N.Y. Insurance Law § 4515: Conditions for avoiding separate funds

§ 4515. Conditions for avoiding separate funds. (a) Any authorized

society which maintains reserves, including deficient premium reserves,

at least equal to those required by the minimum standards of valuation

hereinafter specified and which does not exceed the expense limits

hereinafter specified shall not be required, if its constitution or

by-laws so permit, to create or maintain a separate fund or funds, for

the payment of insurance benefits as required by subsection (a) of

section four thousand five hundred fourteen of this article nor to

comply with the provisions of subsections (b) and (d) of such section

and subsection (d) of section four thousand five hundred seven of this

article.

(b) (1) Such minimum standards of valuation shall be:

(A) as to all contracts for life insurance benefits issued prior to

January first, nineteen hundred forty-eight, the American Experience

Table of Mortality or the American Men Ultimate Table of Mortality with

interest at three and one-half per centum,

(B) as to all contracts for life insurance benefits issued on and

after January first, nineteen hundred forty-eight, and prior to January

first, nineteen hundred fifty-six, the American Experience Table of

Mortality or the American Men Ultimate Table of Mortality with interest

at three per centum, and

(C) as to all contracts for life insurance benefits issued on and

after January first, nineteen hundred fifty-six, the applicable

mortality tables as specified in subsection (c) of section four thousand

five hundred seventeen of this article.

(2) The deficient premium reserve as to all such contracts issued

prior to January first, nineteen hundred forty-eight, shall be

determined in the manner prescribed in subsection (b) of section four

thousand five hundred seventeen of this article and as to all such

contracts issued on and after January first, nineteen hundred

forty-eight, shall be determined in the manner prescribed in section

four thousand two hundred eighteen of this chapter.

(3) Such minimum standard of valuation as to all contracts for annuity

benefits issued on and after January first, nineteen hundred

forty-eight, shall be the 1937 Standard Annuity Mortality Table with

interest at three per centum.

(c) No such society shall, except as provided for in subsection (f)

hereof, make or incur in any calendar year, or permit to be made or

incurred on its behalf or under any agreement with it, total life

insurance expenses as defined in subsection (d) hereof in excess of the

total life insurance expense limit as defined in subsection (e) hereof.

(d) The total life insurance expenses of any such society within the

meaning of this section, shall include all expenses, made or incurred on

its behalf with its permission or under any agreement with it, in the

business of fraternal life insurance, except:

(1) taxes, licenses and fees,

(2) disbursements for altruistic, educational, fraternal or

recreational activities which are made from funds collected solely for

such purposes and in addition thereto disbursements for like purposes in

an amount not exceeding one and one-half per centum of the premiums

received for life insurance contracts during such calendar year,

(3) that portion of its total investment expenses not exceeding

one-fourth of one per centum of the mean amount of its total invested

assets during such calendar year,

(4) taxes and other outlays exclusively in connection with real estate

and commissions, or salaries and expenses in lieu of commissions, on

mortgage loans, and

(5) outlays representing the accrued liability for services rendered

by the society's employees prior to coverage under employees pension

plans.

(e) The total life insurance expense limit, within the meaning of this

section, shall be the sum of the following items:

(1) seven per centum of all life insurance premiums received by such

society during such calendar year,

(2) thirty-five per centum of all first year life insurance premiums

received by such society during such calendar year,

(3) one hundred seventy-five one thousandths of one per centum of the

aggregate amount of life insurance of such society in force at the

beginning of such calendar year and of the aggregate amount of such

insurance issued during, and in force at the end of, such calendar year,

(4) three-tenths of one per centum of the aggregate amount of life

insurance of such society in force at the beginning of such calendar

year and of the aggregate amount of such insurance issued during, and in

force at the end of, such calendar year, and

(5) thirty-five one hundredths of one per centum of the aggregate

amount of life insurance of such society issued during, and is in force

at the end of, such calendar year, exclusive of additional insurance

purchased by the application of certificate dividends.

(f) The total life insurance expense limit of any such society which

has in force at the end of the next preceding calendar year less than

one million dollars of life insurance shall be increased by one hundred

per centum; and for any other such society, such limits shall be

increased by one hundred per centum less two-tenths of one per centum

for each one million dollars of life insurance in excess of one million

dollars of life insurance until the extra margin is sixty per centum of

said limit, and thereafter said extra margin shall decrease by one-third

of one per centum for each ten million dollars of life insurance in

force at the end of the next preceding calendar year until the extra

margin is fifty per centum; and thereafter said extra margin shall

decrease by one-half of one per centum for each ten million dollars of

life insurance in force at the end of the next preceding calendar year

until such extra margin is reduced to zero.

(g) The amounts of life insurance referred to in this section shall

not include additional benefits payable for accidental death or for

total and permanent disability.

(h) No such society, and no person, firm or corporation, on its behalf

or under any agreement with it, shall pay or allow to any agent, broker,

employee or other person, for services in procuring an application for

life insurance, for collecting any premium thereon or for any other

service performed in connection therewith, any compensation greater than

that which has been determined by agreement made in advance of the

rendering of such service.

(i) The superintendent may, in his discretion, accept satisfactory

approximations of the figures required in this section. If any such

society shall in any calendar year make or incur total life insurance

expenses in excess of the total life insurance expense limit, the

superintendent may, upon written application of such society, suspend

such limit for such society for the calendar year in which such excess

was incurred.

(j) Notice of intention to comply with the provisions of this section

shall be given in writing to the superintendent by any such society,

accompanied by a certified copy of the authorizing resolution of the

board of directors.