Director of the Department of Consumer and Business Services may authorize a lower score than the Flesch reading ease test score required by ORS 743.106 when, in the director’s sole discretion, the director finds that a lower required score:
(1) Will provide a more accurate reflection of the readability of a policy form;
(2) Is warranted by the nature of a particular policy form or type or class of policy forms; or
(3) Is caused by certain policy language drafted to conform to the requirements of any state law, regulation or agency interpretation. [Formerly 743.368]
743.108 [1967 c.359 §369; renumbered 743.050 in 1989]
743.109 Approval of certain policy forms containing specified provisions; conditions for approval. A policy form meeting the requirements of ORS 743.106 shall not be disapproved because of other provisions of the Insurance Code that specify the content of policies, if the policy form provides the policyholders and claimants protection not less favorable than they would be entitled to under such provisions. [Formerly 743.370]
743.111 [Formerly 744.090; renumbered 742.058 in 1989]
743.114 [Formerly 736.325; 1971 c.123 §1; 1981 c.667 §1; renumbered 742.061 in 1989]
743.115 [1987 c.774 §46; 1989 c.376 §1; renumbered 742.063 in 1989]
743.116 [1971 c.603 §2; 1981 c.422 §1; 1981 c.891 §2; renumbered 743.701 in 1989]
743.117 [1967 c.271 §§2,3; renumbered 743.703 in 1989]
743.118 [1987 c.720 §2; renumbered 743.704 in 1989]
743.119 [1981 c.254 §2; renumbered 743.706 in 1989]
743.120 [1975 c.135 §2; renumbered 743.707 in 1989]
743.123 [1975 c.338 §2; renumbered 743.709 in 1989]
743.125 [1979 c.268 §6; renumbered 743.710 in 1989]
743.128 [1979 c.785 §20; renumbered 743.712 in 1989]
743.132 [1979 c.1 §15; renumbered 743.713 in 1989]
743.135 [1981 c.422 §5; 1989 c.721 §54; 1989 c.1080 §1; renumbered 743.714 in 1989]
743.138 [1987 c.739 §§2,4b; renumbered 743.715 in 1989]
743.140 [1985 c.536 §1; renumbered 743.716 in 1989]
743.143 [1985 c.312 §2; renumbered 743.717 in 1989]
743.145 [1985 c.747 §59; renumbered 743.700 in 1989]
743.147 [1987 c.530 §2; renumbered 743.718 in 1989]
INDIVIDUAL LIFE INSURANCE AND ANNUITIES
(Generally)
743.150 Scope of ORS 743.150, 743.153 and 743.156. This section and ORS 743.153 and 743.156 apply only to policies of life insurance, other than group life insurance. [1967 c.359 §372]
743.153 Statement of benefits. A life insurance policy shall contain a provision stating the amount of benefits payable or the method to be used or procedure to be followed in determining such amount, the manner of payment and the consideration therefor. [Formerly 739.310]
743.154 Acceleration of death benefits; rules. (1) A life insurance policy or a rider to a life insurance policy may provide for the acceleration of death benefits as part of the life insurance coverage. For purposes of this section, accelerated death benefits are benefits that:
(a) Are payable to the policy owner or certificate holder during the lifetime of the insured, in anticipation of death or upon the occurrence of specified life-threatening or catastrophic conditions as defined by the policy or rider;
(b) Reduce the death benefit otherwise payable under the life insurance policy; and
(c) Are payable upon the occurrence of a single qualifying event that results in the payment of a benefit amount fixed at the time of acceleration.
(2) For purposes of this section, a qualifying event is one or more of the following:
(a) A medical condition that will result in a drastically limited life span, as specified in the policy or rider, not exceeding 24 months.
(b) A medical condition that has required or requires extraordinary medical intervention, such as a major organ transplant or continuous artificial life support, without which the insured would die.
(c) Any condition that usually requires continuous confinement in an eligible institution, as defined in the policy or rider, if the insured is expected to remain there for the rest of the insured’s life.
(d) A medical condition that in the absence of extensive or extraordinary medical treatment will result in a drastically limited life span. Such conditions may include but are not limited to one or more of the following:
(A) Coronary artery disease resulting in an acute infarction or requiring surgery;
(B) Permanent neurological deficit resulting from cerebral vascular accident;
(C) End-stage renal failure; or
(D) Acquired Immune Deficiency Syndrome.
(e) Any other event determined by the Director of the Department of Consumer and Business Services to be life-threatening.
(3) A policy or rider that provides for the acceleration of death benefits:
(a) Must also provide for the continuation of the policy as to the amount of the death benefit that is not accelerated.
(b) Must allow the policy owner or the certificate holder to request payment at any time during the period that the qualifying event continues.
(4) A policy or rider that provides for the acceleration of death benefits under this section shall not be described or marketed by an insurer as long term care insurance or as providing long term care benefits.
(5) The director shall adopt rules establishing minimum benefits, criteria for the payment of accelerated benefits, disclosure requirements and actuarial standards. [1991 c.571 §2; 1993 c.17 §1]
743.156 Statement of premium. A life insurance policy shall contain a provision separately stating the premium for each benefit provision of the policy for which such separate statement is necessary, as determined by the Director of the Department of Consumer and Business Services, to give adequate disclosure of the terms of the policy. [1967 c.359 §374]
(Individual Life Insurance Policies)
743.159 Scope of ORS 743.162 to 743.243. ORS 743.162 to 743.243 apply only to policies of life insurance other than group life insurance, and do not apply to annuity or pure endowment policies. Such sections apply to such policies that are policies of variable life insurance, except to the extent the provisions of such sections are obviously inapplicable to variable life insurance or are in conflict with other provisions of such sections that are expressly applicable to variable life insurance. [1967 c.359 §375; 1973 c.435 §16]
743.162 Payment of premium. A life insurance policy shall contain a provision relating to the time and place of payment of premium. [1967 c.359 §376]
743.165 Grace period. A life insurance policy shall contain a provision that a grace period of 30 days, or, at the option of the insurer, of one month of not less than 30 days, or of four weeks in the case of industrial life insurance policies the premiums for which are payable more frequently than monthly, shall be allowed within which the payment of any premium after the first may be made, during which period of grace the policy shall continue in full force. The insurer may impose an interest charge not in excess of six percent per annum for the number of days of grace elapsing before the payment of the premium. If a claim arises under the policy during such period of grace the amount of any premium due or overdue, together with interest and any deferred installment of the annual premium, may be deducted from the policy proceeds. [1967 c.359 §377]
743.168 Incontestability. (1) A life insurance policy shall contain a provision that the policy shall be incontestable after it has been in force for two years from its date of issue during the lifetime of the insured, except for nonpayment of premiums. At the option of the insurer the two-year limit within which the policy may be contested shall not apply to the provisions for benefits in the event of total and permanent disability and provisions which grant additional insurance specifically against death by accident.
(2) A provision in a life insurance policy providing that such policy shall be incontestable after a specified period shall preclude only a contest of the validity of the policy, and shall not preclude the assertion at any time of defenses based upon provisions in the policy which exclude or restrict coverage, whether or not such restrictions or exclusions are excepted in such provision. [1967 c.359 §378]
743.171 Incontestability and limitation of liability after reinstatement. (1) A reinstated policy of life insurance may be contested on account of fraud or misrepresentation of facts material to the reinstatement only for the same period following reinstatement, and with the same conditions and exceptions, as the policy provides with respect to contestability after original issuance.
(2) When any policy of life insurance is reinstated, such reinstated policy may exclude or restrict liability to the same extent that such liability could have been or was excluded or restricted when the policy was originally issued, and such exclusion or restriction shall be effective from the date of reinstatement. [1967 c.359 §379]
743.174 Entire contract. A life insurance policy shall contain a provision that the policy constitutes the entire contract between the parties. [1967 c.359 §380]
743.177 Statements of insured. A life insurance policy shall contain a provision that all statements made by or on behalf of the insured shall, in the absence of fraud, be deemed representations and not warranties, and that no such statement shall be used in defense of a claim under the policy unless contained in a written application and unless a copy of such application is indorsed upon or attached to the policy when issued. [1967 c.359 §381]
743.180 Misstatement of age. A life insurance policy shall contain a provision that if it is found at any time before final settlement under the policy that the age of the insured or of any other person whose age is considered in determining the premium or benefit accruing under the policy has been misstated, the amount payable or benefit accruing under the policy shall be such as the premium would have purchased at the correct age or ages, or the premium may be adjusted and credit given to the insured or to the insurer, according to the insurer’s published rate at date of issue. [1967 c.359 §382]
743.183 Dividends. (1) A life insurance policy other than a nonparticipating policy shall contain a provision that the policy shall participate in the divisible surplus of the insurer annually, beginning not later than the end of the third policy year. Any policy containing provision for participation beginning at the end of the first or the second policy year may provide that dividends for either or both of such years shall be paid subject to the payment of the premium for the next ensuing year. The owner of the policy shall have the right each year to have the dividend arising from such participation paid in cash, and if the policy provides other dividend options, it shall further provide which dividend option is effective if the owner does not elect one of such options on or before the expiration of the period of grace allowed for the payment of the premium.
(2) In participating industrial life insurance policies, in lieu of the provision required in subsection (1) of this section, there shall be a provision that, beginning not later than the end of the fifth policy year, the policy shall participate annually in the divisible surplus in the manner set forth in the policy.
(3) This section does not apply to any form of paid-up insurance or temporary insurance or endowment insurance issued or granted in exchange for lapsed or surrendered policies. [1967 c.359 §383]
743.186 Policy loan. (1) A life insurance policy shall contain a provision that after three full years’ premiums have been paid and after the policy has a cash surrender value and while no premium is in default beyond the grace period for payment, the insurer will advance, on proper assignment or pledge of the policy and on the sole security thereof, an amount equal to or, at the option of the party entitled thereto, less than the loan value of the policy, at a rate of interest not exceeding the maximum rate permitted by the policy loan provision. The interest rate provision shall comply with ORS 743.187. The loan value of the policy shall be equal to the cash surrender value at the end of the then current policy year, less any existing indebtedness not already deducted in determining such cash surrender value including any interest then accrued but not due, any unpaid balance of the premium for the current policy year, and interest on the loan to the end of the current policy year. The policy may also provide that:
(a) Interest on any indebtedness that is 90 or more days past due shall be added to the existing indebtedness and shall bear interest at the rate applicable to the existing indebtedness; and
(b) Except as provided in ORS 743.187, if the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value of the policy, the policy shall terminate and become void upon 30 days’ notice by the insurer mailed to the last-known address of the insured or other policy owner and of any assignee of record at the home office of the insurer.
(2) The policy shall reserve to the insurer the right to defer the granting of a loan, other than for the payment of any premium to the insurer, for six months after application therefor.
(3) The policy, at the insurer’s option, may provide for automatic premium loan.
(4) This section does not apply to term insurance policies or term insurance benefits provided by rider or supplemental policy provisions, or to industrial life insurance policies. [1967 c.359 §384; 1975 c.575 §1; 1981 c.412 §18; 2001 c.318 §12]
743.187 Maximum interest rate on policy loan; adjustable interest rate. (1) Except as provided otherwise in this section, the maximum interest rate in the policy loan provision required by ORS 743.186 shall be eight percent per year. The insurer may include in the policy loan provision, in lieu of a fixed maximum interest rate, a provision for an adjustable interest rate. The adjustable interest rate provision must comply with this section. A limitation on interest rates under state law, other than a limitation contained in the Insurance Code, shall not apply to interest rates for life insurance policy loans unless the limitation specifically applies to life insurance policy loans.
(2) The adjustable interest rate provision:
(a) Shall state in substance that in accordance with the policy and the law of the jurisdiction in which the policy is delivered, the insurer will establish from time to time the interest rate for an existing or a new policy loan; and
(b) Shall set forth the dates on which the insurer will determine policy loan interest rates. These determination dates shall be at regular intervals no longer than one year and no shorter than three months.
(3) The maximum interest rate permitted for a policy loan under the adjustable interest rate provision shall be established by the provision as the higher of:
(a) The interest rate used to calculate cash surrender values under the policy during the same period, plus one percent; and
(b) The Moody’s Corporate Bond Yield Average - Monthly Average Corporates, as published by Moody’s Investors Service, Inc., for the calendar month which precedes by two months the month in which the determination date for the policy loan interest rate falls. However, if the Moody’s Corporate Bond Yield Average - Monthly Average Corporates is no longer published by Moody’s Investors Service, Inc., or if the National Association of Insurance Commissioners determines that the Moody’s Corporate Bond Yield Average - Monthly Average Corporates is no longer an appropriate rate for this purpose, the Director of the Department of Consumer and Business Services by rule may establish the method of determining the rate under this paragraph. The director’s rule, to the maximum extent reasonable, shall be consistent with the pertinent actions of the National Association of Insurance Commissioners.
(4) On any date specified in the adjustable interest rate provision of the policy for determining the policy loan interest rate:
(a) The insurer may increase the existing rate if the maximum rate permitted by the provision exceeds the existing rate by at least one-half of one percent. The increase shall not be less than one-half of one percent or more than the amount by which the permitted maximum rate exceeds the existing rate; and
(b) The insurer shall decrease the existing rate if the existing rate exceeds the maximum rate permitted by the provision by at least one-half of one percent. The decrease shall not be less than the amount by which the existing rate exceeds the permitted maximum rate.
(5) The insurer under the adjustable interest rate provision shall give notice of the policy loan interest rate and related matters to the policy owner and all other persons entitled to notice by the policy, as follows:
(a) In the case of a loan other than for payment of a premium to the insurer, the insurer shall give notice of the initial interest rate on the loan when the loan is made.
(b) In the case of a loan for payment of a premium to the insurer, the insurer shall give notice of the initial interest rate on the loan as soon as reasonably practicable after the loan is made. However, the insurer need not give this notice when an additional premium loan is made at the same interest rate then applicable to an existing premium loan to the borrower.
(c) In the case of a policy with an outstanding loan, the insurer shall give notice of each increase in the loan interest rate reasonably in advance of the increase.
(d) Notices given under this subsection shall include in substance the information required by subsection (2) of this section.
(6) Notwithstanding ORS 743.186, a policy shall not terminate in a particular policy year solely because a change in the policy loan interest rate during that year caused the total indebtedness under the policy to reach the policy loan value. The policy shall remain in force during that year unless and until it would have terminated in the absence of any policy loan interest rate change during that year. [1981 c.412 §20]
743.189 Reinstatement. A life insurance policy shall contain a provision that if in the event of a default in premium payments the value of the policy has been applied to provide a paid-up nonforfeiture benefit, and if this benefit is currently in force and the original policy has not been surrendered to the insurer and canceled, and if a period of not more than three years has elapsed since the default (or two years in the case of an industrial life insurance policy), the policy may be reinstated upon furnishing evidence of insurability satisfactory to the insurer and payment of arrears of premiums and payment or reinstatement of any other indebtedness to the insurer under the policy, with interest at a rate not exceeding the maximum permitted by the policy loan provision. [1967 c.359 §385; 1981 c.412 §21]
743.192 Payment of claim; payment of interest upon failure to pay proceeds. (1) A life insurance policy shall contain a provision that when the policy becomes a claim by the death of the insured, settlement shall be made upon receipt of due proof of death and of the interest of the claimant.
(2) If the insurer fails to pay the proceeds of or make payment under the policy within 30 days after receipt of due proof of death and of the interest of the claimant, and if the beneficiary elects to receive a lump sum settlement, the insurer shall pay interest on any money due and unpaid after expiration of the 30-day period. The insurer shall compute the interest from the date of the insured’s death until the date of payment, at a rate not lower than that paid by the insurer on other withdrawable policy owner funds. At the end of the 30-day period, the insurer shall notify the named beneficiary or beneficiaries at their last-known address that interest at the applicable rate will be paid on the lump sum proceeds from the date of death of the insured.
(3) Nothing in this section shall be construed to allow an insurer to withhold payment of money payable under a life insurance policy to any named beneficiary for a period longer than reasonably necessary to transmit the payment. [1967 c.359 §386; 1983 c.754 §2]
743.195 Installment payments. A life insurance policy shall contain a table showing the amounts of installments, if any, by which its proceeds may be payable. [1967 c.359 §387]
743.198 Title. A life insurance policy shall contain a title briefly and correctly describing the policy. If an industrial life insurance policy, it shall have the words “industrial policy” imprinted on the face thereof as part of the descriptive matter. [1967 c.359 §388]
743.201 Beneficiary of industrial policies. An industrial life insurance policy shall have the name of the beneficiary designated thereon, or in the application or other form if attached to the policy, with a reservation of the right to designate or change the beneficiary after the issuance of the policy unless such beneficiary has been irrevocably designated. The policy may also provide that no designation or change of beneficiary shall be binding on the insurer until indorsed on the policy by the insurer, and that the insurer may refuse to indorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life of the insured. The policy may also provide that if the beneficiary designated in the policy does not make a claim under the policy or does not surrender the policy with due proof of death within the period stated in the policy, which shall not be less than 30 days after the death of the insured, or if the beneficiary is the estate of the insured, or is a minor, or dies before the insured, or is not legally competent to give a valid release, then the insurer may make any payment thereunder to the executor or administrator of the insured, or to any relative of the insured by blood or legal adoption or connection by marriage, or to any person appearing to the insurer to be equitably entitled thereto by reason of having been named beneficiary, or by reason of having incurred expense for the maintenance, medical attention or burial of the insured. The policy may also include a similar provision applicable to any other payment due under the policy. [1967 c.359 §389]
743.204 Standard Nonforfeiture Law for Life Insurance; applicability. (1) ORS 743.204 to 743.222 may be cited as the Standard Nonforfeiture Law for Life Insurance.
(2) The operative date of the Standard Nonforfeiture Law for Life Insurance as to any policy is the earlier of:
(a) January 1, 1948; or
(b) The date specified in a written notice, filed with the Director of the Department of Consumer and Business Services by the insurer, of election to comply with the Standard Nonforfeiture Law for Life Insurance as to such policy as of the specified date.
(3) The Standard Nonforfeiture Law for Life Insurance shall not apply to:
(a) Any reinsurance, group insurance, pure endowment, annuity or reversionary annuity policy.
(b) Any term policy or renewal thereof, of uniform amount, which provides no guaranteed nonforfeiture or endowment benefits, of 20 years or less expiring before age 71, for which uniform premiums are payable during the entire term of the policy. For this purpose, the age at death for a joint term life insurance policy shall be the age at death of the oldest life.
(c) Any term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, if each adjusted premium, calculated as specified in ORS 743.215 and 743.216, is less than the adjusted premium so calculated on a term policy or renewal thereof of uniform amount, which provides no guaranteed nonforfeiture benefits or endowment benefits, which is issued at the same age, for the same initial amount of insurance and for a term of 20 years or less that expires before age 71 and for which uniform premiums are payable during the entire term of the policy. For this purpose, the age at death for a joint term life insurance policy shall be the age at death of the oldest life.
(d) Any policy which provides no guaranteed nonforfeiture or endowment benefits, and for which policy the cash surrender value or present value of paid-up nonforfeiture benefit calculated for the beginning of any policy year as specified in ORS 743.210, 743.213, 743.215 and 743.216 does not exceed two and one-half percent of the amount of insurance at the beginning of such year. [Formerly 739.340; 1977 c.320 §13; 1981 c.609 §12]
743.207 Required provisions relating to nonforfeiture. (1) A life insurance policy shall contain in substance the following provisions, or corresponding provisions which in the opinion of the Director of the Department of Consumer and Business Services are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements specified in this section, and which are essentially in compliance with ORS 743.221:
(a) That in the event of default in any premium payment the insurer will grant, upon proper request not later than 60 days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of the amount required by ORS 743.213. In lieu of this stipulated benefit the insurer may substitute, upon proper request made not later than 60 days after the due date of the premium in default, another paid-up nonforfeiture benefit which is actuarially equivalent and provides a greater amount or longer period of death benefit or, if applicable, a greater amount or earlier payment of endowment benefit.
(b) That upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums have been paid for at least three full years in the case of ordinary life insurance or five full years in the case of industrial life insurance, the insurer will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of the amount required by ORS 743.210.
(c) That a specified paid-up nonforfeiture benefit will become effective as specified in the policy unless the person entitled to make such election elects another available option not later than 60 days after the due date of the premium in default.
(d) That, if the policy has become paid up by completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary life insurance or the fifth policy anniversary in the case of industrial life insurance, the insurer will pay, upon surrender of the policy within 30 days after any policy anniversary, a cash surrender value of the amount required by ORS 743.210.
(e)(A) In the case of all policies other than those provided for in subparagraph (B) of this paragraph, a statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefit, if any, available under the policy on each policy anniversary either during the first 20 policy years or during the term of the policy, whichever is shorter. Such values and benefits shall be calculated on the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the insurer on the policy. At the option of the insurer such table may also show such values and benefits for any year or years beyond the 20th policy year.
(B) In the case of policies which provide, on a basis guaranteed in the policy, for unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than by change to a new policy, a statement of the mortality table, interest rate and method used in calculating cash surrender values and paid-up nonforfeiture benefits available under the policy.
(f)(A) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered.
(B) An explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the insurer on the policy.
(C) If a detailed statement of the method of computation of the cash surrender values and paid-up nonforfeiture benefits shown in the policy is not stated in the policy, a statement that the method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered.
(D) A statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary beyond the last anniversary for which such values and benefits are shown for consecutive years in the policy.
(2) Any of the provisions set forth in subsection (1) of this section, or portions of the provisions, not applicable by reason of the particular plan of insurance may, to the extent inapplicable, be omitted from the policy.
(3) The insurer shall reserve the right to defer the payment of any cash surrender value for a period of six months after demand therefor with surrender of the policy. [Formerly 739.345; 1981 c.609 §13]
743.210 Determination of cash surrender values; applicability to certain policies. (1) Except as otherwise provided in subsections (2) and (3) of this section, any cash surrender value available under a life insurance policy in the event of default in a premium payment due on any policy anniversary, whether or not required by ORS 743.207, shall be an amount not less than the excess, if any, of the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up additions, if there had been no default, over the sum of:
(a) The present value on such anniversary of the adjusted premiums, as defined in ORS 743.215 and 743.216, corresponding to premiums which would have fallen due on and after such anniversary; and
(b) The amount of any indebtedness to the insurer on the policy.
(2) This subsection applies to a life insurance policy issued on or after the operative date defined in ORS 743.215 which provides supplemental life insurance or annuity benefits by rider or supplemental policy provision at the option of the insured and for an identifiable additional premium. For such a policy, the cash surrender value shall be an amount not less than the cash surrender value required by subsection (1) of this section for a policy otherwise similar to the subject policy but without such rider or supplemental policy provision, plus the cash surrender value required by subsection (1) of this section for a policy which provides only the benefits provided by such rider or supplemental policy provision in the subject policy.
(3) This subsection applies to a family life insurance policy issued on or after the operative date defined in ORS 743.215 which policy defines a primary insured and provides term insurance on the life of the spouse of the primary insured with a term that expires before age 71 of the spouse. For such a policy, the cash surrender value shall be an amount not less than the cash surrender value required by subsection (1) of this section for a policy otherwise similar to the subject policy but without such term insurance on the life of the spouse, plus the cash surrender value required by subsection (1) of this section for a policy which provides only the benefits provided by such term insurance on the life of the spouse in the subject policy.
(4) Any cash surrender value available within 30 days after any policy anniversary under any policy which has been paid up by completion of all premium payments or any policy which has been continued under any paid-up nonforfeiture benefit, whether or not required by ORS 743.207, shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by the amount of any indebtedness to the insurer on the policy. [Formerly 739.350; 1981 c.609 §14]
743.213 Determination of paid-up nonforfeiture benefits. Any paid-up nonforfeiture benefit available under a life insurance policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for by the policy or, if none is provided for, that cash surrender value which would have been required by ORS 743.207 in the absence of the condition that premiums have been paid for at least a specified period. [Formerly 739.355; 1981 c.609 §15]
743.215 Calculation of adjusted premiums. (1) This section applies to all life insurance policies issued on or after the operative date defined in this subsection for the issuing insurer. After January 1, 1982, any insurer may file with the Director of the Department of Consumer and Business Services a written notice of its election to comply with the provisions of this section with regard to any number of plans of insurance after a specified date before January 1, 1989. The specified date shall be the operative date of this subsection for the plan or plans, but if an insurer elects to make this subsection operative before January 1, 1989, for fewer than all plans, the insurer must comply with rules adopted by the director. There is no limit to the number of times that an insurer may make the election. If an insurer makes no such election, the operative date of this section for the insurer shall be January 1, 1989.
(2) Except as provided in subsection (8) of this section, the adjusted premiums referred to in ORS 743.210 for any life insurance policy to which this section applies shall be calculated as provided in this subsection, on an annual basis, as a uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and excluding any uniform annual contract charge or policy fee specified in the policy statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits. This percentage shall be such that the present value, at the date of issue of the policy, of all such adjusted premiums shall equal the sum of:
(a) The present value at the policy issue date of the future guaranteed benefits provided for by the policy;
(b) One percent of either the amount of insurance, if the insurance is uniform in amount, or the average of the amounts of insurance at the beginning of each of the first 10 policy years; and
(c) One hundred twenty-five percent of the nonforfeiture net level premium as defined in subsection (3) of this section. For this purpose, any excess of the nonforfeiture net level premium over four percent of such uniform or average amount of insurance shall be disregarded.
(3) The nonforfeiture net level premium referred to in subsection (2) of this section shall equal the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one per annum payable on the date of issue and on each anniversary of the policy on which a premium falls due.
(4) In the case of policies which provide, on a basis guaranteed in the policy, for unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than by change to a new policy, the adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated by the policy at the date of issue. At the time of any such change in the benefits or premiums the future adjusted premiums, nonforfeiture net level premiums and present values shall be recalculated as provided in subsection (5) of this section on the assumption that future benefits and premiums do not change from those stipulated by the policy immediately after the change.
(5) Except as otherwise provided in subsection (8) of this section, the recalculated future adjusted premiums referred to in subsection (4) of this section shall be calculated as provided in this subsection, on an annual basis, as a uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards and excluding any uniform annual contract charge or policy fee specified in the policy statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits. This percentage shall be such that the present value, at the date of change to the newly defined benefits or premiums, of all such future adjusted premiums shall equal A plus B minus C, where these amounts are defined as follows:
(a) “A” equals the present value, as of the date of change, of the future guaranteed benefits provided for by the policy.
(b) “B” equals the additional expense allowance, if any, for the policy, as defined in subsection (6) of this section.
(c) “C” equals the cash surrender value under the policy, if any, or present value of any paid-up nonforfeiture benefit under the policy, as of the date of change.
(6) The additional expense allowance at the date of the change to the newly defined benefits or premiums, as referred to in subsection (5) of this section, shall equal the sum of:
(a) One percent of the excess, if positive, of the average of the amounts of insurance at the beginning of each of the first 10 policy years subsequent to the change, over the average of the amounts of insurance, as defined before the change, at the beginning of each of the first 10 policy years subsequent to the last previous change or the policy issue date if there has been no change.
(b) One hundred twenty-five percent of the change, if positive, in the amount of the nonforfeiture net level premium from the amount applicable prior to the change in policy benefits or premiums to the amount of the recalculated nonforfeiture net level premium determined from subsection (7) of this section as of the date of the change in policy benefits or premiums.
(7) The recalculated nonforfeiture net level premium referred to in subsection (6) of this section shall equal Y divided by Z, where these amounts are defined as follows:
(a) “Y” equals the sum of:
(A) The nonforfeiture net level premium applicable prior to the change times the present value at the date of change of an annuity of one per annum payable on each anniversary of the policy, on or subsequent to the date of the change, on which a premium would have fallen due had the change not occurred; and
(B) The present value at the date of change of the increase in future guaranteed benefits provided for by the policy.
(b) “Z” equals the present value at the date of change of an annuity of one per annum payable on each anniversary of the policy, on or subsequent to the date of change, on which a premium falls due.
(8) Notwithstanding any other provisions of this section, the provisions of this subsection shall apply in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance determined so that, in each policy year, the policy has the same tabular mortality cost as for an otherwise similar policy of a higher nongraded amount or amounts of insurance issued on the standard basis. Adjusted premiums and present values for a policy on such a substandard basis may be calculated as if the policy were issued to provide such a higher nongraded amount or amounts of insurance on the standard basis.
(9) Except as provided in subsection (10) of this section, all adjusted premiums and present values referred to in the Standard Nonforfeiture Law for Life Insurance shall, for all policies of life insurance to which this section applies, be calculated on the mortality and interest bases as follows:
(a) For ordinary life insurance mortality:
(A) The Commissioners 1980 Standard Ordinary Mortality Table shall be used; or
(B) At the option of the insurer for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors may be used instead of such table without Ten-Year Select Mortality Factors.
(b) For industrial life insurance mortality, the Commissioners 1961 Standard Industrial Mortality Table shall be used.
(c) For all policies issued in a particular calendar year, an interest rate shall be used which does not exceed the nonforfeiture interest rate, as defined in subsection (11) of this section, for policies issued in that year.
(10) The following provisions shall also apply, for policies to which this section applies, to the calculation of premiums and values referred to in the Standard Nonforfeiture Law for Life Insurance:
(a) At the option of the insurer, such calculations for all policies issued in a particular calendar year may be made on the basis of an interest rate which does not exceed the nonforfeiture interest rate, as defined in subsection (11) of this section, for policies issued in the last preceding calendar year.
(b) Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by ORS 743.207, shall be calculated on the basis of the mortality table and interest rate used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions.
(c) An insurer shall calculate the amount of any guaranteed paid-up nonforfeiture benefit, including any paid-up additions, on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.
(d) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1980 Extended Term Insurance Table for policies of ordinary life insurance, and not more than those shown in the Commissioners 1961 Industrial Extended Term Insurance Table for policies of industrial life insurance.
(e) For insurance issued on a substandard basis, the calculation of premiums and values may be based on appropriate modifications of the mortality tables referred to in subsection (9) of this section and in this subsection.
(f) Any ordinary life mortality tables adopted after 1980 by the National Association of Insurance Commissioners that are approved under rules issued by the director for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors, or for the Commissioners 1980 Extended Term Insurance Table.
(g) Any industrial life mortality tables adopted after 1980 by the National Association of Insurance Commissioners that are approved under rules issued by the director for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table.
(11) The nonforfeiture interest rate for any policy issued in a particular calendar year shall equal 125 percent of the calendar year statutory valuation interest rate for such policy as defined in the Standard Valuation Law, rounded to the nearer one-quarter of one percent.
(12) Notwithstanding any other provision in this chapter or ORS chapter 743A, for any previously approved policy form, any refiling of nonforfeiture values or their methods of computation which involves only a change in the interest rate or mortality table used to compute nonforfeiture values shall not of itself require refiling of any other provisions of that policy form. [1981 c.609 §17; 1983 c.282 §1]
743.216 Adjusted premiums; applicability. This section applies only to life insurance policies issued before the operative date defined in ORS 743.215. For such policies:
(1) Except as provided in subsection (3) of this section, the adjusted premiums referred to in ORS 743.210 shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding any extra premiums charged because of impairments or special hazards, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of:
(a) The present value at the policy issue date of the future guaranteed benefits provided for by the policy.
(b) Two percent of the amount of insurance if the insurance is uniform in amount, or of the equivalent uniform amount as defined in subsection (2) of this section if the amount of insurance varies with duration of the policy.
(c) Forty percent of the adjusted premium for the first policy year. For this purpose, any excess of the adjusted premium over four percent of the amount of insurance or equivalent uniform amount shall be disregarded.
(d) Twenty-five percent of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy for the same uniform or the same equivalent uniform amount of insurance with uniform premiums for the whole of life issued at the same age, whichever is less. For this purpose, any excess of the adjusted premium over four percent of the amount of insurance or equivalent uniform amount shall be disregarded.
(2) In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount of the subject policy for the purpose of this section shall be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the subject policy. However, in the case of a policy providing a varying amount of insurance issued on the life of a child under age 10, the equivalent uniform amount may be computed as though the amount of insurance provided by the subject policy prior to the attainment of age 10 were the amount provided by the subject policy at age 10.
(3) The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be calculated in accordance with this subsection. The amounts specified in paragraphs (a) and (b) of this subsection shall be calculated separately. Each such amount shall be calculated as specified in subsections (1) and (2) of this section. However, for the purposes of subsection (1)(b), (c) and (d) of this section, the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in paragraph (b) of this subsection shall be equal to the excess of the uniform or equivalent uniform amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in paragraph (a) of this subsection. The adjusted premiums for the entire policy shall equal the sum of:
(a) The adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits; and
(b) During the period for which premiums for such term insurance benefits are payable, the adjusted premiums for such term insurance benefits.
(4) Except as provided in paragraphs (a) and (b) of this subsection and subsection (5) of this section, all adjusted premiums and present values referred to in the Standard Nonforfeiture Law for Life Insurance shall for all policies of ordinary life insurance to which this section applies be calculated on the basis of the Commissioners 1941 Standard Ordinary Mortality Table. Such calculations for any category of ordinary life insurance issued on female lives may, however, be based on an age not more than six years younger than the actual age of the insured. Except as provided in paragraphs (a) and (b) of this subsection and subsection (7) of this section, such calculations of adjusted premiums and present values for all policies of industrial life insurance shall be made on the basis of the 1941 Standard Industrial Mortality Table. All calculations shall be made on the basis of the rate of interest, not exceeding three and one-half percent per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits. The following exceptions pertain:
(a) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than 130 percent of the rates of mortality according to the respective table.
(b) For insurance issued on a substandard basis, the calculation of adjusted premiums and present values may be based on such other table of mortality as may be specified by the insurer and approved by the Director of the Department of Consumer and Business Services.
(5) This subsection applies only to policies of ordinary life insurance to which this section applies and which are issued on or after the operative date of this subsection as defined in subsection (6) of this section. For such policies, all adjusted premiums and present values referred to in the Standard Nonforfeiture Law for Life Insurance shall, except as provided in paragraphs (a) and (b) of this subsection, be calculated on the basis of the Commissioners 1958 Standard Ordinary Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits. Such calculations for any category of ordinary life insurance issued on female lives may, however, be based on an age not more than six years younger than the actual age of the insured. Such rate of interest shall not exceed three and one-half percent, except that a rate of interest not exceeding four percent may be used for policies issued from January 1, 1974, to December 31, 1977, and a rate of interest not exceeding five and one-half percent may be used for policies issued on or after January 1, 1978, and with the further exception that for any single premium whole life or endowment insurance policy a rate of interest not exceeding six and one-half percent may be used. The following exceptions pertain:
(a) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1958 Extended Term Insurance Table.
(b) For insurance issued on a substandard basis, the calculation of adjusted premiums and present values may be based on such other table of mortality as may be specified by the insurer and approved by the director.
(6) After August 9, 1961, any insurer may file with the director a written notice of its election to comply with the provisions of subsection (5) of this section after a specified date before January 1, 1966. After the filing of such notice, such specified date shall be the operative date of subsection (5) of this section for the insurer with respect to the ordinary life policies it thereafter issues. If an insurer makes no such election, such operative date for the insurer shall be January 1, 1966.
(7) This subsection applies only to policies of industrial life insurance to which this section applies and which are issued on or after the operative date of this subsection as defined in subsection (8) of this section. For such policies, all adjusted premiums and present values referred to in the Standard Nonforfeiture Law for Life Insurance shall, except as provided in paragraphs (a) and (b) of this subsection, be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits. Such rate of interest shall not exceed three and one-half percent, except that a rate of interest not exceeding four percent may be used for policies issued from January 1, 1974, to December 31, 1977, and a rate of interest not exceeding five and one-half percent may be used for policies issued on or after January 1, 1978, and with the further exception that for any single premium whole life or endowment insurance policy a rate of interest not exceeding six and one-half percent may be used. The following exceptions pertain:
(a) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1961 Industrial Extended Term Insurance Table.
(b) For insurance issued on a substandard basis, the calculation of adjusted premiums and present values may be based on such other table of mortality as may be specified by the insurer and approved by the director.
(8) After September 2, 1963, any insurer may file with the director a written notice of its election to comply with the provisions of subsection (7) of this section after a specified date before January 1, 1968. After the filing of such notice, such specified date shall be the operative date of subsection (7) of this section for the insurer with respect to the industrial life insurance policies it thereafter issues. If an insurer makes no such election, such operative date for the insurer shall be January 1, 1968. [Formerly 739.360; 1973 c.636 §6; 1977 c.320 §14; 1981 c.609 §16]
743.218 Requirements for determination of future premium amounts or minimum values. In the case of policies of life insurance which provide for determination of future premium amounts by the insurer on the basis of current estimates of future experience, or policies of life insurance which are of such a nature that minimum values cannot in the judgment of the Director of the Department of Consumer and Business Services be determined by the methods otherwise described in the Standard Nonforfeiture Law for Life Insurance, the following requirements shall apply:
(1) The director must be satisfied that the policy benefits are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by the Standard Nonforfeiture Law for Life Insurance;
(2) The director must be satisfied that the benefits and the pattern of premiums of the policy are not misleading to prospective policyholders or insureds; and
(3) The cash surrender values and paid-up nonforfeiture benefits provided by the policy must not be less than the minimum values and benefits required for the policy as calculated by a method consistent with the principles of the Standard Nonforfeiture Law for Life Insurance, as determined under rules issued by the director. [1981 c.609 §18]
743.219 Supplemental rules for calculating nonforfeiture benefits. (1) Any cash surrender value and any paid-up nonforfeiture benefit available under a life insurance policy in the event of default in a premium payment due at any time other than on the policy anniversary date shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary.
(2) All values referred to in the Standard Nonforfeiture Law for Life Insurance may be calculated on the assumption that any death benefit is payable at the end of the policy year of death.
(3) The net value of any paid-up additions, other than paid-up term additions, shall not be less than the amounts used to provide the additions. [Formerly 739.365; 1981 c.609 §19]
743.221 Cash surrender values upon default in premium payment. (1) This section shall apply to all life insurance policies issued on or after January 1, 1986.
(2) Any cash surrender value available in the event of default in a premium payment due on any policy anniversary under a life insurance policy to which this section applies shall be in an amount which does not differ, by more than two-tenths of one percent of the amount of insurance, if uniform, or the average of the amounts of insurance at the beginning of each of the first 10 policy years, from A plus B minus C, where these amounts are defined as follows:
(a) “A” equals the basic cash value on such anniversary as defined in subsection (3) of this section.
(b) “B” equals the present value on such anniversary of any existing paid-up additions.
(c) “C” equals the amount of any indebtedness to the insurer under the policy on such anniversary.
(3)(a) The basic cash value referred to in subsection (2) of this section shall equal the present value, on a particular subject policy anniversary, of the future guaranteed benefits which would have been provided for by the policy if there had been no premium default, excluding any existing paid-up additions and before deduction of any indebtedness to the insurer, less the present value on such anniversary of the nonforfeiture factors, as defined in subsection (4) of this section, corresponding to premiums which would have fallen due on and after such anniversary. The basic cash value shall be taken as zero if this calculation produces a negative result.
(b) Supplemental life insurance or annuity benefits and family coverage, as described in ORS 743.210 or 743.216, whichever is applicable to the policy, shall affect the basic cash value in the same manner as is provided in ORS 743.210 or 743.216 for their effect on the cash surrender values.
(4)(a) Except as provided in paragraph (b) of this subsection, the nonforfeiture factor referred to in subsection (3) of this section shall for each policy year equal a percentage of the adjusted premium for that policy year as defined in ORS 743.215 or 743.216, whichever is applicable to the policy. This percentage must:
(A) Be uniform for each policy year between the second policy anniversary and the later of:
(i) The fifth policy anniversary; and
(ii) The first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, at least equal to two-tenths of one percent of the amount of insurance, if uniform, or of the average of the amounts of insurance at the beginning of each of the first 10 policy years; and
(B) Be such that no percentage after the later policy anniversary defined in subparagraph (A) of this paragraph applies to fewer than five consecutive policy years.
(b) No basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy as defined in ORS 743.215 or 743.216, whichever is applicable to the policy, were substituted for the nonforfeiture factors defined in this subsection in the calculation of the basic cash value.
(5) All adjusted premiums and present values referred to in this section shall for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the compliance of the policy with the Standard Nonforfeiture Law for Life Insurance. The cash surrender values referred to in this section shall include any endowment benefits provided for by the policy.
(6)(a) Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment, shall be determined in a manner consistent with the manner specified for determining the analogous minimum amounts under the Standard Nonforfeiture Law for Life Insurance.
(b) The amounts of any cash surrender values and any paid-up nonforfeiture benefits granted in connection with additional benefits such as those described in ORS 743.222 shall conform with the principles of this section. [1981 c.609 §21]
743.222 Policy benefits and premiums that shall be disregarded in calculating cash surrender values and paid-up nonforfeiture benefits. (1) Notwithstanding ORS 743.210, in ascertaining minimum cash surrender values and paid-up nonforfeiture benefits required by the Standard Nonforfeiture Law for Life Insurance, benefits and their respective premiums provided for in a life insurance policy shall be disregarded where the benefits are payable:
(a) In the event of death or dismemberment by accident or accidental means;
(b) In the event of total and permanent disability;
(c) As reversionary annuity or deferred reversionary annuity benefits;
(d) As term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, the Standard Nonforfeiture Law for Life Insurance would not apply;
(e) As term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child’s age is 26, is uniform in amount after the child’s age is one, and has not become paid up by reason of the death of a parent of the child; or
(f) As other policy benefits additional to life insurance and endowment benefits.
(2) No benefits such as are described in subsection (1) of this section are required to be included in any paid-up nonforfeiture benefits. [Formerly 739.370; 1981 c.609 §20]
743.225 Prohibited provisions. No life insurance policy shall contain any of the following provisions:
(1) A provision limiting the time within which any action at law or suit in equity may be commenced to less than three years after the cause of action or suit accrues.
(2) A provision by which the policy purports to be issued or to take effect more than six months before the original application for the insurance was made.
(3) A provision for forfeiture of the policy for failure to repay any loan on the policy or any interest on such loan while the total indebtedness on the policy is less than the loan value thereof. [Formerly 739.315]
743.228 Acts of corporate insured or beneficiary with respect to policy. (1) Whenever a corporation organized under the laws of this state or qualified to do business in this state has caused to be insured the life of any director, officer, agent or employee, or whenever such corporation is named as a beneficiary in or assignee of any life insurance policy, due authority to effect, assign, release, relinquish, convert, surrender, change the beneficiary or take any other or different action with reference to such insurance shall be sufficiently evidenced to the insurer by a written statement under oath showing that such action has been approved by a majority of the board of directors. Such a statement shall be signed by the president and secretary of the corporation and bear the corporate seal.
(2) Such a statement shall be binding upon the corporation and shall protect the insurer concerned in any act done or suffered by it upon the faith thereof without further inquiry into the validity of the corporate authority or the regularity of the corporate proceedings.
(3) No person shall be disqualified by reason of interest in the subject matter from acting as a director or as a member of the executive committee of such a corporation on any corporate act touching such insurance. [Formerly 739.415]
743.230 Variable life policy provisions. A variable life insurance policy shall contain in substance the following provisions:
(1) A provision that there will be a period of grace of 30 days within which payment of any premium after the first may be made, during which period of grace the policy will continue in full force. If a claim arises under the policy during such period of grace, the amount of any premiums due or overdue, together with interest not in excess of six percent per annum and any deferred installment of the annual premium, may be deducted from the policy proceeds. The policy may contain a statement of the basis for determining any variation in benefits that may occur as a result of the payment of premium during the period of grace.
(2) A provision that the policy will be reinstated at any time within three years from the date of a default in premium payments, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the production of evidence of insurability satisfactory to the insurer and the payment of an amount not exceeding the greater of:
(a) All overdue premiums and any other indebtedness to the insurer upon said policy with interest at a rate not exceeding six percent per annum; and
(b) One hundred ten percent of the increase in cash surrender value resulting from reinstatement.
(3) A provision for cash surrender values and paid-up insurance benefits available as nonforfeiture options in the event of default in a premium payment after premiums have been paid for a specified period. If the policy does not include a table of figures for the options so available, the policy shall provide that the insurer will furnish, at least once in each policy year, a statement showing the cash value as of a date no earlier than the next preceding policy anniversary.
(a) The method of computation of cash values and other nonforfeiture benefits shall be as described either in the policy or in a statement filed with the Director of the Department of Consumer and Business Services, and shall be actuarially appropriate to the variable nature of the policy.
(b) The method of computation must result, if the net investment return credited to the policy at all times from the date of issue equals the specified investment increment factor, with premiums and benefits determined accordingly under the terms of the policy, in cash values and other nonforfeiture benefits at least equal to the minimum values required by the Standard Nonforfeiture Law for a policy with such premiums and benefits. The method of computation may disregard incidental minimum guarantees as to the dollar amounts payable. Incidental minimum guarantees include, but are not limited to, a guarantee which provides that the amount payable at death or maturity shall be at least equal to the amount that would be payable if the net investment return credited to the policy at all times from the date of issue is equal to the specified investment increment factor.
(4) A provision specifying the investment increment factor to be used in computing the dollar amount of variable benefits or other variable payments or values under the policy, and guaranteeing that expense and mortality results will not adversely affect such dollar amounts. [1973 c.435 §18]
743.231 “Profit-sharing policy” defined. “Profit-sharing policy” means:
(1) A life insurance policy which by its terms expressly provides that the policyholder will participate in the distribution of earnings or surplus other than earnings or surplus attributable, by reasonable and nondiscriminatory standards, to the participating policies of the insurer and allocated to the policyholder on reasonable and nondiscriminatory standards; or
(2) A life insurance policy the provisions of which, through sales material or oral presentations, are interpreted by the insurer to prospective policyholders as entitling the policyholder to the benefits described in subsection (1) of this section. [Formerly 739.705]
743.234 “Charter policy” or “founders policy” defined. “Charter policy” or “founders policy” means:
(1) A life insurance policy which by its terms expressly provides that the policyholder will receive some preferential or discriminatory advantage or benefit not available to persons who purchase insurance from the insurer at future dates or under other circumstances; or
(2) A life insurance policy the provisions of which, through sales material or oral presentations, are interpreted by the insurer to prospective policyholders as entitling the policyholder to the benefits described in subsection (1) of this section. [Formerly 739.710]
743.237 “Coupon policy” defined. “Coupon policy” means a life insurance policy which provides a series of pure endowments maturing periodically in amounts not exceeding the gross annual policy premiums. The term “pure endowment” or “endowment” is used in its accepted actuarial sense, meaning a benefit becoming payable at a specific future date if the insured person is then living. [Formerly 739.715]
743.240 Profit-sharing, charter or founders policies prohibited. No profit-sharing, charter or founders policy shall be issued or delivered in this state. [Formerly 739.720]
743.243 Restrictions on form of coupon policy. Coupon policies issued or delivered in this state shall be subject to the following provisions:
(1) No detachable coupons or certificates or passbooks may be used. No other device may be used which tends to emphasize the periodic endowment benefits or which tends to create the impression that the endowments represent interest earnings or anything other than benefits which have been purchased by part of the policyholder’s premium payments.
(2) Each endowment benefit must have a fixed maturity date and payment of the endowment benefit shall not be contingent upon the payment of any premium becoming due on or after such maturity date.
(3) The endowment benefits must be expressed in dollar amounts rather than as percentages of other quantities or in other ways, both in the policy itself and in the sale thereof.
(4) A separate premium for the periodic endowment benefits must be shown in the policy adjacent to the rest of the policy premium information and must be given the same emphasis in the policy and in the sale thereof as that given the rest of the policy premium information. This premium shall be calculated with mortality, interest and expense factors which are consistent with those for the basic policy premium. [1967 c.359 §403]
743.245 Variable life insurance policy provisions. A variable life insurance policy shall contain a provision stating the essential features of the procedures to be followed by the insurer in determining benefits thereunder. Such a policy, and any certificate evidencing such a policy, shall contain on its first page a clear and prominent statement to the effect that benefits thereunder are variable. [1973 c.435 §14]
743.247 Notice to variable life insurance policyholders. An insurer issuing individual variable life insurance policies shall mail to each policyholder at least once in each policy year after the first, at the last address of the policyholder known to the insurer:
(1) A statement reporting the investments held in the applicable separate account.
(2) A statement reporting as of a date not more than four months preceding the date of mailing:
(a) In the case of an annuity policy under which payments have not yet commenced, the number of accumulation units credited to such policy and the dollar value of a unit, or the value of the policyholder’s account; and
(b) In the case of a life insurance policy, the dollar amount of the death benefit. [1973 c.435 §15]
(Individual Annuity and Pure Endowment Policies)
743.252 Scope of ORS 743.255 to 743.273. ORS 743.255 to 743.273 apply only to annuity and pure endowment policies, other than reversionary annuity policies except as provided in ORS 743.273, and other than group annuity policies, and shall not apply to reversionary or deferred annuity benefits included in life insurance policies. Such sections apply to such policies that are variable annuity policies, except to the extent the provisions of such sections are obviously inapplicable to variable annuities or are in conflict with other provisions of such sections that are expressly applicable to variable annuities. [1967 c.359 §404; 1973 c.435 §19]
743.255 Grace period for annuities. An annuity or pure endowment policy shall contain a provision that there shall be a period of grace of one month, but not less than 30 days, within which any stipulated payment to the insurer falling due after the first such payment may be made, subject at the option of the insurer to an interest charge thereon at the rate specified in the policy but not exceeding six percent per annum for the number of days of grace elapsing before such payment, during which period of grace the policy shall continue in full force. In case a claim arises under the policy on account of death prior to expiration of the period of grace before the overdue payment to the insurer or the deferred payments of the current policy year, if any, are made, the amount of such payments, with interest on any overdue payments, may be deducted from any amount payable under the policy in settlement. [1967 c.359 §405]
743.258 Incontestability. If any statement other than those relating to age, sex and identity are required as a condition to issuing an annuity or pure endowment policy, the policy shall contain a provision that the policy shall be incontestable after it has been in force during the lifetime of the person or of each of the persons as to whom such statements are required, for a period of two years from its date of issue, except for nonpayment of stipulated payments to the insurer. At the option of the insurer the two year limit within which the policy may be contested shall not apply to any provisions relative to benefits in the event of disability and any provisions which grant insurance specifically against death by accident or accidental means. [1967 c.359 §406]
743.261 Entire contract. An annuity or pure endowment policy shall contain a provision that the policy, including a copy of the application if indorsed upon or attached to the policy when issued, shall constitute the entire contract between the parties. [1967 c.359 §407]
743.264 Misstatement of age or sex. An annuity or pure endowment policy shall contain a provision that if the age or sex of the person or persons upon whose life or lives the policy is made, or of any of them, has been misstated, the amount payable or benefits accruing under the policy shall be such as the stipulated payment or payments to the insurer would have purchased according to the correct age or sex, and that if the insurer has made any overpayment or overpayments on account of any such misstatement, the amount thereof with interest at the rate specified in the policy but not exceeding six percent per annum may be charged against the current or next succeeding payment or payments to be made by the insurer under the policy. [1967 c.359 §408]
743.267 Dividends. If an annuity or pure endowment policy is participating, it shall contain a provision that the insurer shall annually ascertain and apportion any divisible surplus accruing on the policy. [1967 c.359 §409]
743.268 Advancement of policy loans. (1) An insurer may advance a policy loan equal to or less than the loan value of an annuity policy or a pure endowment policy if:
(a) The policy premium is not in default beyond the grace period for payment;
(b) The insured has properly assigned or pledged the policy on the sole security thereof; and
(c) The interest rate provision complies with ORS 743.187 and does not exceed the maximum interest rate permitted by the policy loan provision.
(2) An insurer may establish a minimum loan amount that may not exceed $1,000.
(3) Except as provided in subsection (4) of this section, the loan value of the policy shall be equal to the cash surrender value of the policy, less any existing indebtedness and interest due that is not already deducted in determining the cash surrender value, plus any interest then accrued but not credited.
(4) Subsection (3) of this section does not apply to a policy for which the loan value is established by federal law. When the loan value is established by federal law, the policy shall indicate the loan value as a dollar amount, a percentage of the cash surrender value or a combination of both.
(5) Except as provided in ORS 743.187, if the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value of the policy, the policy shall terminate and become void upon 30 days’ notice by the insurer mailed to the last-known address of the insured or other policy owner and of any assignee of record at the home office of the insurer. However, if there is any remaining cash surrender value under the policy after deducting the total indebtedness on the policy, an insurer may not terminate the policy.
(6) A insurer may provide for automatic premium loans in an annuity policy or a pure endowment policy.
(7) An annuity policy or a pure endowment policy may reserve to the insurer the right to defer the granting of a loan, other than for payment of any premium to the insurer, for six months after application for the loan if the insurer makes a written request to and receives written approval from the chief insurance regulator of the state of domicile of the insurer prior to exercising a deferral. [2005 c.185 §5]
743.269 Periodic payments for period certain. An annuity policy meeting the requirements of this section may provide that periodic payments shall be made under the policy for a period certain. Payments under such a policy shall begin on a date less than 13 months after the date on which the insurer issues the policy. The policy shall provide that payments will be made for a period of five years or more. The periodic payments may be fixed or variable in amount. If such policy offers commuted values on the annuity, such values must be based on an interest rate not more than one percent in excess of the interest rates that were used in determining the payments when the annuity was purchased. [1995 c.632 §2]
743.270 Reinstatement. An annuity or pure endowment policy shall contain a provision that the policy may be reinstated at any time within one year from a default in making stipulated payments to the insurer, unless the cash surrender value has been paid, but all overdue stipulated payments and any indebtedness to the insurer on the policy shall be paid or reinstated with interest at the rate specified in the policy but not exceeding six percent per annum, and in cases where applicable the insurer may also include a requirement of evidence of insurability satisfactory to the insurer. [1967 c.359 §410]
743.271 Periodic stipulated payments on variable annuities. A variable annuity policy requiring periodic stipulated payments to the insurer shall contain in substance the following provisions:
(1) A provision that there will be a period of grace of 30 days within which any stipulated payment to the insurer after the first may be made, during which period of grace the policy will continue in full force. The policy may include a statement of the basis for determining the date as of which any such payment received during the period of grace will be applied.
(2) A provision that, at any time within one year from the date of a default in making periodic stipulated payments to the insurer during the life of the annuitant, and unless the cash surrender value has been paid, the policy may be reinstated upon payment to the insurer of the overdue payments and all indebtedness to the insurer on the policy, with interest. The policy may include a statement of the basis for determining the date as of which the amount to cover such overdue payments and indebtedness will be applied.
(3) A provision specifying the options available in the event of a default in a periodic stipulated payment. Such options may include an option to surrender the policy for a cash value as determined by the policy, and shall include an option to receive a paid-up annuity if the policy is not surrendered for cash, the amount of the paid-up annuity being determined by applying the value of the policy at the annuity commencement date in accordance with the terms of the policy. [1973 c.435 §21]
743.272 Computing benefits. (1) A variable annuity policy shall specify the investment increment factors to be used in computing the dollar amount of variable benefits or other variable payments or values under the policy, and may guarantee that expense or mortality results or both will not adversely affect such dollar amounts. In the case of an individual variable annuity policy under which the expense or mortality results may adversely affect the dollar amount of benefits, the expense and mortality factors shall be correspondingly specified in the policy. “Expense” as used in this subsection may exclude some or all taxes, as specified in the policy.
(2) In computing the dollar amount of variable benefits or other policy payments or values:
(a) The annual net investment increment assumption shall not exceed five percent, except with the approval of the Director of the Department of Consumer and Business Services; and
(b) To the extent that the level of benefits may be affected by future mortality results, the mortality factor shall be determined from the Annuity Mortality Table for 1949, Ultimate, or any modification of that table not having a lower life expectancy at any age or, if approved by the director, from another table. [1973 c.435 §22]
743.273 Standard provisions of reversionary annuities. A policy of reversionary annuity shall contain in substance the following provisions:
(1) The provisions specified in ORS 743.255 to 743.267, except that under ORS 743.255 the insurer may at its option provide for an equitable reduction of the amount of the annuity payments in settlement of an overdue payment in lieu of providing for deduction of the overdue payment from an amount payable upon settlement under the policy.
(2) A provision that the policy may be reinstated at any time within three years from the date of default in making stipulated payments to the insurer, upon production of evidence of insurability satisfactory to the insurer, and upon the condition that all overdue payments and any indebtedness to the insurer on account of the policy be paid or reinstated with interest at the rate specified in the policy but not exceeding six percent per annum. [1967 c.359 §411]
743.275 Standard Nonforfeiture Law for Individual Deferred Annuities; application. (1) ORS 743.275 to 743.295 may be cited as the Standard Nonforfeiture Law for Individual Deferred Annuities.
(2) The Standard Nonforfeiture Law for Individual Deferred Annuities does not apply to:
(a) Reinsurance.
(b) A group annuity policy purchased under a retirement or deferred compensation plan established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both. This exclusion does not apply, however, to a plan providing individual retirement accounts or individual retirement annuities under section 408 of the federal Internal Revenue Code.
(c) A premium deposit fund.
(d) A variable annuity policy.
(e) An investment annuity policy.
(f) An immediate annuity policy.
(g) A deferred annuity policy after annuity payments have commenced.
(h) A reversionary annuity.
(i) A policy delivered outside this state through an agent or other representative of the insurer issuing the policy. [1977 c.320 §2; 2003 c.370 §1]
743.278 Required provisions in annuity policies; exception. (1) An annuity policy shall contain in substance the following provisions, or corresponding provisions that in the opinion of the Director of the Department of Consumer and Business Services are at least as favorable to the policyholder:
(a) That upon the termination of considerations under the policy, or upon the written request of the policyholder, the insurer shall grant a paid-up annuity benefit on a plan stipulated in the policy, of the value specified in ORS 743.284 and 743.287.
(b) That, if the policy provides for a lump sum settlement at maturity or any other time, the insurer shall pay upon surrender of the policy on or before the start of annuity payments, in lieu of a paid-up annuity benefit, a cash surrender benefit of the amount specified in ORS 743.284 and 743.287. The insurer may reserve the right to defer the payment of the cash surrender benefit for a period not to exceed six months after demand therefor with surrender of the policy, if the insurer makes a written request and receives written approval from the director. The request shall address the necessity and equitability to all policyholders of the deferral.
(c) A statement of the mortality table, if any, and interest rates used in calculating any minimum guaranteed paid-up annuity, cash surrender or death benefits that are guaranteed under the policy, together with sufficient information to determine the amount of the benefits.
(d) A statement that any paid-up annuity, cash surrender or death benefits available under the policy are not less than the minimum benefits required by any statute of the state in which the policy is delivered and an explanation of the manner in which the benefits are altered by the existence of any additional amounts credited by the insurer to the policy, any indebtedness to the insurer on the policy or any prior withdrawals from or partial surrenders of the policy.
(2) Notwithstanding subsection (1) of this section, a deferred annuity policy may provide that if no considerations have been received for two full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the policy arising from prior considerations paid would be less than $20 monthly, the insurer at its option may terminate the policy by payment in cash of the then present value of the portion of the paid-up annuity benefit. The value shall be calculated on the basis of the mortality table, if any, and the interest rate specified in the policy for determining the paid-up annuity benefit. By this payment the insurer shall be relieved of further obligations under the policy. [1977 c.320 §3; 2003 c.370 §2]
743.281 [1977 c.320 §4; repealed by 2003 c.370 §9]
743.284 Computation of benefits. (1) Any paid-up annuity benefit available under an annuity policy shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. The present value shall be computed using the mortality table, if any, and the interest rate specified in the policy for determining the minimum paid-up annuity benefits guaranteed in the policy.
(2) For annuity policies that provide cash surrender benefits, the cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of the portion of the policy maturity value of the paid-up annuity benefit that would be provided under the policy at maturity arising from considerations paid prior to the time of cash surrender, reduced by appropriate amounts reflecting any previous withdrawals from or partial surrenders of the policy. The present value shall be calculated using an interest rate not more than one percent higher than the interest rate specified in the policy for accumulating the net considerations to determine maturity value, shall be decreased by the amount of any indebtedness to the insurer on the policy, including interest due and accrued, and shall be increased by any existing additional amounts credited by the insurer to the policy. In no event shall the cash surrender benefit be less than the minimum nonforfeiture amount on the date of surrender. The death benefit under an annuity policy that provides cash surrender benefits shall be at least equal to the cash surrender benefit.
(3) For annuity policies that do not provide cash surrender benefits, the present value of the paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity may not be less than the present value of the portion of the maturity value of the paid-up annuity benefits provided under the policy arising from considerations paid before the policy is surrendered in exchange for, or changed to, a deferred paid-up annuity. The present value shall be calculated for the period prior to the maturity date on the basis of the interest rate specified in the policy for accumulating the net considerations to determine the value, and shall be increased by any additional amounts credited by the insurer to the policy. For annuity policies that do not provide any death benefits before annuity payments start, present values shall be calculated on the basis of such interest rate and the mortality table specified in the policy for determining the maturity value of paid-up annuity benefit. In no event, however, shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time. [1977 c.320 §5; 2003 c.370 §5]
743.287 Commencement of annuity payments at optional maturity dates; calculation of benefits. (1) For the purpose of determining the benefits calculated under ORS 743.284 (2) and (3) in the case of annuity policies under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be considered to be the latest date for which such election is permitted by the policy, but not later than the policy anniversary next following the annuitant’s 70th birthday or the 10th anniversary of the policy, whichever is later.
(2) Any paid-up annuity, cash surrender or death benefits available at any time, other than on the policy anniversary of a policy with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the start of the policy year in which termination of considerations occurs. [1977 c.320 §6; 2003 c.370 §6]
743.290 Notice of nonpayment of certain benefits to be included in annuity policy. An annuity policy that does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the start of annuity payments shall include a statement in a prominent place in the policy that the benefits are not provided. [1977 c.320 §7; 2003 c.370 §7]
743.293 Minimum forfeiture amounts for annuity policies; rules. (1) The minimum values as specified in ORS 743.284 and 743.287 of any paid-up annuity, cash surrender or death benefits available under an annuity policy shall be based on minimum nonforfeiture amounts as described in this section.
(2) The minimum nonforfeiture amount at or prior to the commencement of any annuity payments shall be equal to an accumulation up to that time at rates of interest as indicated in subsection (4) of this section of the net considerations previously paid, decreased by the sum of the following:
(a) Any prior withdrawals from or partial surrenders of the contract accumulated at rates of interest as indicated in subsection (4) of this section;
(b) An annual contract charge of $50, accumulated at rates of interest as indicated in subsection (4) of this section;
(c) Any premium tax paid by the insurer for the policy, accumulated at rates of interest as indicated in subsection (4) of this section; and
(d) The amount of any indebtedness to the insurer on the policy, including interest due and accrued.
(3) For purposes of subsection (2) of this section, the net considerations for a given policy year used to define the minimum nonforfeiture amount shall be an amount equal to 87.5 percent of the gross considerations credited to the policy during that policy year.
(4)(a) The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest determined as the lesser of three percent per annum and the rate established under paragraph (b) of this subsection. The rates established shall be specified in the policy if the interest rate is reset.
(b) The following provisions apply to the rate:
(A) The rate shall be the five-year constant maturity treasury rate reported by the Federal Reserve as of a date certain or an average over a period, rounded to the nearest one-twentieth of one percent, that is specified in the policy and that is no longer than 15 months prior to the policy issue date or redetermination date under paragraph (c) of this subsection, reduced by 125 basis points.
(B) The resulting interest rate under subparagraph (A) of this paragraph may not be less than one percent.
(c) The interest rate shall apply to an initial period and may be redetermined for additional periods. The redetermination date, basis and period, if any, shall be stated in the policy. The basis is the date certain or an average over a specified period that produces the value of the five-year constant maturity treasury rate to be used at each redetermination date.
(5) During the period or term that a policy provides substantive participation in an equity indexed benefit, it may increase the reduction described in subsection (4)(b) of this section by up to an additional 100 basis points to reflect the value of the equity index benefit. The present value on the policy issue date and at each redetermination date thereafter, may not exceed the market value of the benefit. The Director of the Department of Consumer and Business Services may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. If a demonstration is not acceptable to the director, the director may disallow or limit the additional reduction.
(6) The director may adopt rules to implement subsection (5) of this section and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for policies that provide substantive participation in an equity index benefit and for other policies that the director determines justify an adjustment. [2003 c.370 §4]
743.295 Effect of certain life insurance and disability benefits on minimum nonforfeiture amounts. (1) For an annuity policy that includes, by rider or supplemental contract provision, both annuity benefits and life insurance benefits that exceed the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall equal the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion, computed as if each portion were a separate policy.
(2) Notwithstanding ORS 743.284 and 743.287, additional benefits payable in the event of total and permanent disability, as reversionary annuity or deferred reversionary annuity benefits, or as other policy benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits, shall be disregarded in ascertaining the minimum nonforfeiture amounts and paid-up annuity, cash surrender and death benefits required by the Standard Nonforfeiture Law for Individual Deferred Annuities. The inclusion of such benefits may not be required in any paid-up benefits unless the additional benefits would separately require minimum nonforfeiture amounts and paid-up annuity, cash surrender and death benefits. [1977 c.320 §8; 2003 c.370 §8]
GROUP LIFE INSURANCE
743.303 Requirements for issuance of group life insurance policies. Policies of group life insurance are subject to the following requirements:
(1) The policy shall be issued upon the lives of persons who are associated in a common group formed for purposes other than the obtaining of insurance, except that either of the following kinds of policies may be issued to persons other than those in a common group:
(a) Group policies of credit life insurance; or
(b) Group policies of mortgage life insurance on first and second mortgages secured by real estate.
(2) No fewer than two lives are insured at the date of issue of the policy.
(3) The amounts of insurance under the policy shall be based on some plan precluding individual selection, except that optional supplemental insurance may be available to persons insured under the policy, if the amounts of such supplemental insurance are based upon age, salary, rank or similar objective standards.
(4) The premium for the policy must be paid from the funds of the group policyholder or from funds contributed by persons insured under the policy, or from both sources.
(5) For the purposes of this section, the term “mortgage” includes trust deeds.
(6) As used in this section, “trust deed” has the meaning given in ORS 86.705. [1967 c.359 §412; 1971 c.231 §44; 1991 c.182 §4; 1993 c.426 §1; 2007 c.560 §2]
743.306 Required provisions in group life insurance policies. (1) Except as provided in subsection (2) of this section a group life insurance policy shall contain in substance the provisions described in ORS 743.309 to 743.342.
(2) The provisions described in ORS 743.327 to 743.339 shall not apply to policies of group credit life insurance. [1967 c.359 §413]
743.309 Nonforfeiture provisions. If a group life insurance policy is on a plan of insurance other than the term plan, it shall contain nonforfeiture provision or provisions which in the opinion of the Director of the Department of Consumer and Business Services are equitable to the insured persons and to the policyholder, but nothing in this section shall be construed to require that group life insurance policies contain the same nonforfeiture provisions as are required for individual life insurance policies. [1967 c.359 §414]
743.312 Grace period. A group life insurance policy shall contain a provision that the policyholder is entitled to a grace period of 31 days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder shall have given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during such grace period. [1967 c.359 §415]
743.315 Incontestability. A group life insurance policy shall contain a provision that the validity of the policy shall not be contested, except for nonpayment of premiums, after it has been in force for two years from its date of issue; and that no statement made by any person insured under the policy relating to the insurability of the person shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of two years during such person’s lifetime nor unless it is contained in a written instrument signed by the person. [1967 c.359 §416]
743.318 Application; representations by policyholders and insureds. A group life insurance policy shall contain a provision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by the persons insured shall be deemed representations and not warranties, and that no statement made by any person insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such person or the beneficiary of the person. [1967 c.359 §417]
743.321 Evidence of insurability. A group life insurance policy shall contain a provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of the coverage. [1967 c.359 §418]
743.324 Misstatement of age. A group life insurance policy shall contain a provision specifying an equitable adjustment of premiums or of benefits or of both to be made in the event the age of a person insured has been misstated, such provision to contain a clear statement of the method of adjustment to be used. [1967 c.359 §419]
743.327 Payments under policy; payment of interest upon failure to pay proceeds. (1) A group life insurance policy shall contain a provision that any sum becoming due by reason of the death of a person insured shall be payable to the beneficiary designated by the person insured, subject to the provisions of the policy in the event there is no designated beneficiary, as to all or any part of such sum, living at the death of the person insured, and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of such sum not exceeding $500 to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured.
(2) If the insurer fails to pay the proceeds of or make payment under the policy within 30 days after receipt of due proof of death and of the interest of the claimant, and if the beneficiary elects to receive a lump sum settlement, the insurer shall pay interest on any money due and unpaid after expiration of the 30-day period. The insurer shall compute the interest from the date of the insured’s death until the date of payment, at a rate not lower than that paid by the insurer on other withdrawable policy owner funds. At the end of the 30-day period, the insurer shall notify the designated beneficiary or beneficiaries at their last-known address that interest at the applicable rate will be paid on the lump sum proceeds from the date of death of the insured.
(3) Nothing in this section shall be construed to allow an insurer to withhold payment of money payable under a group life insurance policy to any designated beneficiary for a period longer than reasonably necessary to transmit the payment. [1967 c.359 §420; 1983 c.754 §3]
743.330 Issuance of certificates. A group life insurance policy shall contain a provision that the insurer will issue to the policyholder for delivery to each person insured an individual certificate setting forth a statement as to the insurance protection to which the person is entitled, to whom the insurance benefits are payable, and the rights and conditions set forth in ORS 743.333, 743.336 and 743.339. [1967 c.359 §421]
743.333 Termination of individual coverage. A group life insurance policy shall contain a provision that if the insurance, or any portion of it, on a person covered under the policy ceases because of termination of employment or of membership in the class or classes eligible for coverage under the policy, such person shall be entitled to have issued by the insurer, without evidence of insurability, an individual policy of life insurance without disability or other supplementary benefits, provided application for the individual policy shall be made, and the first premium paid to the insurer, within 31 days after such termination, and provided further that:
(1) The individual policy shall, at the option of such person, be on any one of the forms, except term insurance, then customarily issued by the insurer at the age and for the amount applied for;
(2) The individual policy shall be in an amount not in excess of the amount of life insurance which ceases because of such termination, less the amount of any life insurance for which such person is or becomes eligible under the same or any other group policy within 31 days after such termination, provided that any amount of insurance which shall have matured on or before the date of such termination as an endowment payable to the person insured, whether in one sum or in installments or in the form of an annuity, shall not, for the purposes of this provision, be included in the amount which is considered to cease because of such termination; and
(3) The premium on the individual policy shall be at the insurer’s then customary rate applicable to the form and amount of the individual policy, to the class of risk to which such person then belongs, and to the age attained on the effective date of the individual policy. [1967 c.359 §422]
743.336 Termination of policy or class of insured persons. A group life insurance policy shall contain a provision that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of such termination whose insurance terminates and who has been so insured for at least five years prior to such termination date shall be entitled to have issued by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided by ORS 743.333, except that the group policy may provide that the amount of such individual policy shall not exceed the smaller of:
(1) The amount of the person’s life insurance protection ceasing because of the termination or amendment of the group policy, less the amount of any life insurance for which the person is or becomes eligible under any group policy issued or reinstated by the same or another insurer within 31 days after such termination; and
(2) $10,000. [1967 c.359 §423; 1989 c.784 §16]
743.339 Death during period for conversion to individual policy. A group life insurance policy shall contain a provision that if a person insured under the group policy dies during the period within which the person would have been entitled to have an individual policy issued in accordance with ORS 743.333 or 743.336 and before such an individual policy shall have become effective, the amount of life insurance which the person would have been entitled to have issued under such individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium therefor has been made. [1967 c.359 §424]
743.342 Statement furnished to insured under credit life insurance policy. A group credit life insurance policy shall contain a provision that the insurer will furnish to the policyholder for delivery to each debtor insured under the policy a form which will contain a statement that the life of the debtor is insured under the policy and that any death benefit paid thereunder by reason of death shall be applied to reduce or extinguish the indebtedness. [1967 c.359 §425]
743.345 Assignability of group life policies. Nothing in the Insurance Code or in any other law shall be construed to prohibit any person insured under a group life insurance policy from making an assignment of all or any part of the incidents of ownership under such policy, including but not limited to the privilege to have issued an individual policy of life insurance pursuant to the provisions of ORS 743.333 to 743.339 and the right to name a beneficiary. Subject to the terms of the policy or an agreement between the insured, the group policyholder and the insurer relating to assignment of incidents of ownership under the policy, such an assignment by an insured is valid for the purpose of vesting in the assignee, in accordance with any provisions included in the assignment as to the time at which it is to be effective, all of such incidents of ownership so assigned, but without prejudice to the insurer on account of any payment it may make, or individual policy it may issue in accordance with ORS 743.333 to 743.339, prior to receipt of notice of the assignment. [1971 c.231 §6; 2005 c.22 §491]
743.348 Certain sales practices prohibited. (1) No person selling group life insurance is authorized to sell membership in a common group for the purpose of qualifying an applicant who is an individual for group life insurance.
(2) No person selling membership in a common group is authorized to offer group life insurance for the purpose of selling membership in the common group. [1989 c.784 §6]
743.350 [1979 c.708 §2; renumbered 743.100 in 1989]
743.351 Eligibility of association to be group life policyholder; rules. (1) An insurer shall not offer a policy of group life insurance in this state to an association as the policyholder or offer coverage under such a policy, whether the policy is issued in this or another state, unless the Director of the Department of Consumer and Business Services determines that the association satisfies the following requirements:
(a) The association must have had an active existence for at least one year;
(b) The association must insure under the policy the employees or members of the association, or employees of members of the association, for the benefit of persons other than the association or its officers or trustees; and
(c) The association must be maintained primarily for purposes other than the procurement of insurance.
(2) An insurer shall submit evidence to the director that the association satisfies the requirements of subsection (1) of this section. The director shall review the evidence and may request additional evidence as needed.
(3) An insurer shall submit to the director any changes in the evidence submitted under subsection (2) of this section.
(4) The director may order an insurer to cease offering group life insurance to an association if the director determines that the association does not meet the requirements under subsection (1) of this section.
(5) For purposes of this section:
(a) An association includes a labor union.
(b) “Employees” may include retired employees.
(6) The director may adopt rules to carry out this section. [1989 c.784 §7]
743.353 [1979 c.708 §3; renumbered 743.101 in 1989]
743.354 Requirements for certain group life policies issued to trustees of certain funds; rules. (1) An insurer shall not offer in this state a policy of group life insurance that is described in this section and insures persons in this state, or shall not offer coverage under such a policy, whether the policy is to be issued in this or another state, unless the Director of the Department of Consumer and Business Services determines that the requirements of subsections (2) and (3) of this section are satisfied. This section applies to a policy to be issued to the trustees of a fund established for:
(a) Two or more employers in the same or related industry;
(b) One or more labor unions;
(c) One or more employers and one or more labor unions; or
(d) An association determined by the director to satisfy the requirements of ORS 743.351 (1).
(2) A policy of group life insurance shall provide coverage for the benefit of employees of the employers, members of the unions or members of the association. The policy may include as employees the officers and managers of the employer, and the individual proprietor or partners if the employer is an individual proprietor or a partnership. In addition to such employees, the policy may also insure retired employees and the trustees or their employees, or both, if their duties are principally connected with the trust.
(3) The director shall determine with respect to a policy whether the trustees are the policyholder. If the director determines that the trustees are the policyholder and if the policy is issued or proposed to be issued in this state, the policy is subject to the Insurance Code. If the director determines that the trustees are not the policyholder, the evidence of coverage that is issued or proposed to be issued in this state to a participating employer, labor union or association shall be deemed to be a group life insurance policy subject to the Insurance Code. For purposes of this section, the director may determine that the trustees are not the policyholder if:
(a) The evidence of coverage issued or proposed to be issued to a participating employer, labor union or association is in fact the primary statement of coverage for the employer, labor union or association; and
(b) The trust arrangement is under the actual control of the insurer.
(4) An insurer shall submit evidence to the director showing that the requirements of subsections (2) and (3) of this section are satisfied. The director shall review the evidence and may request additional evidence as needed.
(5) An insurer shall submit to the director any changes in the evidence submitted under subsection (4) of this section.
(6) The director may adopt rules to carry out this section. [1989 c.784 §8]
743.356 Continuing coverage upon replacement of group life policy. When coverage under a group life insurance policy is replaced by coverage under another group life insurance policy, the insurer offering the policy that is replaced shall continue to provide coverage for each certificate holder under the replaced policy whose premium payments are suspended because the certificate holder is disabled. [1989 c.784 §9]
Note: 743.356 was enacted into law by the Legislative Assembly but was not added to or made a part of ORS chapter 743 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.
743.357 [1979 c.708 §4; renumbered 743.103 in 1989]
743.358 Borrowing by certificate holders under group life policy. (1) An insurer of a group life insurance policy may authorize certificate holders under the policy to borrow upon the policy, subject to the following provisions:
(a) The insurer may require a certificate holder, in order to borrow on the policy, to have been a certificate holder under the policy for a minimum period specified by the insurer.
(b) The insurer may require that no premium on the policy be in default beyond the grace period for payment.
(2) An insurer authorizing a certificate holder under a group life insurance policy may establish a minimum loan amount, but the amount may not exceed $1,000.
(3) An insurer may charge a fixed interest rate not exceeding eight percent per year, or an adjustable interest rate. The policy provision establishing an adjustable interest rate must comply with ORS 743.187. The exemption from a limitation on interest rates under state law established in ORS 743.187 for individual life insurance policies also applies to interest rates established pursuant to this section.
(4) The loan value of a certificate shall be equal to 90 percent of the cash surrender value of the certificate at the time of the loan, less any existing indebtedness not already deducted, including any unpaid interest. This subsection does not apply to certificates issued under a group policy for which the loan value is established by federal law. [1991 c.182 §9]
743.360 Alternative group life insurance coverage. (1) Group life insurance coverage offered to a resident in this state under a group life insurance policy issued to a group other than one described in ORS 743.351 or 743.354 may be delivered if:
(a) The Director of the Department of Consumer and Business Services finds that:
(A) The issuance of the policy is in the best interest of the public;
(B) The issuance of the policy would result in economies of acquisition or administration; and
(C) The benefits are reasonable in relation to the premiums charged;
(b) The premium for the policy is paid either from funds of a policyholder, from funds contributed by a covered person or from both; and
(c) An insurer has the discretion to exclude or limit coverage for a voluntary plan on any person for whom evidence of individual insurability is not satisfactory to the insurer.
(2) The requirements of ORS 743.303 do not apply to a policy authorized under subsection (1) of this section. [2001 c.943 §3]
743.362 [1979 c.708 §5; renumbered 743.104 in 1989]
743.365 [1979 c.708 §6; renumbered 743.106 in 1989]
743.368 [1979 c.708 §7; renumbered 743.107 in 1989]
743.370 [1979 c.708 §8; renumbered 743.109 in 1989]
CREDIT LIFE AND CREDIT HEALTH INSURANCE
743.371 Definitions for credit life and credit health insurance provisions. (1) “Credit life insurance” means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction.
(2) “Credit health insurance” means insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is disabled as defined in the policy.
(3) “Creditor” means the lender of money or vendor or lessor of goods, services, property, rights or privileges for which payment is arranged through a credit transaction, or any successor to the right, title or interest of any such lender, vendor or lessor, and an affiliate, associate or subsidiary of any of them or any director, officer or employee of any of them or any other person in any way associated with any of them.
(4) “Debtor” means a borrower of money or a purchaser or lessee of goods, services, property, rights or privileges for which payment is arranged through a credit transaction.
(5) “Indebtedness” means the total amount payable by a debtor to a creditor in connection with a loan or other credit transaction. [Formerly 739.565 and then 743.561]
743.372 Applicability of credit life and credit health insurance provisions. (1) All life or health insurance in connection with loans or other credit transactions shall be subject to ORS 743.371 to 743.380, except:
(a) Insurance in connection with a loan or other credit transaction of more than 10 years’ duration; or
(b) Insurance, the issuance of which is an isolated transaction on the part of the insurer not related to an agreement or a plan for insuring debtors of the creditor.
(2) Notwithstanding subsection (1) of this section, credit life and credit health insurance may be issued for up to 10 years in connection with a loan or other credit transaction of any duration. [Formerly 739.570 and then 743.564]
743.373 Forms of credit life and credit health insurance. Credit life and credit health insurance shall be issued only in the following forms:
(1) Individual policies of life insurance issued to debtors on the term plan.
(2) Individual policies of health insurance issued to debtors on a term plan, or disability benefit provisions in individual policies of credit life insurance.
(3) Group policies of life insurance issued to creditors providing insurance upon the lives of debtors on the term plan.
(4) Group policies of health insurance issued to creditors on a term plan insuring debtors, or disability benefit provisions in group credit life insurance policies. [Formerly 739.575 and then 743.567]
743.374 Limits on amount of credit life insurance. (1) The initial amount of credit life insurance shall not exceed the total amount repayable under the contract of indebtedness and, where an indebtedness is repayable in substantially equal installments, the amount of insurance shall at no time exceed the scheduled or actual amount of unpaid indebtedness, whichever is greater.
(2) Notwithstanding the provisions of subsection (1) of this section, insurance on agricultural credit transaction commitments not exceeding 18 months in duration may be written up to the amount of the loan commitment, on a nondecreasing or level term plan.
(3) Notwithstanding the provisions of subsection (1) of this section, insurance on educational credit transaction commitments may include the portion of such commitment that has not been advanced by the creditor. [Formerly 743.570]
743.375 Limit on amount of credit health insurance. The total amount of periodic indemnity payable by credit health insurance in the event of disability, as defined in the policy, shall not exceed the aggregate of the periodic scheduled unpaid installments of the indebtedness; and the amount of each periodic indemnity payment shall not exceed the original indebtedness divided by the number of periodic installments. [Formerly 741.425 and then 743.573]
743.376 Duration of credit life and credit health insurance. (1) The term of any credit life or credit health insurance shall, subject to acceptance by the insurer, commence on the date when the debtor becomes obligated to the creditor, except that, where a group policy provides coverage with respect to existing obligations, the insurance on a debtor with respect to such indebtedness shall commence on the effective date of the policy. Where evidence of insurability is required and such evidence is furnished more than 30 days after the date when the debtor becomes obligated to the creditor, the term of the insurance may commence on the date on which the insurer determines the evidence to be satisfactory, and in such event there shall be an appropriate refund or adjustment of any charge to the debtor for insurance.
(2) The term of the insurance shall not extend more than 15 days beyond the scheduled maturity date of the indebtedness except when extended without additional cost to the debtor.
(3) If the indebtedness is discharged because of renewal or refinancing prior to the scheduled maturity date, the insurance in force shall be terminated before any new insurance may be issued in connection with the renewed or refinanced indebtedness.
(4) In all cases of termination of the insurance prior to the scheduled maturity date of the indebtedness, a refund shall be paid or credited as provided in ORS 743.378. [Formerly 739.585 and then 743.576]
743.377 Credit life and credit health insurance policy or group certificate; contents; delivery of policy, certificate or copy of application. (1) All credit life or credit health insurance shall be evidenced by an individual policy or, in the case of group insurance, by a certificate of insurance, which individual policy or group certificate of insurance shall be delivered to the debtor.
(2) Each individual policy or group certificate of credit life or credit health insurance, or both shall, in addition to other requirements of law, set forth:
(a) The name and home-office address of the insurer;
(b) The name or names of the debtor, or in the case of a certificate under a group policy, the identity by name or otherwise of the debtor;
(c) The premium or amount of payment by the debtor separately for credit life insurance and for credit health insurance;
(d) A description of the coverage including the amount and term thereof, and any exceptions, limitations and restrictions; and
(e) A statement that the benefits shall be paid to the creditor to reduce or extinguish the unpaid indebtedness and, wherever the amount of insurance may exceed the unpaid indebtedness, that any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to the estate of the debtor.
(3) Such individual policy or group certificate of insurance shall be delivered to the insured debtor at the time the indebtedness is incurred except as provided in subsection (4) of this section.
(4) If such individual policy or group certificate of insurance is not delivered to the debtor at the time the indebtedness is incurred, a copy of the application for insurance or a notice of proposed insurance, signed by the debtor and setting forth the name and home-office address of the insurer, the name or names of the debtor, the premium or amount of payment by the debtor separately for credit life insurance and for credit health insurance, and the amount, term and a brief description of the coverage provided, shall be delivered to the debtor at the time the indebtedness is incurred. The copy of the application for insurance or notice of proposed insurance shall also refer exclusively to insurance coverage, and shall be separate and apart from the loan, sale or other credit statement of account, instrument or agreement, unless the information required by this subsection is prominently set forth therein. Upon acceptance of the insurance by the insurer and within 30 days of the date upon which the indebtedness is incurred, the insurer shall cause the individual policy or group certificate of insurance to be delivered to the debtor. The application for insurance or notice of proposed insurance shall state that upon acceptance by the insurer, the insurance shall become effective as provided in ORS 743.376.
(5) If an insurer other than the named insurer accepts the risk, then the debtor shall receive a policy or certificate of insurance setting forth the name and home-office address of the substituted insurer and the amount of the premium to be charged, and if the amount of premium is less than that set forth in the notice of proposed insurance an appropriate refund shall be made. [Formerly 739.590 and then 743.579]
743.378 Charges and refunds to debtor. (1) Each individual policy or group certificate of credit life or credit health insurance, or both, shall provide that in the event of termination of the insurance prior to the scheduled maturity date of the indebtedness, any refund of an amount paid by the debtor for insurance shall be paid or credited promptly to the person entitled thereto. However, the Director of the Department of Consumer and Business Services shall prescribe a minimum refund and no refund which would be less than such minimum need be made. The formula to be used in computing such refund shall be filed with and approved by the director.
(2) If a creditor requires a debtor to make any payment for credit life insurance or credit health insurance and an individual policy or group certificate of insurance is not issued, the creditor shall immediately give written notice to such debtor and shall promptly make an appropriate credit to the account.
(3) The amount charged to a debtor for credit life insurance and for credit health insurance shall not exceed the respective premiums charged by the insurer, as computed at the time the charge to the debtor is determined. [Formerly 739.600 and then 743.582]
743.379 Status of remuneration to creditor. Notwithstanding the provisions of any other law of this state which may expressly or by construction provide otherwise, any commission or service fee or other benefit or return to any creditor arising out of the sale or provision of credit life and credit health insurance shall not be deemed interest or charges in connection with loans or credit transactions. [Formerly 739.603 and then 743.585]
743.380 Claim report and payment. (1) All claims under policies of credit life or credit health insurance, or both, shall be promptly reported to the insurer or its designated claim representative and the insurer shall maintain adequate claim files. All claims shall be settled as soon as possible and in accordance with the terms of the policy.
(2) All claims shall be paid either by draft drawn upon the insurer or by check of the insurer to the order of the claimant to whom payment is due pursuant to the policy provisions or, upon direction of such claimant, to the one specified. [Formerly 739.610 and then 743.588]
HEALTH INSURANCE
(Individual)
743.402 Exceptions to individual health insurance policy requirements. Nothing in ORS 743.405 to 743.498, 743A.160 and 743A.164 shall apply to or affect:
(1) Any workers’ compensation insurance policy or any liability insurance policy with or without supplementary expense coverage therein;
(2) Any policy of reinsurance;
(3) Any blanket or group policy of insurance; or
(4) Any life insurance policy, or policy supplemental thereto which contains only such provisions relating to health insurance as:
(a) Provide additional benefits in case of death or dismemberment or loss of sight by accident; or
(b) Operate to safeguard such policy against lapse, or to give a special surrender value or special benefit or an annuity in the event the insured shall become totally and permanently disabled, as defined by the policy or supplemental policy.
(5) Coverage under ORS 735.600 to 735.650. [Formerly 741.022; 2001 c.356 §5]
743.405 General requirements. An individual health insurance policy must meet the following requirements:
(1) The entire money and other considerations therefor shall be expressed therein.
(2) The time at which the insurance takes effect and terminates shall be expressed therein.
(3) It shall purport to insure only one person, except that a policy may insure, originally or by subsequent amendment, upon the application of an adult member of a family who shall be deemed the policyholder, any two or more eligible members of that family, including husband, wife, dependent children or any children under a specified age, which shall not exceed 19 years, and any other person dependent upon the policyholder.
(4) The policy may not be issued individually to an individual in a group of persons as described in ORS 743.522 for the purpose of separating the individual from health insurance benefits offered or provided in connection with a group health benefit plan.
(5) Except as provided in ORS 743.498, the style, arrangement