58-37A-1      Fraternal benefit society defined.
58-37A-2      Lodge system--Regular meetings--Lodges for children.
58-37A-3      Representative form of government determined.
58-37A-4      Definition of terms.
58-37A-5      Benefits and purposes of society--Power to adopt laws and rules for governing the society.
58-37A-6      Specification of laws or rules--Membership rights.
58-37A-7      Location of office and meetings--Official publication--Annual synopsis--Grievance procedures provided.
58-37A-8      Liability of officers and members of governing body--Indemnification and reimbursement--Insurance--Liability of noncompensated member.
58-37A-9      Provisions of laws may not be waived.
58-37A-10      Procedure for formation of a society--Transaction by unincorporated society is a misdemeanor.
58-37A-11      Amendments to society laws--Adoption--Filing--Printing as prima facie evidence.
58-37A-12      Nonprofit organization created by society.
58-37A-13      Reinsurance agreement--Ceding risks.
58-37A-14      Consolidation or merger.
58-37A-15      Conversion into life insurance company--Plan--Approval.
58-37A-16      Contractual benefits allowed.
58-37A-17      Beneficiary designations--Funeral benefits.
58-37A-18      Money or other benefits not attachable for individual debts.
58-37A-19      Benefit certificates.
58-37A-20      Basis for computing value of nonforfeiture benefits.
58-37A-21      Authorized investments.
58-37A-22      Permissible use of assets and special funds--Establishing separate accounts and issuing contracts.
58-37A-23      Exemption from other insurance laws.
58-37A-24      Exemption from certain taxes.
58-37A-25      Standards of valuation for certificates--Maintenance of excess reserves.
58-37A-26      Annual statement of affairs--Valuation of certificates--Filing requirements.
58-37A-27      License to transact business--Annual expiration and renewal--License fee--Copy of license as evidence.
58-37A-28      Examination of domestic, foreign, and alien societies--Requirements--Responsibility for expenses--Report of examination.
58-37A-29      Foreign or alien society--Qualifications and procedure for admission to transact business in state.
58-37A-30 to 58-37A-32.      Repealed.
58-37A-33      Insurance producers--When license is required.
58-37A-34      Applicability of unfair trade prohibitions--Determination of membership requirements and to whom benefits offered.
58-37A-35      Appointment of director as attorney for service of process--Copy forwarded to secretary of society--Time for filing answer--Fee paid by plaintiff.
58-37A-36      Fraudulent statements, and soliciting membership in unlicensed societies as crimes.
58-37A-37      Judicial review of actions of director.
58-37A-38      Exempt societies--Allowance of compensation for procuring new members prohibited--Director to determine exemption--Exempt societies not subject to insurance laws.
58-37A-38.1      Inapplicability of subdivision 58-37A-38(2) to certain societies, orders, and associations.
58-37A-39      Application of other provisions.

58-37A-1. Fraternal benefit society defined.

Any incorporated society, order, or supreme lodge, without capital stock, including one exempted under the provisions of subdivision 58-37A-38(2), whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with ritualistic form of work, having a representative form of government, and which provides benefits in accordance with this chapter, is a fraternal benefit society for the purposes of this chapter.

Source: SL 1990, ch 410, § 1.

58-37A-2. Lodge system--Regular meetings--Lodges for children.

A society is operating on the lodge system if it has a supreme governing body and subordinate lodges into which members are elected, initiated, or admitted in accordance with its laws, rules and ritual. Subordinate lodges shall be required by the laws of the society to hold regular meetings at least once in each month in furtherance of the purposes of the society. A society may organize and operate lodges for children under the minimum age for adult membership. No membership and initiation in local lodges may be required of those children, nor may they have a voice or vote in the management of the society.

Source: SL 1990, ch 410, § 2.

58-37A-3. Representative form of government determined.

A society has a representative form of government if:

(1)    It has a supreme governing body constituted in one of the following ways:

(a)    The supreme governing body is an assembly composed of delegates elected directly by the members or at intermediate assemblies or conventions of members or their representatives, together with other delegates as may be prescribed in the society's laws. A society may provide for election of delegates by mail. The elected delegates shall constitute a majority in number and may not have less than two-thirds of the votes and not less than the number of votes required to amend the society's laws. The assembly shall be elected and shall meet at least once every four years and shall elect a board of directors to conduct the business of the society between meetings of the assembly. Vacancies on the board of directors between elections may be filled in the manner prescribed by the society's laws;

(b)    The supreme governing body is a board composed of persons elected by the members, either directly or by their representatives in intermediate assemblies, and any other persons prescribed in the society's laws. A society may provide for election of the board by mail. Each term of a board member may not exceed four years. Vacancies on the board between elections may be filled in the manner prescribed by the society's laws. Those persons elected to the board shall constitute a majority in number and not less than the number of votes required to amend the society's laws. A person filling the unexpired term of an elected board member shall be considered to be an elected member. The board shall meet at least quarterly to conduct the business of the society;

(2)    The officers of the society are elected either by the supreme governing body or by the board of directors;

(3)    Only benefit members are eligible for election to the supreme governing body and the board of directors; and

(4)    Each voting member shall have one vote; no vote may be cast by proxy.

Source: SL 1990, ch 410, § 3.

58-37A-4. Definition of terms.

Terms used in this chapter mean:

(1)    "Benefit contract," the agreement for provision of benefits authorized by § 58-37A-16, as that agreement is described in § 58-37A-19;

(2)    "Benefit member," any adult member who is designated by the laws or rules of the society to be a benefit member under a benefit contract;

(3)    "Certificate," the document issued as written evidence of the benefit contract;

(4)    "Laws," the society's articles of incorporation, constitution, and bylaws, however designated;

(5)    "Lodge," subordinate member units of the society, known as camps, courts, councils, branches, or by any other designation;

(6)    "Premiums," premiums, rates, dues, or other required contributions by whatever name known, which are payable under the certificate;

(7)    "Rules," all rules, regulations, or resolutions adopted by the supreme governing body or board of directors which are intended to have general application to the members of the society;

(8)    "Society," fraternal benefit society, unless otherwise indicated.

Source: SL 1990, ch 410, § 4.

58-37A-5. Benefits and purposes of society--Power to adopt laws and rules for governing the society.

A society shall operate for the benefit of members and their beneficiaries by providing benefits as specified in § 58-37A-16, and operating for one or more social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic, or religious purposes for the benefit of its members, which may also be extended to others. These purposes may be carried out directly by the society, or indirectly through subsidiary corporations or affiliated organizations. These subsidiaries or affiliated organizations shall comply with all other applicable provisions of the laws and are also subject to the requirements of chapter 58-5A.

Every society may adopt laws and rules for the government of the society, the admission of its members, and the management of its affairs. It may change, alter, add to, or amend the laws and rules and has any other powers that are necessary and incidental to carrying into effect the objects and purposes of the society.

Source: SL 1990, ch 410, § 5.

58-37A-6. Specification of laws or rules--Membership rights.

A society shall specify in its laws or rules:

(1)    Eligibility standards for each class of membership. If benefits are provided on the lives of children, the minimum age for adult membership shall be set at not less than age fifteen and not greater than age twenty-one;

(2)    The process for admission to membership for each membership class; and

(3)    The rights and privileges of each membership class. However, only benefit members have the right to vote on the management of the insurance affairs of the society.

A society may also admit social members who have no voice or vote in the management of the insurance affairs of the society. Membership rights in the society are personal to the member and are not assignable.

Source: SL 1990, ch 410, § 6.

58-37A-7. Location of office and meetings--Official publication--Annual synopsis--Grievance procedures provided.

The principal office of any domestic society shall be located in this state. The meetings of its supreme governing body may be held in any state, district, province, or territory wherein the society has at least one subordinate lodge, or in any other location as determined by the supreme governing body, and all business transacted at these meetings shall be as valid in all respects as if these meetings were held in this state. The minutes of the proceedings of the supreme governing body and of the board of directors shall be in the English language.

A society may provide in its laws for an official publication in which any notice, report, or statement required by law to be given to members, including notice of election, may be published. Each required report, notice, and statement shall be printed conspicuously in the publication. If the records of a society show that two or more members have the same mailing address, an official publication mailed to one member is deemed to be mailed to all members at the same address unless a member requests a separate copy.

Not later than June first of each year, a synopsis of the society's annual statement providing an explanation of the facts concerning the condition of the society thereby disclosed shall be printed and mailed to each benefit member of the society or such synopsis may be published in the society's official publication.

A society may provide in its laws or rules for grievance or complaint procedures for members.

Source: SL 1990, ch 410, § 7.

58-37A-8. Liability of officers and members of governing body--Indemnification and reimbursement--Insurance--Liability of noncompensated member.

The officers and members of the supreme governing body or any subordinate body of a society are not personally liable for any benefits provided by a society.

Any person may be indemnified and reimbursed by any society for expenses reasonably incurred by, and liabilities imposed upon, the person in connection with or arising out of any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, or threat thereof, in which the person may be involved because the person was a director, officer, employee, or insurance producer of the society or of any firm, corporation, or organization which the person served in any capacity at the request of the society. No person may be indemnified or reimbursed in relation to any matter in any action, suit, or proceeding if the person is finally adjudged to be guilty of a breach of a duty as a director, officer, employee, or insurance producer of the society or in relation to any matter in any action, suit, or proceeding, or threat thereof, which is the subject of a compromise settlement; unless in either case the person acted in good faith for a purpose the person reasonably believed to be in or not opposed to the best interests of the society and, in a criminal action or proceeding, had no reasonable cause to believe that the person's conduct was unlawful. The determination whether the conduct of the person met the standard required in order to justify indemnification and reimbursement in relation to any matter described in the preceding sentence may only be made by the supreme governing body or board of directors by a majority vote of a quorum consisting of persons who were not parties to the action, suit, or proceeding or by a court of competent jurisdiction. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of no contest, as to the person does not create a conclusive presumption that the person did not meet the standard of conduct required to justify indemnification and reimbursement. The right of indemnification and reimbursement is not exclusive of other rights to which a person may be entitled as a matter of law and shall inure to the benefit of the person's heirs and personal representatives.

A society may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or insurance producer of the society, or who is or was serving at the request of the society as a director, officer, employee, or insurance producer of any other firm, corporation, or organization against any liability asserted against the person and incurred by the person in any capacity or arising out of the person's status as such, whether or not the society would have the power to indemnify the person against the liability under this section.

No director, officer, employee, member, or volunteer of a society serving without compensation is liable, and no cause of action may be brought, for damages resulting from the exercise of judgment or discretion in connection with the duties or responsibilities of the person for the society unless the act or omission involved willful or wanton misconduct.

Source: SL 1990, ch 410, § 8; SL 2001, ch 286, § 217.

58-37A-9. Provisions of laws may not be waived.

The laws of the society may provide that no subordinate body, nor any of its subordinate officers or members may waive any of the provisions of the laws of the society. This provision is binding on the society and every member and beneficiary of a member.

Source: SL 1990, ch 410, § 9.

58-37A-10. Procedure for formation of a society--Transaction by unincorporated society is a misdemeanor.

A domestic society organized on or after January 1, 1991, shall be formed according to this section.

Seven or more citizens of the United States, a majority of whom are citizens of this state, who desire to form a fraternal benefit society, may sign and acknowledge before some officer competent to take acknowledgment of deeds, articles of incorporation, in which shall be stated the proposed corporate name of the society, which may not so closely resemble the name of any society or insurance company as to be misleading or confusing; the purposes for which it is being formed and the mode in which its corporate powers are to be exercised; and the names and residences of the incorporators and the names, residences and official titles of all the officers, trustees, directors, or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which all the officers shall be elected by the supreme governing body, which election shall be held not later than one year from the date of issuance of the permanent certificate of authority.

The articles of incorporation, duly certified copies of the society's bylaws and rules, copies of all proposed forms of certificates, applications therefor, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year shall be filed with the director, who may require more information as the director considers necessary. The bond with sureties approved by the director shall be in an amount, not less than four hundred thousand dollars nor more than one million five hundred thousand dollars as required by the director. All documents filed are to be in the English language. If the purposes of the society conform to the requirements of this chapter and all provisions of the law have been complied with, the director shall certify, retain and file the articles of incorporation and furnish the incorporators a preliminary certificate of authority authorizing the society to solicit members.

No preliminary certificate of authority granted under the provisions of this section is valid after one year from its date or after a further period, not exceeding one year, as may be authorized by the director upon cause shown, unless the five hundred applicants as required by this chapter are secured and the organization is completed. The articles of incorporation and all other proceedings are void in one year from the date of the preliminary certificate of authority, or at the expiration of the extended period, unless the society completes its organization and receives a certificate of authority to do business.

Upon receipt of a preliminary certificate of authority from the director, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates, and shall issue to each applicant a receipt for the amount collected. No society may incur any liability other than for the return of the advance premium, nor issue any certificate, nor pay, allow, or offer or promise to pay or allow, any benefit to any person until:

(1)    Actual bona fide applications for benefits have been secured on five hundred applicants, and any necessary evidence of insurability has been furnished to and approved by the society;

(2)    At least ten subordinate lodges have been established into which the five hundred applicants have been admitted;

(3)    There has been submitted to the director, under oath of the president or secretary, or corresponding officer of the society, a list of applicants, giving their names, addresses, date each was admitted, name and number of the subordinate lodge of which each applicant is a member, amount of benefits to be granted and premiums therefor; and

(4)    It is shown to the director, by sworn statement of the treasurer, or corresponding officer of the society, that five hundred applicants have each paid in cash at least one regular monthly premium, which premiums in the aggregate amount to at least one hundred fifty thousand dollars. The advance premiums shall be held in trust during the period of organization and if the society does not qualify for a certificate of authority within one year, the premiums shall be returned to the applicants.

The director may make an examination and require further information. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, the director shall issue to the society a certificate of authority to that effect and that the society is authorized to transact business pursuant to the provisions of this chapter. The certificate of authority is prima facie evidence of the existence of the society at the date of the certificate. The director shall cause a record of the certificate of authority to be made. A certified copy of the record may be given in evidence with like effect as the original certificate of authority.

No incorporated society authorized to transact business in this state on January 1, 1991, may be required to reincorporate.

It is a Class 2 misdemeanor for an unincorporated or voluntary association to transact business in the state as a fraternal benefit society.

Source: SL 1990, ch 410, § 10.

58-37A-11. Amendments to society laws--Adoption--Filing--Printing as prima facie evidence.

A domestic society may amend its laws in accordance with the provisions of this chapter by action of its supreme governing body at any regular or special meeting or, if its laws so provide, by referendum. A referendum may be held in accordance with the provisions of its laws by the vote of the voting members of the society, by the vote of delegates or representatives of voting members or by the vote of local lodges. A society may provide for voting by mail. No amendment submitted for adoption by referendum may be adopted unless, within six months from the date of submission, two-thirds of the members voting have signified their consent to the amendment by one of the methods specified.

No amendment to the laws of any domestic society may take effect unless approved by the director who shall approve the amendment if the director finds that it has been duly adopted and is not inconsistent with any requirement of the laws of this state or with the character, objects and purposes of the society. Unless the director disapproves the amendment within sixty days after the filing of it, the amendment shall be considered approved. The approval or disapproval of the director shall be in writing and mailed to the secretary or corresponding officer of the society at its principal office. If the director disapproves the amendment, the reasons shall be stated in the written notice.

Within ninety days from the approval by the director, each amendment, or a synopsis of the amendment, shall be furnished to all members of the society either by mail or by publication in full in the official publication of the society. The affidavit of any officer of the society or of anyone authorized by it to mail each amendment or synopsis, stating facts which show that same have been addressed and mailed, is prima facie evidence that the amendment or synopsis has been furnished to the addressee.

Every foreign or alien society authorized to do business in this state shall file with the director a certified copy of all amendments of, or additions to, its laws within thirty days after their enactment.

Printed copies of the laws as amended, certified by the secretary or corresponding officer of the society are prima facie evidence of their legal adoption.

Source: SL 1990, ch 410, § 11.

58-37A-12. Nonprofit organization created by society.

A society may create, maintain, and operate, or may establish organizations to operate, not for profit institutions to further the purposes permitted by § 58-37A-5. The institutions may furnish services free or at a reasonable charge. Any real or personal property owned, held or leased by the society for this purpose shall be reported in the annual statement required by § 58-37A-26.

It is a Class 2 misdemeanor for a society to own or operate a funeral home or an undertaking establishment.

Source: SL 1990, ch 410, § 12.

58-37A-13. Reinsurance agreement--Ceding risks.

A domestic society may, by a reinsurance agreement, cede any individual risk to an insurer, other than another fraternal benefit society, having the power to make such reinsurance and authorized to do business in this state, or if not authorized, one which is approved by the director, but no society may reinsure substantially all of its insurance in force without the written permission of the director. It may take credit for the reserves on the ceded risks to the extent reinsured, but no credit may be allowed as an admitted asset or as a deduction from liability, to a ceding society for reinsurance made, ceded, renewed, or otherwise becoming effective after January 1, 1991, unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding society under the contract or contracts reinsured without diminution because of the insolvency of the ceding society.

Notwithstanding this limitation, a society may reinsure the risks of another society in a consolidation or merger approved by the director under § 58-37A-14.

Source: SL 1990, ch 410, § 13.

58-37A-14. Consolidation or merger.

A domestic society may consolidate or merge with any other society by complying with the provisions of this section and the applicable provisions of §§ 47-1A-1101 to 47-1A-1108, inclusive, and chapter 58-5. It shall file with the director:

(1)    A certified copy of the written contract containing in full the terms and conditions of the consolidation or merger;

(2)    A sworn statement by the president and secretary or corresponding officers of each society showing the financial condition thereof on a date fixed by the director but not earlier than December thirty-first, next preceding the date of the contract;

(3)    A certificate of the officers, verified by their respective oaths, that the consolidation or merger has been approved by a two-thirds vote of the supreme governing body of each society, the vote being conducted at a regular or special meeting of each body, or, if the society's laws permit, by mail; and

(4)    Evidence that at least sixty days before the action of the supreme governing body of each society, the text of the contract had been furnished to all members of each society either by mail or by publication in full in the official publication of each society.

If the director finds that the contract conforms to the provisions of this section, that the financial statements are correct and that the consolidation or merger is just and equitable to the members of each society, the director shall approve the contract and issue a certificate to that effect. Upon approval, the contract shall be in effect unless any society which is a party to the contract is incorporated under the laws of any other state or territory. The consolidation or merger is not effective until it has been approved as provided by the laws of the other state or territory and a certificate of approval filed with the director of insurance of this state or, if the laws of the other state or territory contain no such provision, the consolidation or merger is not effective until it has been approved by the director of the other state or territory and a certificate of approval filed with the director of insurance of this state.

Upon the consolidation or merger becoming effective, all the rights, franchises, and interests of the consolidated or merged societies in and to every species of property, real, personal, or mixed, and things in action belonging to the consolidated or merged societies, shall be vested in the society resulting from or remaining after the consolidation or merger without any other instrument. However, conveyances of real property may be evidenced by proper deeds, and the title to any real estate or interest in real estate, vested under the laws of this state in any of the societies consolidated or merged, do not revert and are not impaired by reason of the consolidation or merger, but shall vest in the society resulting from the consolidation or merger.

The affidavit of any officer of the society or of anyone authorized by it to mail any notice or document, stating that the notice or document has been addressed and mailed, is prima facie evidence that the notice or document has been furnished to the addressees.

Source: SL 1990, ch 410, § 14; SL 2005, ch 202, § 29.

58-37A-15. Conversion into life insurance company--Plan--Approval.

Any fraternal benefit society incorporated under the laws of the state may reorganize and convert itself into a mutual life insurance company or into a stock life insurance company by compliance with all the requirements of the insurance laws of this state for mutual life insurance companies. A plan of conversion shall be prepared in writing by the board of directors setting forth the terms and conditions of conversion. The affirmative vote of two-thirds of all members of the supreme governing body at a regular or special meeting is necessary for the approval of the plan. No conversion may take effect unless approved by the director who may approve the plan if the director finds that the proposed change conforms to the requirements of law and is not prejudicial to the certificate holders of the society.

Source: SL 1990, ch 410, § 15.

58-37A-16. Contractual benefits allowed.

A society may provide the following contractual benefits in any form:

(1)    Death benefits;

(2)    Endowment benefits;

(3)    Annuity benefits;

(4)    Temporary or permanent disability benefits;

(5)    Hospital, medical, or nursing benefits;

(6)    Monument or tombstone benefits to the memory of deceased members; and

(7)    Any other benefits as authorized for life and health insurers and which are not inconsistent with this chapter.

A society shall specify in its rules those persons who may be issued, or covered by, the contractual benefits consistent with providing benefits to members and their dependents. A society may provide benefits on the lives of children under the minimum age for adult membership upon application of an adult.

Source: SL 1990, ch 410, § 16.

58-37A-17. Beneficiary designations--Funeral benefits.

The owner of a benefit contract may change the beneficiaries in accordance with the laws or rules of the society unless the owner waives this right by specifically requesting in writing that the beneficiary designation be irrevocable. A society may, through its laws or rules, limit the scope of beneficiary designations and shall provide that no revocable beneficiary may obtain any vested interest in the proceeds of any certificate until the certificate has become due and payable in conformity with the provisions of the benefit contract. A society shall honor the request of the owner of a benefit contract to assign the contract to, or designate an irrevocable beneficiary of, a trust which provides for the payment of funeral or burial related expenses and is established by the insured, the insurer, or owner of the benefit contract, unless the request does not conform to the laws or rules of the society. In no event may the certificate proceeds paid to such a trust exceed the actual funeral or burial related expenses incurred.

A society may provide for the payment of funeral benefits to the extent of the portion of any payment under a certificate as might reasonably appear to be due to any person equitably entitled to it by reason of having incurred expense occasioned by the burial of the member. A society shall honor the request of the owner of a benefit contract to collaterally assign the contract to, or make an irrevocable beneficiary designation of, a funeral home solely for the payment of funeral or burial related expenses, unless the request does not conform to the laws or rules of the society.

If, at the death of any person insured under a benefit contract, there is no lawful beneficiary to whom the proceeds are payable, the amount of the benefit, except to the extent that funeral benefits may be paid as provided in this chapter, is payable to the estate of the deceased insured the same as other property not exempt. However, if the owner of the certificate is other than the insured, the proceeds are payable to the owner.

Source: SL 1990, ch 410, § 17; SL 2005, ch 278, § 1; SL 2010, ch 245, § 1.

58-37A-18. Money or other benefits not attachable for individual debts.

No money or other benefit, charity, relief, or aid to be paid, provided, or rendered by any society, is liable to attachment, garnishment, or other process, or to be seized, taken, appropriated, or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary, or any other person who may have a right thereunder, either before or after payment by the society.

Source: SL 1990, ch 410, § 18.

58-37A-19. Benefit certificates.

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 to be provided by the benefit contract. The certificate, together with any riders or endorsements attached to it, 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 are representations and not warranties. Any waiver of this provision is void.

Any changes, additions or amendments to the laws of the society made or enacted after the issuance of the certificate, bind the owner and the beneficiaries, and govern and control the benefit contract in all respects the same as though the changes, additions, or amendments had been made before and were in force at the time of the application for insurance. However, no change, addition, or amendment may destroy or diminish benefits which the society contracted to give the owner as of the date of issuance.

Any person upon whose life a benefit contract is issued before 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.

A society shall provide in its laws that if its reserves as to any class of certificates become impaired its board of directors 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. If the payment is not made either it stands as an indebtedness against the certificate and shall draw interest not to exceed the rate specified for certificate loans under the certificates or in lieu of or in combination with the indebtedness, 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.

Copies of any of the documents provided for in this section, certified by the secretary or corresponding officer of the society, shall be received in evidence of the terms and conditions thereof.

No certificate may be delivered or issued for delivery in this state unless a copy of the form has been filed with the director in the manner provided for like policies issued by life and health insurers in this state. Every life, accident, health, or disability insurance certificate and every annuity certificate issued on or after one year from January 1, 1991, shall meet the standard contract provision requirements consistent with this chapter for like policies issued by life and health insurers in this state. However, a society may provide for a grace period for payment of premiums of one full month in its certificates. The certificate shall also contain a provision 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, shall 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 expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentation in the application for membership or insurance, may maintain the certificate in force by continuing payment of the premium.

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 rights, obligations, and liabilities incident to and connected with the certificates. Ownership rights before this transfer shall be specified in the certificate.

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

Source: SL 1990, ch 410, § 19.

58-37A-20. Basis for computing value of nonforfeiture benefits.

For certificates issued before one year after January 1, 1991, the value of every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan, or other option granted shall comply with the provisions of law applicable immediately before January 1, 1991.

For certificates issued on or after one year from January 1, 1991, every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan, or other option granted may not be less than the corresponding amount based on the interest rate and mortality tables authorized by the laws of this state for the calculation of these benefits by life and health insurers issuing policies containing like benefits based upon such interest rate and mortality tables.

Source: SL 1990, ch 410, § 20.

58-37A-21. Authorized investments.

A society shall invest its funds only in the investments that are authorized by the laws of this state for the investment of assets of life insurers and subject to the same limitations. Any foreign or alien society permitted or seeking to do business in this state which invests its funds in accordance with the laws of the state, district, territory, country, or province in which it is incorporated, shall be held to meet the requirements of this section for the investment of funds.

Source: SL 1990, ch 410, § 21.

58-37A-22. Permissible use of assets and special funds--Establishing separate accounts and issuing contracts.

All assets shall be held, invested, and disbursed for the use and benefit of the society and no member or beneficiary has individual rights in the assets or is entitled to any apportionment on the surrender of any part of the assets, except as provided in the benefit contract.

A society may create, maintain, invest, disburse, and apply any special fund or funds necessary to carry out any purpose permitted by the laws of the society.

A society may, pursuant to resolution of its supreme governing body, establish and operate separate accounts and issue contracts on a variable basis, subject to the provisions of law regulating life and health insurers establishing the accounts and issuing the contracts. To the extent the society considers it necessary in order to comply with any applicable federal or state laws, or any rules issued under those federal or state laws, the society may adopt special procedures for the conduct of the business and affairs of a separate account, may, for persons having beneficial interests in a separate account, provide special voting and other rights, including special rights and procedures relating to investment policy, investment advisory services, selection of certified public accountants, and selection of a committee to manage the business and affairs of the account, and may issue contracts on a variable basis to which the provisions of the second and third paragraphs in § 58-37A-19 do not apply.

Source: SL 1990, ch 410, § 22.

58-37A-23. Exemption from other insurance laws.

Except as provided in this chapter, societies are exempt from all other provisions of the insurance laws of this state unless they are expressly designated in the law, or unless it is specifically made applicable by this chapter.

Source: SL 1990, ch 410, § 23.

58-37A-24. Exemption from certain taxes.

Every society organized or licensed under this chapter is a charitable and benevolent institution for the purposes of this chapter, and all of its funds are exempt from all and every state, county, district, municipal, and school tax, other than sales taxes, use taxes, and taxes on real estate and office equipment.

Source: SL 1990, ch 410, § 24.

58-37A-25. Standards of valuation for certificates--Maintenance of excess reserves.

Any standards of valuation for certificates issued before one year after January 1, 1991, shall be those provided by the laws applicable immediately before January 1, 1991.

The minimum standards of valuation for certificates issued on or after one year from January 1, 1991, shall be based on the following:

(1)    For certificates of life insurance--the commissioner's standard ordinary mortality tables applicable to life and health insurers in this state; and

(2)    For annuity and pure endowment certificates, for total and permanent disability benefits, for accidental death benefits and for noncancelable accident and health benefits--the tables that are authorized for use by life and health insurers in this state.

All of the above shall be under valuation methods and standards including interest assumptions in accordance with the laws of this state applicable to life and health insurers issuing policies containing like benefits.

The director may accept other standards for valuation if the director finds that the reserves produced by the other standards will not be less in the aggregate than reserves computed in accordance with the minimum valuation standard prescribed in this section. The director may vary the standards of mortality applicable to all benefit contracts on substandard lives or other extra hazardous lives by any society authorized to do business in this state.

Any society, with the consent of the insurance supervisory official of the state of domicile of the society and under such conditions, if any, which the director may impose, may establish and maintain reserves on its certificates in excess of the reserves required under this section, but no contractual rights of any benefit member may be affected by maintaining excess reserves.

Source: SL 1990, ch 410, § 25.

58-37A-26. Annual statement of affairs--Valuation of certificates--Filing requirements.

Every society transacting business in this state shall annually, on or before the first day of March, unless for cause shown the time has been extended by the director, file with the director a true statement of its financial condition, transactions and affairs for the preceding calendar year. A fraternal benefit society receiving premiums, as defined in subdivision 10-44-1(5), in an amount of two hundred thousand dollars or more shall pay a five hundred dollar annual statement filing fee to the state. A fraternal benefit society receiving premiums, as defined in subdivision 10-44-1(5), in an amount less than two hundred thousand dollars, shall pay a one hundred dollar annual statement filing fee to the state. The statement shall be in general form and content as approved by the national association of insurance commissioners for fraternal benefit societies and as supplemented by additional information required by the director.

As a part of the annual statement, each society shall, on or before the first day of March, file with the director a valuation of its certificates in force on December thirty-first last preceding. However, the director may for cause shown, extend the time for filing the valuation for not more than two calendar months. The valuation shall be done in accordance with the standards specified in § 58-37A-25. The valuation and underlying data shall be certified by a qualified actuary or, at the expense of the society, verified by the actuary of the insurance regulatory agency of the state of domicile of the society.

A society neglecting to file the annual statement in the form and within the time provided by this section shall forfeit one hundred dollars for each day during which the neglect continues, and, upon notice by the director to that effect, its authority to do business in this state shall cease while the default continues.

Source: SL 1990, ch 410, § 26.

58-37A-27. License to transact business--Annual expiration and renewal--License fee--Copy of license as evidence.

Societies which are now authorized to transact business in this state, and all societies hereafter licensed, may continue their business until May 1, 1991. The authority of these societies and all societies hereafter licensed, may thereafter be renewed annually, but in all cases to terminate on the first day of the succeeding May. However, a license issued shall continue in effect until the new license is issued or specifically refused. A fraternal benefit society making application for a certificate of authority or original license to transact business in this state shall pay a five hundred dollar license fee to the state. A fraternal benefit society receiving premiums, as defined in subdivision 10-44-1(5), in an amount less than two hundred thousand dollars shall pay a one hundred dollar annual renewal license fee to the state. A fraternal benefit society receiving premiums, as defined in subdivision 10-44-1(5), in an amount of two hundred thousand dollars or more shall pay a five hundred dollar annual renewal license fee to the state. A certified copy or duplicate of the license is prima facie evidence that the licensee is a fraternal benefit society within the meaning of this chapter.

Source: SL 1990, ch 410, § 27.

58-37A-28. Examination of domestic, foreign, and alien societies--Requirements--Responsibility for expenses--Report of examination.

The director, or any person appointed by the director, may examine any domestic, foreign, or alien society transacting or applying for admission to transact business in this state in the same manner as authorized for examination of domestic, foreign, or alien insurers. Requirements of notice and an opportunity to respond before findings are made public as provided in the laws regulating insurers are also applicable to the examination of societies.

The expense of each examination and of each valuation, including compensation and actual expense of examiners, shall be paid by the society examined or whose certificates are valued, upon statements furnished by the director.

A summary of the report of the director and the recommendations or statements of the director that accompany the report, shall be read at the first meeting of the board of directors or corresponding body of the society following their receipt, and if directed by the director, shall also be read at the first meeting of the supreme legislative or governing body of the society following their receipt. A copy of the report, recommendations, and statements of the director shall be furnished by the society to each member of the board of directors or other governing body.

Source: SL 1990, ch 410, § 28.

58-37A-29. Foreign or alien society--Qualifications and procedure for admission to transact business in state.

It is a Class 2 misdemeanor for any foreign or alien society to transact business in this state without a license issued by the director. Any foreign or alien society desiring admission to this state shall have the qualifications required of domestic societies organized under this chapter. Any foreign or alien society may be licensed to transact business in this state upon filing with the director:

(1)    A duly certified copy of its articles of incorporation;

(2)    A copy of its bylaws, certified by its secretary or corresponding officer;

(3)    A power of attorney to the director as prescribed in § 58-37A-35;

(4)    A statement of its business under oath of its president and secretary or corresponding officers in a form prescribed by the director, verified by an examination made by the supervising insurance official of its home state or other state, territory, province, or country, satisfactory to the director;

(5)    Certification from the proper official of its home state, territory, province, or country that the society is legally incorporated and licensed to transact business;

(6)    Copies of its certificate forms; and

(7)    Any other information as the director considers necessary;

and upon a showing that its assets are invested in accordance with the provisions of this chapter.

Source: SL 1990, ch 410, § 29.