1.1                          A bill for an act
  1.2             relating to insurance; Medicare-related coverage; 
  1.3             regulating policy reinstatement; amending Minnesota 
  1.4             Statutes 1994, sections 62A.04, subdivision 2; and 
  1.5             62D.12, by adding a subdivision. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1994, section 62A.04, 
  1.8   subdivision 2, is amended to read: 
  1.9      Subd. 2.  [REQUIRED PROVISIONS.] Except as provided in 
  1.10  subdivision 4 each such policy delivered or issued for delivery 
  1.11  to any person in this state shall contain the provisions 
  1.12  specified in this subdivision in the words in which the same 
  1.13  appear in this section.  The insurer may, at its option, 
  1.14  substitute for one or more of such provisions corresponding 
  1.15  provisions of different wording approved by the commissioner 
  1.16  which are in each instance not less favorable in any respect to 
  1.17  the insured or the beneficiary.  Such provisions shall be 
  1.18  preceded individually by the caption appearing in this 
  1.19  subdivision or, at the option of the insurer, by such 
  1.20  appropriate individual or group captions or subcaptions as the 
  1.21  commissioner may approve. 
  1.22     (1) A provision as follows: 
  1.23     ENTIRE CONTRACT; CHANGES:  This policy, including the 
  1.24  endorsements and the attached papers, if any, constitutes the 
  1.25  entire contract of insurance.  No change in this policy shall be 
  2.1   valid until approved by an executive officer of the insurer and 
  2.2   unless such approval be endorsed hereon or attached hereto.  No 
  2.3   agent has authority to change this policy or to waive any of its 
  2.4   provisions. 
  2.5      (2) A provision as follows: 
  2.6      TIME LIMIT ON CERTAIN DEFENSES:  (a) After two years from 
  2.7   the date of issue of this policy no misstatements, except 
  2.8   fraudulent misstatements, made by the applicant in the 
  2.9   application for such policy shall be used to void the policy or 
  2.10  to deny a claim for loss incurred or disability (as defined in 
  2.11  the policy) commencing after the expiration of such two year 
  2.12  period. 
  2.13     The foregoing policy provision shall not be so construed as 
  2.14  to affect any legal requirement for avoidance of a policy or 
  2.15  denial of a claim during such initial two year period, nor to 
  2.16  limit the application of clauses (1), (2), (3), (4) and (5), in 
  2.17  the event of misstatement with respect to age or occupation or 
  2.18  other insurance.  A policy which the insured has the right to 
  2.19  continue in force subject to its terms by the timely payment of 
  2.20  premium (1) until at least age 50 or, (2) in the case of a 
  2.21  policy issued after age 44, for at least five years from its 
  2.22  date of issue, may contain in lieu of the foregoing the 
  2.23  following provisions (from which the clause in parentheses may 
  2.24  be omitted at the insurer's option) under the caption 
  2.25  "INCONTESTABLE": 
  2.26     After this policy has been in force for a period of two 
  2.27  years during the lifetime of the insured (excluding any period 
  2.28  during which the insured is disabled), it shall become 
  2.29  incontestable as to the statements contained in the application. 
  2.30     (b) No claim for loss incurred or disability (as defined in 
  2.31  the policy) commencing after two years from the date of issue of 
  2.32  this policy shall be reduced or denied on the ground that a 
  2.33  disease or physical condition not excluded from coverage by name 
  2.34  or specific description effective on the date of loss had 
  2.35  existed prior to the effective date of coverage of this policy. 
  2.36     (3) A provision as follows: 
  3.1      GRACE PERIOD:  A grace period of ..... (insert a number not 
  3.2   less than "7" for weekly premium policies, "10" for monthly 
  3.3   premium policies and "31" for all other policies) days will be 
  3.4   granted for the payment of each premium falling due after the 
  3.5   first premium, during which grace period the policy shall 
  3.6   continue in force. 
  3.7      A policy which contains a cancellation provision may add, 
  3.8   at the end of the above provision, 
  3.9      subject to the right of the insurer to cancel in accordance 
  3.10  with the cancellation provision hereof. 
  3.11     A policy in which the insurer reserves the right to refuse 
  3.12  any renewal shall have, at the beginning of the above provision, 
  3.13     Unless not less than five days prior to the premium due 
  3.14  date the insurer has delivered to the insured or has mailed to 
  3.15  the insured's last address as shown by the records of the 
  3.16  insurer written notice of its intention not to renew this policy 
  3.17  beyond the period for which the premium has been accepted. 
  3.18     (4) A provision as follows: 
  3.19     REINSTATEMENT:  If any renewal premium be not paid within 
  3.20  the time granted the insured for payment, a subsequent 
  3.21  acceptance of premium by the insurer or by any agent duly 
  3.22  authorized by the insurer to accept such premium, without 
  3.23  requiring in connection therewith an application for 
  3.24  reinstatement, shall reinstate the policy.  If the insurer or 
  3.25  such agent requires an application for reinstatement and issues 
  3.26  a conditional receipt for the premium tendered, the policy will 
  3.27  be reinstated upon approval of such application by the insurer 
  3.28  or, lacking such approval, upon the forty-fifth day following 
  3.29  the date of such conditional receipt unless the insurer has 
  3.30  previously notified the insured in writing of its disapproval of 
  3.31  such application.  For health plans described in section 
  3.32  62A.011, subdivision 3, clause (10), an insurer must accept 
  3.33  payment of a renewal premium and reinstate the policy, if the 
  3.34  insured applies for reinstatement no later than 60 days after 
  3.35  the due date for the premium payment, unless: 
  3.36     (1) the insured has in the interim left the state or the 
  4.1   insurer's service area; or 
  4.2      (2) the insured has applied for reinstatement on two or 
  4.3   more prior occasions. 
  4.4      The reinstated policy shall cover only loss resulting from 
  4.5   such accidental injury as may be sustained after the date of 
  4.6   reinstatement and loss due to such sickness as may begin more 
  4.7   than ten days after such date.  In all other respects the 
  4.8   insured and insurer shall have the same rights thereunder as 
  4.9   they had under the policy immediately before the due date of the 
  4.10  defaulted premium, subject to any provisions endorsed hereon or 
  4.11  attached hereto in connection with the reinstatement.  Any 
  4.12  premium accepted in connection with a reinstatement shall be 
  4.13  applied to a period for which premium has not been previously 
  4.14  paid, but not to any period more than 60 days prior to the date 
  4.15  of reinstatement.  The last sentence of the above provision may 
  4.16  be omitted from any policy which the insured has the right to 
  4.17  continue in force subject to its terms by the timely payment of 
  4.18  premiums (1) until at least age 50, or, (2) in the case of a 
  4.19  policy issued after age 44, for at least five years from its 
  4.20  date of issue. 
  4.21     (5) A provision as follows: 
  4.22     NOTICE OF CLAIM:  Written notice of claim must be given to 
  4.23  the insurer within 20 days after the occurrence or commencement 
  4.24  of any loss covered by the policy, or as soon thereafter as is 
  4.25  reasonably possible.  Notice given by or on behalf of the 
  4.26  insured or the beneficiary to the insurer at ..... (insert the 
  4.27  location of such office as the insurer may designate for the 
  4.28  purpose), or to any authorized agent of the insurer, with 
  4.29  information sufficient to identify the insured, shall be deemed 
  4.30  notice to the insurer. 
  4.31     In a policy providing a loss-of-time benefit which may be 
  4.32  payable for at least two years, an insurer may at its option 
  4.33  insert the following between the first and second sentences of 
  4.34  the above provision: 
  4.35     Subject to the qualifications set forth below, if the 
  4.36  insured suffers loss of time on account of disability for which 
  5.1   indemnity may be payable for at least two years, the insured 
  5.2   shall, at least once in every six months after having given 
  5.3   notice of claim, give to the insurer notice of continuance of 
  5.4   said disability, except in the event of legal incapacity. The 
  5.5   period of six months following any filing of proof by the 
  5.6   insured or any payment by the insurer on account of such claim 
  5.7   or any denial or liability in whole or in part by the insurer 
  5.8   shall be excluded in applying this provision.  Delay in the 
  5.9   giving of such notice shall not impair the insured's right to 
  5.10  any indemnity which would otherwise have accrued during the 
  5.11  period of six months preceding the date on which such notice is 
  5.12  actually given. 
  5.13     (6) A provision as follows: 
  5.14     CLAIM FORMS:  The insurer, upon receipt of a notice of 
  5.15  claim, will furnish to the claimant such forms as are usually 
  5.16  furnished by it for filing proofs of loss.  If such forms are 
  5.17  not furnished within 15 days after the giving of such notice the 
  5.18  claimant shall be deemed to have complied with the requirements 
  5.19  of this policy as to proof of loss upon submitting, within the 
  5.20  time fixed in the policy for filing proofs of loss, written 
  5.21  proof covering the occurrence, the character and the extent of 
  5.22  the loss for which claim is made. 
  5.23     (7) A provision as follows: 
  5.24     PROOFS OF LOSS:  Written proof of loss must be furnished to 
  5.25  the insurer at its said office in case of claim for loss for 
  5.26  which this policy provides any periodic payment contingent upon 
  5.27  continuing loss within 90 days after the termination of the 
  5.28  period for which the insurer is liable and in case of claim for 
  5.29  any other loss within 90 days after the date of such loss.  
  5.30  Failure to furnish such proof within the time required shall not 
  5.31  invalidate nor reduce any claim if it was not reasonably 
  5.32  possible to give proof within such time, provided such proof is 
  5.33  furnished as soon as reasonably possible and in no event, except 
  5.34  in the absence of legal capacity, later than one year from the 
  5.35  time proof is otherwise required. 
  5.36     (8) A provision as follows: 
  6.1      TIME OF PAYMENT OF CLAIMS:  Indemnities payable under this 
  6.2   policy for any loss other than loss for which this policy 
  6.3   provides periodic payment will be paid immediately upon receipt 
  6.4   of due written proof of such loss.  Subject to due written proof 
  6.5   of loss, all accrued indemnities for loss for which this policy 
  6.6   provides periodic payment will be paid ..... (insert period for 
  6.7   payment which must not be less frequently than monthly) and any 
  6.8   balance remaining unpaid upon the termination of liability will 
  6.9   be paid immediately upon receipt of due written proof. 
  6.10     (9) A provision as follows: 
  6.11     PAYMENT OF CLAIMS:  Indemnity for loss of life will be 
  6.12  payable in accordance with the beneficiary designation and the 
  6.13  provisions respecting such payment which may be prescribed 
  6.14  herein and effective at the time of payment.  If no such 
  6.15  designation or provision is then effective, such indemnity shall 
  6.16  be payable to the estate of the insured. Any other accrued 
  6.17  indemnities unpaid at the insured's death may, at the option of 
  6.18  the insurer, be paid either to such beneficiary or to such 
  6.19  estate.  All other indemnities will be payable to the insured. 
  6.20     The following provisions, or either of them, may be 
  6.21  included with the foregoing provision at the option of the 
  6.22  insurer: 
  6.23     If any indemnity of this policy shall be payable to the 
  6.24  estate of the insured, or to an insured or beneficiary who is a 
  6.25  minor or otherwise not competent to give a valid release, the 
  6.26  insurer may pay such indemnity, up to an amount not exceeding 
  6.27  $..... (insert an amount which shall not exceed $1,000), to any 
  6.28  relative by blood or connection by marriage of the insured or 
  6.29  beneficiary who is deemed by the insurer to be equitably 
  6.30  entitled thereto.  Any payment made by the insurer in good faith 
  6.31  pursuant to this provision shall fully discharge the insurer to 
  6.32  the extent of such payment. 
  6.33     Subject to any written direction of the insured in the 
  6.34  application or otherwise all or a portion of any indemnities 
  6.35  provided by this policy on account of hospital, nursing, 
  6.36  medical, or surgical services may, at the insurer's option and 
  7.1   unless the insured requests otherwise in writing not later than 
  7.2   the time of filing proofs of such loss, be paid directly to the 
  7.3   hospital or person rendering such services; but it is not 
  7.4   required that the service be rendered by a particular hospital 
  7.5   or person. 
  7.6      (10) A provision as follows: 
  7.7      PHYSICAL EXAMINATIONS AND AUTOPSY:  The insurer at its own 
  7.8   expense shall have the right and opportunity to examine the 
  7.9   person of the insured when and as often as it may reasonably 
  7.10  require during the pendency of a claim hereunder and to make an 
  7.11  autopsy in case of death where it is not forbidden by law. 
  7.12     (11) A provision as follows: 
  7.13     LEGAL ACTIONS:  No action at law or in equity shall be 
  7.14  brought to recover on this policy prior to the expiration of 60 
  7.15  days after written proof of loss has been furnished in 
  7.16  accordance with the requirements of this policy.  No such action 
  7.17  shall be brought after the expiration of three years after the 
  7.18  time written proof of loss is required to be furnished. 
  7.19     (12) A provision as follows: 
  7.20     CHANGE OF BENEFICIARY:  Unless the insured makes an 
  7.21  irrevocable designation of beneficiary, the right to change of 
  7.22  beneficiary is reserved to the insured and the consent of the 
  7.23  beneficiary or beneficiaries shall not be requisite to surrender 
  7.24  or assignment of this policy or to any change of beneficiary or 
  7.25  beneficiaries, or to any other changes in this policy.  The 
  7.26  first clause of this provision, relating to the irrevocable 
  7.27  designation of beneficiary, may be omitted at the insurer's 
  7.28  option. 
  7.29     Sec. 2.  Minnesota Statutes 1994, section 62D.12, is 
  7.30  amended by adding a subdivision to read: 
  7.31     Subd. 18.  No health maintenance organization shall fail to 
  7.32  comply with the special reinstatement privilege provided under 
  7.33  section 62A.04, subdivision 2, clause (4), for the 
  7.34  Medicare-related coverage referred to in that clause.