South Carolina § 38-38-340 - Benefit certificates; subsequent bylaw changes; impaired reserves; evidence of terms and conditions; approval of certificates by director; transfer of ownership on gaining majority; assignment.

§ 38-38-340. Benefit certificates; subsequent bylaw changes; impaired reserves; evidence of terms and conditions; approval of certificates by director; transfer of ownership on gaining majority; assignment.

(A) Every society authorized to do business in this State shall issue to each owner of a benefit contract a certificate specifying the amount of benefits provided by the benefit contract. The certificate, riders or endorsements attached to the certificate, the bylaws of the society, the application for membership, the application for insurance and declaration of insurability, if any, signed by the applicant, and all amendments to each of these items constitute the benefit contract, as of the date of issuance, between the society and the owner, and the certificate must so state. A copy of the application for insurance and declaration of insurability, if any, must be endorsed upon or attached to the certificate. All statements on the application are representations and not warranties. A waiver of this provision is void.

(B) Any changes, additions, or amendments to the bylaws of the society made or enacted subsequent to the issuance of the certificate bind the owner and the beneficiaries and govern and control the benefit contract in all respects as though the changes, additions, or amendments had been made before and were in force at the time of the application for insurance, except that a change, addition, or amendment does not destroy or diminish benefits which the society contracted to give the owner as of the date of issuance.

(C) A person upon whose life a benefit contract is issued before attaining the age of majority is bound by the terms of the application and certificate and by all the bylaws and rules of the society to the same extent as though the age of majority had been attained at the time of application.

(D) A society must provide in its bylaws that if its reserves as to all or any class of certificates become impaired its board of directors or corresponding body may require that there be paid by the owner to the society the amount of the owner's equitable proportion of the deficiency as ascertained by its board and that if the payment is not made either (1) it must stand as an indebtedness against the certificate and draw interest not to exceed the rate specified for certificate loans under the certificates, or (2) instead of or in combination with (1), the owner may accept a proportionate reduction in benefits under the certificate. The society may specify the manner of the election in which alternative is to be presumed if no election is made. This provision must be disclosed in all certificates filed and approved by the director or his designee on or after the effective date of this chapter.

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

(F) A certificate may not be delivered or issued for delivery in this State unless a copy of the form has been filed with and approved by the director or his designee in the manner provided for like policies issued by life and health insurers in this State. Every life, accident and sickness, health, or disability insurance certificate and every annuity certificate issued on or after the effective date of this chapter must be filed with and approved by the director or his designee and shall meet the standard contract provision requirements not inconsistent with this chapter for like policies issued by life and health insurers in this State, except that a society may provide for a grace period for payment of premiums of one full month in its certificates. The certificate also shall contain a provision stating the premiums which are payable under the certificate. If the bylaws of the society provide for expulsion or suspension of a member, the certificate also shall contain a provision that a member expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentation in the application for membership of insurance, has the privilege of maintaining the certificate in force by continuing payment of the required premium.

(G) Benefit contracts issued on the lives of persons below the society's minimum age for adult membership may provide for transfer of control of ownership to the insured at an age specified in the certificate. A society may require approval of an application for membership in order to effect this transfer and may provide in all other respects for the regulation, government, and control of the certificates and all incidental and connected rights, obligations, and liabilities. Ownership rights before the transfer must be specified in the certificate.

(H) A society may specify the terms and conditions on which benefit contracts may be assigned.

HISTORY: 2000 Act No. 259, SECTION 1.