KRS 304.29-191: The benefit contract.

(1) 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. The

certificate, together with any riders or endorsements attached thereto, the laws 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, shall constitute the benefit contract, as of the date of issuance, between the

society and the owner, and the certificate shall so state. A copy of the application

for insurance and declaration of insurability, if any, shall be endorsed upon or

attached to the certificate. All statements on the application shall be representations

and not warranties. Any waiver of this provision shall be void.

(2) Any changes, additions or amendments to the laws of the society duly made or

enacted subsequent to the issuance of the certificate, shall bind the owner and the

beneficiaries, and shall govern and control t he benefit contract in all respects the

same as though the changes, additions or amendments had been made prior to and

were in force at the time of the application for insurance, except that no change,

addition or amendment shall destroy or diminish benefi ts which the society

contracted to give the owner as of the date of issuance.

(3) Any person upon whose life a benefit contract is issued prior to attaining the age of

majority shall be bound by the terms of the application and certificate and by all the

laws and rules of the society to the same extent as though the age of majority had

been attained at the time of application.

(4) A society shall provide in its laws that, if its reserves as to all or any class of

certificates become impaired, its board of d irectors or corresponding body may

require that there shall 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:

(a) It shall stand as an indebtedness against the certificate and draw interest not to

exceed the rate specified for certificate loans under the certificates; or

(b) In lieu of or in combination with paragraph (a), the owner may accept a

proportionate reduction in benefits under the certificate.

The society may specify the manner of the election and which alternative is to be

presumed if no election is made.

(5) Copies of any of the documents mentioned in this section, certified by the secretary

or corresponding officer of the society, shall be received as evidence of the terms

and conditions thereof.

(6) No certificate shall be delivered or issued for delivery in this state unless a copy of

the form has been filed with and approved by the commissioner in the manner

provided for like policies issued by life insurers in this state. Every life, accident,

health, or disability insurance certificate and every annuity certificate issued on or

after one (1) year from January 1, 1989 shall meet the standard contract provision

requirements not inconsistent with this subtitle for like policies issued by life

insurers in this state, except that a society may provide for a grace period for

payment of premiums of one (1) full month in its certificates. The certificates shall

also contain a pr ovision stating the amount of premiums which are payable under

the certificate and a provision reciting or setting forth the substance of any sections

of the society's laws or rules in force at the time of issuance of the certificate which,

if violated, wi ll result in the termination or reduction of benefits payable under the

certificate. If the laws of the society provide for expulsion or suspension of a

member, the certificate shall also contain a provision that any member so expelled

or suspended, except for nonpayment of a premium or within the contestable period

for material misrepresentation in the application for membership or insurance, shall

have the privilege of maintaining the certificate in force by continuing payment of

the required premium.

(7) Benefit contracts issued on the lives of persons below the society's minimum age for

adult membership may provide for transfer of control or 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 certificates and all rights, obligations,

and liabilities incident thereto and connected therewith. Ownership rights prior to

transfer shall be specified in the certificate.

(8) A society may specify the terms and conditions on which benefit contracts may be

assigned.