Group Requirements Generally

  1. Law
  2. Georgia Code
  3. Insurance
  4. Group Life Insurance
  5. Group Requirements Generally

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No policy of group life insurance shall be delivered in this state unless it conforms to one of the following descriptions:

  1. EMPLOYEE GROUPS. A policy issued to an employer or to the trustees of a fund established by an employer, which employer or trustee shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer, subject to the following requirements:
    1. The employees eligible for insurance under the policy shall be all of the employees of the employer or all of any class or classes thereof determined by conditions pertaining to their employment. The policy may provide that the term "employees" shall include the employees of one or more subsidiary corporations and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietors, or partnerships, if the business of the employer and of such affiliated corporations, proprietors, or partnerships is under common control through stock ownership or contract or otherwise. The policy may provide that the term "employees" shall include the individual proprietor or partners if the employer is an individual proprietor or a partnership. The policy may provide that the term "employees" shall include retired employees. No individual proprietor or partner shall be eligible for insurance under the policy unless he is actively engaged in and devotes a substantial part of his time to the conduct of the business of the proprietor or partnership. A policy issued to insure the employees of a public body may provide that the term "employees" shall include elected or appointed officials;
    2. The premium for the policy shall be paid by the policyholder either from the employer's own funds or from charges collected from the insured employee specifically for such insurance or from funds contributed by both the employer and the employee. A policy in which no part of the premium is to be derived from funds contributed by the insured employee must insure each eligible employee, except for any employee as to whom evidence of individual insurability is not satisfactory to the insurer;
    3. The policy must cover at least two employees at date of issue; and
    4. The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the employees or by the employer or trustee.
  2. DEBTOR GROUPS. A policy issued to a creditor or to a trustee or agent appointed by two or more creditors, which creditor, trustee, or agent shall be deemed the policyholder, to insure debtors of the creditor, subject to the following requirements:
    1. The debtors eligible for insurance under the policy shall be all of the debtors of the creditor whose indebtedness is repayable either in installments, including any extraordinary payment of an installment or lease-purchase obligation, or in one sum at the end of a period not in excess of 24 months from the initial date of debt or all of any class or classes thereof determined by conditions pertaining to the indebtedness or to the purchase giving rise to the indebtedness. The policy may provide that the term "debtors" shall include the debtors of one or more subsidiary corporations and the debtors of one or more affiliated corporations, proprietors, or partnerships, if the business of the policyholder and of such affiliated corporations, proprietors, or partnerships is under common control through stock ownership, contract, or otherwise. No debtor shall be eligible unless the indebtedness constitutes an irrevocable obligation to repay which is binding upon him during his lifetime at the time the insurance becomes effective upon his life;
    2. The premium for the policy shall be paid by the policyholder either from the creditor's funds, from charges collected from the insured debtors, or from both. A policy on which part or all of the premium is to be derived from the collection from the insured debtors of identifiable charges not required of uninsured debtors shall not include, in the class or classes of debtors eligible for insurance, debtors under obligations outstanding at its date of issue without evidence of individual insurability unless at least 75 percent of the then eligible debtors elect to pay the required charges. A policy on which no part of the premium is to be derived from the collection of such identifiable charges must insure all eligible debtors or all except any as to whom evidence of individual insurability is not satisfactory to the insurer;
    3. The policy may be issued only if the policy reserves to the insurer the right to require evidence of individual insurability if less than 75 percent of the new entrants become insured. The policy may exclude from the classes eligible for insurance classes of debtors determined by age;
    4. The amount of insurance on the life of any debtor shall at no time exceed the amount owed by him which is repayable in installments, the amount of the unpaid indebtedness, or $75,000.00, whichever is less. Where the indebtedness is repayable in one sum to the creditor, the insurance on the life of any debtor shall in no instance be in effect for a period in excess of 24 months, except that such insurance may be continued for an additional period not exceeding six months in the case of default, extension, or recasting of the loan; and
    5. The insurance shall be payable to the policyholder. Such payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of such payment.
  3. MORTGAGEE GROUP. A policy issued to a creditor, or to a trustee or agent appointed by two or more creditors, which creditor, trustee, or agent shall be deemed the policyholder, to insure mortgagors of the creditor. The insurance must be written in connection with a credit transaction that is secured by a first mortgage or deed of trust; made to finance the purchase of real property or the construction of a dwelling thereon, or to refinance a prior credit transaction made for the purpose; and shall be payable to the policyholder. Such payment shall reduce or extinguish the unpaid mortgage of the mortgagor to the extent of such payment.
  4. AGRICULTURAL LOANS. Notwithstanding the provisions of this Code section, group life insurance in connection with agricultural loans may be written up to the amount of the loan or loan commitment on the nondecreasing or level term plan; however, the amount of insurance on the life of any such debtor shall not on any anniversary date of the insurance exceed the amount then owed by him which is repayable in installments, the amount of the then unpaid indebtedness, or $75,000.00, whichever is less.
  5. LABOR UNION GROUPS. A policy issued to a labor union, which shall be deemed the policyholder, to insure members of such union for the benefit of persons other than the union or any of its officials, representatives, or agents, subject to the following requirements:
    1. The members eligible for insurance under the policy shall be all of the members of the union or all of any class or classes thereof determined by conditions pertaining to their employment or to membership in the union, or both;
    2. The premium for the policy shall be paid by the policyholder either wholly from the union's funds or partly from such funds and partly from funds contributed by the insured members specifically for their insurance. No policy may be issued on which the entire premium is to be derived from funds contributed by the insured members specifically for their insurance. A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members or all except any as to whom evidence of individual insurability is not satisfactory to the insurer;
    3. The policy must cover at least 25 members at date of issue; and
    4. The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the members or by the union.
  6. TRUSTEE GROUPS. A policy issued to the trustees of a fund established by two or more employers or by one or more labor unions or by one or more employers and one or more labor unions, which trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions for the benefit of persons other than the employers or the unions, subject to the following requirements:
    1. The persons eligible for insurance shall be all of the employees of the employers, all of the members of the unions, or all of any class or classes of employees or union members determined by conditions pertaining to their employment, to membership in the unions, or to both. The policy may provide that the term "employees" shall include retired employees and the individual proprietor or partners if an employer is an individual proprietor or a partnership. No director of a corporate employer shall be eligible for insurance under the policy unless such person is otherwise eligible as a bona fide employee of the corporation by performing services other than the usual duties of a director. No individual proprietor or partner shall be eligible for insurance under the policy unless he is actively engaged in and devotes a substantial part of his time to the conduct of the business of the proprietor or partnership. The policy may provide that the term "employees" shall include the trustees or their employees, or both, if their duties are principally connected with such trusteeship;
    2. The premium for the policy shall be paid by the trustees wholly from funds contributed by the employer or employers of the insured persons, by the union or unions, or by both or partly from such funds and partly from funds contributed by the insured persons. No policy may be issued on which the entire premium is to be derived from funds contributed by the insured persons specifically for their insurance. A policy on which no part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance must insure all eligible persons or all except any as to whom evidence of individual insurability is not satisfactory to the insurer;
    3. The policy must cover at date of issue at least 100 persons; and, if the fund is established by the members of an association of employers, the policy may be issued only if either the participating employers constitute at date of issue at least 60 percent of those employer members whose employees are not already covered for group life insurance or the total number of persons covered at date of issue exceeds 600; and the policy shall not require that, if a participating employer discontinues membership in the association, the insurance of his employees shall cease solely by reason of the discontinuance; and
    4. The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the insured persons or by the policyholder, employers, or unions.
  7. ASSOCIATION GROUPS. The lives of a group of individuals may be insured under a policy issued to an association, which shall be deemed the policyholder, to insure members of such association for the benefit of persons other than the association. As used in this paragraph, the term "association" means an association of governmental or public employees, an association of employees of a common employer, or an organization formed and operated in good faith for purposes other than that of procuring insurance and composed of members engaged in a common trade, business, or profession. The policy shall be subject to the following requirements:
    1. The members eligible for insurance under the policy shall be all of the members of the association or all of any class or classes of the association determined by conditions pertaining to their employment, to their trade, business, or profession, to their membership in the association, or to any two or more of such conditions. The policy may provide that officers and employees of the association who are bona fide members may be insured under the policy;
    2. The policy must cover at least 25 members at date of issue;
    3. The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the association or by the members; and
    4. The premium for the policy shall be paid by the policyholder either from the association's own funds, or from charges collected from the insured members specifically for the insurance, or from both.
  8. BANK AND CREDIT UNION GROUPS. A bank authorized to do business in this state may carry insurance upon its depositors for amounts not to exceed the savings deposit balances of each depositor or $5,000.00, whichever is less, and a credit union organized pursuant to the laws of this state or the Federal Credit Union Act may carry insurance upon its members for amounts not to exceed the share and deposit balances of each member or $5,000.00, whichever is less. Such insurance shall be subject to the requirements of subparagraphs (A) through (D) of paragraph (7) of this Code section.
    1. The lives of a group of individuals may be insured under a policy issued to a legal entity providing a multiple employer welfare arrangement. As used in this paragraph, the term "multiple employer welfare arrangement" means any employee benefit plan which is established or maintained for the purpose of offering or providing life insurance benefits to the employees of two or more employers, including self-employed individuals and their dependents. The term does not apply to any plan or arrangement which is established or maintained by a tax-exempt rural electric cooperative or a collective bargaining agreement.
    2. The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the employees, employers, or trustee.

      SPECIAL EMPLOYEE GROUPS. An entity or a trustee of a trust established by an entity which has an insurable interest in employees pursuant to subsection (d) of Code Section 33-24-3 and authority to effectuate insurance on employees pursuant to paragraph (4) or (5) of subsection (a) of Code Section 33-24-6 may establish an employee group to effectuate group life insurance policies on employees when such corporation or trustee of a trust is providing life, health, disability, retirement, or similar benefits to employees, provided that the premium for such group policies is wholly paid by the corporation or trustee of the trust and the proceeds of such policies are used to provide supplemental funding for such employee benefit plans.

      DISCRETIONARY GROUPS. Group life insurance offered to a resident of this state under a group life insurance policy issued to a group other than one described in paragraphs (1) through (10) of this Code section shall be subject to the following requirements:

    3. No such group life insurance policy shall be delivered in this state unless the Commissioner finds that:
      1. The issuance of such group policy is not contrary to the best interest of the public;
      2. The issuance of the group policy would result in economies of acquisition or administration; and
      3. The benefits are reasonable in relation to the premiums charged;
    4. No such group life insurance coverage may be offered in this state by an insurer under a policy issued in another state unless this state or such other state having requirements substantially similar to those contained in divisions (i) through (iii) of subparagraph (A) of this paragraph has made a determination that the requirements have been met;
    5. The premium for the policy shall be paid either from the policyholder's funds or from funds contributed by the covered persons, or from both; and
    6. An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.

(9) M ULTIPLE EMPLOYER WELFARE ARRANGEMENTS.

(Code 1933, § 56-2701, enacted by Ga. L. 1960, p. 289, § 1; Ga. L. 1981, p. 1814, § 1; Ga. L. 1982, p. 3, § 33; Ga. L. 1983, p. 464, §§ 1, 2; Ga. L. 1985, p. 616, § 1; Ga. L. 1987, p. 1333, § 1; Ga. L. 1987, p. 1486, §§ 1-5; Ga. L. 1989, p. 883, § 1; Ga. L. 1990, p. 8, § 33; Ga. L. 1990, p. 1402, § 1; Ga. L. 1993, p. 1721, § 5; Ga. L. 1994, p. 97, § 33; Ga. L. 1998, p. 768, § 1; Ga. L. 2005, p. 481, § 4/HB 291; Ga. L. 2006, p. 869, § 3/HB 1484; Ga. L. 2013, p. 762, § 1/HB 103.)

Law reviews.

- For article surveying developments in Georgia insurance law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 143 (1981).

JUDICIAL DECISIONS

Debtors groups.

- This section refers to "debtor groups" and is for purpose of avoiding discrimination between members of such a group; failure to meet this restriction results in prohibition against delivery of the policy in this state. Parramore Farms, Inc. v. John Deere Co., 159 Ga. App. 774, 285 S.E.2d 233 (1981).

This section prohibits an insured employee from naming "the employer" as beneficiary of group policy; sole shareholders of the employer corporation are not encompassed within the meaning of "employer." Bohannon v. Manhattan Life Ins. Co., 555 F.2d 1205 (5th Cir. 1977).

Cited in Schulman v. Federated Life Ins. Co., 154 Ga. App. 479, 268 S.E.2d 704 (1980); Gowen v. Georgia Int'l Life Ins. Co., 163 Ga. App. 75, 293 S.E.2d 729 (1982); Connecticut Gen. Life Ins. Co. v. Wood, 631 F. Supp. 9 (N.D. Ga. 1984).

OPINIONS OF THE ATTORNEY GENERAL

Premium charges other than those approved by Commissioner unauthorized.

- Any premium charge made to the debtor other than as filed with and approved by the Commissioner of Insurance and consistent with the premium rate charged by the insurer is unauthorized. 1965-66 Op. Att'y Gen. No. 66-184.

Elements of unfair discrimination in premiums charged.

- Unfair discrimination in premiums for life insurance, accident insurance, or sickness insurance was prohibited by former Code 1933, § 56-701 (see O.C.G.A. § 33-6-1); however, for unfair discrimination to exist, the insurance companies must not be offering the same amount of insurance for the same amount of premium to policyholders with the same risk rating; also, the number of employees under the group plan could legitimately affect the rates; consequently, for different group policies, the rates charged by the insurance company could be different and at the same time could also be legal. 1974 Op. Att'y Gen. No. 74-81.

Eligible employees may include nonresidents of state.

- Paragraph (5) of this section authorizes group policies issued to "trustee groups" to include eligible employees, as defined in this section, who are not residents of this state; and paragraph (6) of this Code section likewise authorizes the inclusion of such nonresidents in group policies issued to "association groups." 1962 Op. Att'y Gen. p. 291.

Directors not includable unless otherwise eligible as bona fide employees.

- Group policy issued to employer to cover employees under this section may not legally include directors who are not otherwise eligible as bona fide employees performing duties other than those of directors. 1963-65 Op. Att'y Gen. p. 663.

All holders of particular brand of credit card do not appear to constitute a permissible group for which a group policy of life insurance may be issued. 1972 Op. Att'y Gen. No. 72-66.

RESEARCH REFERENCES

Am. Jur. 2d.

- 44A Am. Jur. 2d, Insurance, §§ 1831 et seq., 1872 et seq.

14B Am. Jur. Pleading and Practice Forms, Insurance, § 291.

C.J.S.

- 44 C.J.S., Insurance, § 486 et seq. 45 C.J.S., Insurance, § 676 et seq.

ALR.

- Group life insurance policy for benefit of union members, 17 A.L.R.2d 927.

Group insurance: construction of provision limiting coverage to full-time employees, 57 A.L.R.3d 801.

Construction and application of Federal Credit Union Act of 1934 (FCUA) (12 U.S.C.A. §§ 1751 to 1795k), 89 A.L.R. Fed. 2d 357.


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