N.Y. Insurance Law § 4514: Creation and maintenance of separate funds; premiums; assessments and other contributions of members

§ 4514. Creation and maintenance of separate funds; premiums;

assessments and other contributions of members. (a) Every authorized

society shall create a separate fund or funds for the payment of all

insurance benefits as defined in section four thousand five hundred one

of this article, under all certificates or other contracts issued by it

or under any provisions of its constitution or by-laws which require

payment of premiums or other contributions as consideration for such

benefits. All such funds shall be known as the insurance funds of such

society. In addition to such insurance funds, any such society may

create, maintain, invest, disburse and apply, separate and independent

from such insurance funds, any general, expense, emergency, patriotic,

relief or other similar funds in accordance with its constitution and

by-laws. Except as provided in subsection (g) hereof, all such funds of

any such society may be invested only as permitted by paragraph two of

subsection (a) of section one thousand four hundred three of this

chapter. All such funds shall be held, invested and disbursed for the

use and benefit of the society, and no member or beneficiary shall have

or acquire individual rights therein, or become entitled to any

apportionment or the surrender of any part thereof, except in accordance

with the terms and provisions of an insurance or annuity contract made

by such society.

(b) In a provision of its by-laws relating to the payment of premiums

or other required periodical contributions by insured members, every

such society shall distinctly indicate the amount or portion of such

premium or contribution which is to be used for insurance benefits, to

be known as the insurance contribution, and the amount or portion which

may be used for expenses and other purposes. The amount of such

insurance contributions shall be not less than that required by the

standard of valuation applicable to such certificate or contract in

accordance with the provisions of this chapter. Every such insurance

contribution shall without any deduction be paid into the insurance

funds of such society.

(c) No authorized society shall issue or deliver in this state or

elsewhere any certificate which does not require stated periodical

premiums or contributions at least equal to those required according to

the minimum valuation standards set forth in subsection (c) of section

four thousand five hundred seventeen of this article; nor shall such

society insure in this state or elsewhere members for temporary or

permanent disability benefits or for hospital expense or surgical and

medical expense unless the rates thereof are adequate upon the basis of

tables based upon reliable experience with an interest assumption not

higher than three percent per annum.

(d) The insurance funds of every such society shall consist of the

insurance contributions and of all interest or other income on

investments in such funds and all other accretions to such funds. Such

insurance funds may be used for the payment of benefits under any

insurance or annuity contract and for the payment of expenses of

investment of such funds. No part of such insurance funds shall be used

for any other expenses or other purposes, except that any such society

having admitted assets, as shown by its last annual statement filed with

the superintendent, in excess of one hundred five percent of its entire

liabilities, including its required reserves computed on a net tabular

basis, may transfer or allocate such excess insurance funds to the

expense or other funds of the society, in accordance with its

constitution and by-laws; but the amount so transferred in any calendar

year shall not exceed whichever is the smaller of (i) five percent of

the total contributions to the mortuary fund or funds of such society

during the next preceding calendar year or (ii) seventy-five per centum

of the sum of

(1) the savings in mortality during the preceding calendar year under

certificates issued on rates creating and maintaining reserves in

accordance with the table of mortality used, and

(2) the excess interest earnings over and above the interest

requirements to maintain reserves, after deducting from such sum the

dividends, if any, paid to members, as determined by the valuation

report and annual statement required by this chapter, but no society

shall make any such transfer or allocation within the limits herein

described which pays or agrees to pay a first year commission in excess

of fifty-five percent of the year's premium on any life insurance

certificate or annuity contract issued by such society. In addition to

any transfer or allocation made within the limits herein described, a

society may transfer or allocate from the mortuary fund or funds to the

general or expense fund, surrender charges, if any, provided for under

terminated life insurance contracts on a legal reserve basis.

(e) Any such society may ascertain and distribute any divisible

surplus accruing under its certificates on an equitable basis, provided

that any apportionment of such surplus shall be only on an annual basis.

(f) Whenever any authorized society heretofore organized in or

licensed to do business in this state has substantially separate groups

or classes of certificates in force on which premiums or assessments are

payable according to substantially different tables of rates, the

superintendent may require such society to file a separate accounting in

its annual report of such major classifications of certificates.

(g) Any such society, for the accomplishment of any lawful purpose

provided for in its charter or constitution, may own, hold or lease

personal and real property located within or without this state, with

necessary buildings thereon; but no such personal or real property shall

be deemed an admitted asset of such society, within the meaning of this

chapter, except the home office building of such society to an amount

not exceeding that permitted by paragraph seven of subsection (a) of

section one thousand four hundred four of this chapter. Any such real or

personal property may be acquired and maintained only out of the general

or expense fund of such society, any voluntary contributions which it

may receive therefor, and such reasonable charges as may be made for the

facilities or services furnished thereby.

(h) Every authorized society shall at all times maintain a surplus not

less than the minimum amount established by rule of the superintendent.