Minnesota Session Laws - 1985, Regular Session

  

                         Laws of Minnesota 1985 

                         CHAPTER 49-S.F.No. 437 
           An act relating to insurance; providing for the 
          regulation of fraternal benefit societies; amending 
          Minnesota Statutes 1984, section 61B.02, subdivision 1;
          proposing coding for new law as Minnesota Statutes, 
          chapter 64B; repealing Minnesota Statutes 1984, 
          sections 64A.01 to 64A.48. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [64B.01] [FRATERNAL BENEFIT SOCIETIES.] 
    Any incorporated society, order, or supreme lodge, without 
capital stock, including one exempted under section 38, 
subdivision 1, clause (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 hereby declared to be a fraternal benefit society. 
    Sec. 2.  [64B.02] [LODGE SYSTEM.] 
    Subdivision 1.  [DEFINITION.] 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 rituals.  Subordinate 
lodges shall be required by the laws of the society to hold 
regular meetings at least once every three months in furtherance 
of the purposes of the society. 
    Subd. 2.  [CHILDREN'S LODGES.] A society may, at its 
option, organize and operate lodges for children under the 
minimum age for adult membership.  Membership and initiation in 
local lodges shall not be required of the children, nor shall 
they have a voice or vote in the management of the society. 
    Sec. 3.  [64B.03] [REPRESENTATIVE FORM OF GOVERNMENT.] 
    (a) A society has a representative form of government when 
it has a supreme governing body constituted in one of the 
following ways: 
    (1) 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 shall 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. 
    (2) 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. 
    (b) A society has a representative form of government when 
the officers of the society are elected either by the supreme 
governing body or by the board of directors. 
    (c) A society has a representative form of government when 
only benefit members are eligible for election to the supreme 
governing body, the board of directors, or any intermediate 
assembly. 
    (d) A society has a representative form of government when 
each voting member shall have one vote and no vote may be cast 
by proxy. 
    Sec. 4.  [64B.04] [TERMS USED.] 
    For the purposes of this chapter, the following terms have 
the meanings given them:  
    (a) "Benefit contract" means the agreement for provision of 
benefits authorized by section 16, as that agreement is 
described in section 19, subdivision 1. 
    (b) "Benefit member" means an adult member who is 
designated by the laws or rules of the society to be a benefit 
member under a benefit contract. 
    (c) "Certificate" means the document issued as written 
evidence of the benefit contract. 
    (d) "Commissioner" means the commissioner of commerce of 
the state of Minnesota or a duly appointed deputy charged with 
the responsibility of administering the insurance laws of the 
state of Minnesota. 
    (e) "Premiums" means premiums, rates, dues, or other 
required contributions by whatever name known, which are payable 
under the certificate. 
    (f) "Laws" means the society's articles of incorporation, 
constitution, and bylaws, however designated. 
    (g) "Rules" means 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. 
    (h) "Society" means fraternal benefit society, unless 
otherwise indicated. 
    (i) "Lodge" means subordinate member units of the society, 
known as camps, courts, councils, branches, or by any other 
designation. 
    Sec. 5.  [64B.05] [PURPOSES AND POWERS.] 
    Subdivision 1.  [PURPOSES.] A society shall operate for the 
benefit of members and their beneficiaries by: 
    (1) providing benefits as specified in section 16; and 
    (2) 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. 
    The purposes provided for in this subdivision may be 
carried out directly by the society, or indirectly through 
subsidiary corporations or affiliated organizations which are to 
be operated primarily for member service.  The subsidiaries 
authorized under section 21 are to be operated primarily for 
investment purposes. 
    Subd. 2.  [ADOPTION OF LAWS AND RULES.] 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 such laws and rules and 
shall have such other powers as are necessary and incidental to 
carrying into effect the objects and purposes of the society. 
    Sec. 6.  [64B.06] [QUALIFICATIONS FOR MEMBERSHIP.] 
    Subdivision 1.  [QUALIFICATIONS.] A society shall specify 
in its laws or rules: 
    (1) eligibility standards for each and every class of 
membership, provided that if benefits are provided on the lives 
of children, the minimum age for adult membership shall be set 
at not less than age 15 and not greater than age 21; 
    (2) the process for admission to membership for each 
membership class; and 
    (3) the rights and privileges of each membership class, 
provided that only benefit members may vote on the management of 
the insurance affairs of the society. 
    Subd. 2.  [SOCIAL MEMBERS.] A society may also admit social 
members who shall have no voice or vote in the management of the 
insurance affairs of the society. 
    Subd. 3.  [MEMBERSHIP RIGHTS.] Membership rights in the 
society are personal to the member and are not assignable. 
    Sec. 7.  [64B.07] [LOCATION OF OFFICE, MEETINGS, 
COMMUNICATIONS TO MEMBERS, GRIEVANCE PROCEDURES.] 
    Subdivision 1.  [LOCATION OF OFFICE; MEETINGS.] 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 where 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 the meetings shall be as valid in all 
respects as if the 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 English. 
    Subd. 2.  [COMMUNICATIONS.] (a) 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.  The required 
reports, notices, and statements 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. 
    (b) Not later than June 1 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, 
in lieu thereof, the synopsis may be published in the society's 
official publication. 
    Subd. 3.  [GRIEVANCE PROCEDURES.] A society may provide in 
its laws or rules for grievance or complaint procedures for 
members. 
    Sec. 8.  [64B.08] [PERSONAL LIABILITY; INDEMNIFICATION; 
INSURANCE.] 
    Subdivision 1.  [NO PERSONAL LIABILITY.] The officers and 
members of the supreme governing body or any subordinate body of 
a society shall not be personally liable for any benefits 
provided by a society. 
    Subd. 2.  [INDEMNIFICATION.] A person may be indemnified 
and reimbursed by a 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 by reason of the fact that 
he or she is or was a director, officer, employee, or agent of 
the society or of any firm, corporation, or organization which 
he or she served in any capacity at the request of the society. 
A person shall not be so indemnified or reimbursed (1) in 
relation to any matter in the action, suit, or proceeding as to 
which he or she shall finally be adjudged to be or have been 
guilty of breach of a duty as a director, officer, employee, or 
agent of the society, or (2) in relation to any matter in the 
action, suit, or proceeding, or threat thereof, which has been 
made the subject of a compromise settlement, unless in either 
such 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, in addition, had no reasonable cause to believe that 
his or her 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 clause (1) or (2) 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 shall not in itself create 
a conclusive presumption that the person did not meet the 
standard of conduct required in order to justify indemnification 
and reimbursement.  The foregoing right of indemnification and 
reimbursement shall not be exclusive of other rights to which 
the person may be entitled as a matter of law and shall inure to 
the benefit of his or her heirs, executors, and administrators. 
    Subd. 3.  [INSURANCE.] A society may purchase and maintain 
insurance on behalf of any person who is or was a director, 
officer, employee, or agent of the society, or who is or was 
serving at the request of the society as a director, officer, 
employee, or agent of any other firm, corporation, or 
organization against any liability asserted against the person 
and incurred by him or her in any such capacity or arising out 
of his or her status as such, whether or not the society would 
have the power to indemnify the person against such liability 
under this section. 
    Sec. 9.  [64B.09] [WAIVER.] 
    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.  The provision 
is binding on the society and every member and beneficiary of a 
member. 
    Sec. 10.  [64B.10] [ORGANIZATION.] 
    Subdivision 1.  [REGULATION.] A domestic society organized 
on or after the effective date of this chapter shall be formed 
according to subdivisions 2 to 6. 
    Subd. 2.  [FORMATION.] 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 make, sign, and 
acknowledge before some officer competent to take acknowledgment 
of deeds, articles of incorporation in which shall be stated: 
    (1) the proposed corporate name of the society, which shall 
not so closely resemble the name of any society or insurance 
company as to be misleading or confusing; 
    (2) the purposes for which it is being formed and the mode 
in which its corporate powers are to be exercised.  These 
purposes shall not include more liberal powers than are granted 
by this chapter; 
    (3) 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 such 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. 
    Subd. 3.  [FILING OF ARTICLES AND DOCUMENTS.] 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 commissioner, who may require 
such further information as the commissioner deems necessary. 
The bond with sureties approved by the commissioner shall be in 
such amount, not less than $300,000 nor more than $1,500,000, as 
required by the commissioner.  All documents filed are to be in 
English.  If the purposes of the society conform to the 
requirements of this chapter and all provisions of the law have 
been complied with, the commissioner shall so certify, retain 
and file the articles of incorporation, and furnish the 
incorporators a preliminary certificate of authority authorizing 
the society to solicit members as hereinafter provided. 
    Subd. 4.  [INITIAL SOLICITATIONS AND QUALIFICATIONS.] No 
preliminary certificate of authority granted under this section 
shall be valid after one year from its date or after such 
further period, not exceeding one year, as may be authorized by 
the commissioner upon cause shown, unless the 500 applicants 
hereinafter required have been secured and the organization has 
been completed as herein provided.  The articles of 
incorporation and all other proceedings thereunder shall become 
null and void in one year from the date of the preliminary 
certificate of authority, or at the expiration of the extended 
period, unless the society shall have completed its organization 
and received a certificate of authority to do business. 
    Subd. 5.  [TIME FOR COMPLETING ORGANIZATION.] Upon receipt 
of a preliminary certificate of authority from the commissioner, 
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 shall incur any liability 
other than for the return of such 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 not less than 500 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 500 applicants have been admitted; 
    (3) there has been submitted to the commissioner, 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 shall have been shown to the commissioner, by sworn 
statement of the treasurer, or corresponding officer of such 
society, that at least 500 applicants have each paid in cash at 
least one regular monthly premium as herein provided, which 
premiums in the aggregate shall amount to at least $150,000. 
Advance premiums shall be held in trust during the period of 
organization and if the society has not qualified for a 
certificate of authority within one year, the premiums shall be 
returned to the applicants. 
    Subd. 6.  [CERTIFICATE OF COMPLIANCE; CERTIFIED COPY AS 
EVIDENCE.] The commissioner may make such examination and 
require such further information as the commissioner deems 
advisable.  Upon presentation of satisfactory evidence that the 
society has complied with all the provisions of law, the 
commissioner shall issue to the society a certificate of 
authority to that effect and that the society is authorized to 
transact business pursuant to this chapter.  The certificate of 
authority is prima facie evidence of the existence of the 
society at the date of the certificate.  The commissioner 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. 
    Subd. 7.  [CORPORATE POWERS RETAINED.] An incorporated 
society authorized to transact business in this state at the 
time this chapter becomes effective shall not be required to 
reincorporate. 
    Sec. 11.  [64B.11] [AMENDMENTS TO LAWS.] 
    Subdivision 1.  [AMENDMENT PROCEDURE.] A domestic society 
may amend its laws in accordance with the provisions thereof by 
action of its supreme governing body at any regular or special 
meeting thereof or, if its laws so provide, by referendum.  The 
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 shall 
be adopted unless, within six months from the date of 
submission, a majority of the members voting shall have 
signified their consent to the amendment by one of the methods 
herein specified. 
    Subd. 2.  [APPROVAL OF AMENDMENTS.] No amendment to the 
laws of any domestic society shall take effect unless approved 
by the commissioner who shall approve the amendment if the 
commissioner 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 commissioner disapproves the amendment within 60 days after 
the filing of same, the amendment shall be considered approved. 
The approval or disapproval by the commissioner shall be in 
writing and mailed to the secretary or corresponding officer of 
the society at its principal office.  In case the commissioner 
disapproves the amendment, the reasons therefor shall be stated 
in the written notice. 
    Subd. 3.  [PUBLICATION OF AMENDMENTS.] Within 90 days from 
the approval thereof by the commissioner, all amendments, or a 
synopsis thereof, 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 any amendments or 
synopsis thereof, stating facts which show that same have been 
duly addressed and mailed, shall be prima facie evidence that 
the amendments or synopsis thereof, have been furnished the 
addressee. 
    Subd. 4.  [FILING OF AMENDMENTS BY FOREIGN OR ALIEN 
SOCIETY.] Every foreign or alien society authorized to do 
business in this state shall file with the commissioner a duly 
certified copy of all amendments of, or additions to, its laws 
within 90 days after the enactment of same. 
    Subd. 5.  [CERTIFIED COPIES OF AMENDMENTS.] Printed copies 
of the laws as amended, certified by the secretary or 
corresponding officer of the society, shall be prima facie 
evidence of their legal adoption. 
    Sec. 12.  [64B.12] [INSTITUTIONS.] 
    A society may create, maintain, and operate, or may 
establish organizations to operate, not for profit institutions 
to further the purposes permitted by section 5, subdivision 1, 
clause (2).  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 
every annual statement. 
    Sec. 13.  [64B.13] [REINSURANCE.] 
    (a) A domestic society may, by a reinsurance agreement, 
cede any individual risk or risks in whole or in part 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 so authorized, one which is approved by 
the commissioner, but no such society may reinsure substantially 
all of its insurance in force without the written permission of 
the commissioner.  It may take credit for the reserves on the 
ceded risks to the extent reinsured, but no credit shall 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 the effective date of this 
chapter, 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.  
    (b) Notwithstanding the limitation in paragraph (a), a 
society may reinsure the risks of another society in a 
consolidation or merger approved by the commissioner under 
section 14. 
    Sec. 14.  [64B.14] [CONSOLIDATIONS AND MERGERS.] 
    Subdivision 1.  [REQUIREMENTS.] A domestic society may 
consolidate or merge with any other society by complying with 
the provisions of this section.  It shall file with the 
commissioner: 
    (1) a certified copy of the written contract containing 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 commissioner but not 
earlier than December 31 next preceding the date of the contract;
    (3) a certificate of the officers, duly 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 such body, or, if the society's laws so permit, 
by mail; and 
    (4) evidence that at least 60 days prior to the action of 
the supreme governing body of each society, the text of the 
contract has been furnished to all members of each society 
either by mail or by publication in full in the official 
publication of each society. 
    Subd. 2.  [APPROVAL BY COMMISSIONER.] If the commissioner 
finds that the contract is in conformity with 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 commissioner shall approve the contract and issue a 
certificate to such effect.  Upon approval, the contract shall 
be in full force and effect unless any society which is a party 
to the contract is incorporated under the laws of any other 
state or territory.  In the event the consolidation or merger 
shall not become effective unless and until it has been approved 
as provided by the laws of the state or territory and a 
certificate of approval filed with the commissioner of this 
state or, if the laws of the state or territory contain no such 
provision, then the consolidation or merger shall not become 
effective unless and until it has been approved by the 
commissioner of such state or territory and a certificate of the 
approval filed with the commissioner of this state. 
    Subd. 3.  [PAYMENT OF EXPENSES.] (a) All necessary and 
actual expenses and compensation incident to all the proceedings 
provided hereby shall be paid as provided by the contract of 
merger, consolidation, or reinsurance.  An itemized statement of 
all these expenses shall be filed with the commissioner or 
commissioners, as the case may be, subject to approval, and when 
approved the same shall be binding on the parties. 
    (b) No brokerage or commission shall be included in the 
expenses and compensation or shall be paid to any person by 
either of the parties to the contract in connection with the 
negotiation therefor, or execution thereof. 
    (c) No compensation shall be paid to any officer or 
employee of either of the parties to the contract for, directly 
or indirectly, aiding in effecting the contract of merger, 
consolidation, or reinsurance. 
    (d) Except as fully expressed in the contract of merger, 
consolidation, or reinsurance, or the approved itemized 
statement of expenses, as approved by the commissioner or 
commissioners, as the case may be, no compensation shall be paid 
to any person and no officer or employee of the state shall 
receive any compensation, directly or indirectly, for in any 
manner aiding, promoting, or assisting in any merger, 
consolidation, or reinsurance. 
    Subd. 4.  [EFFECT OF CONSOLIDATION OR MERGER.] 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 thereunto belonging shall be 
vested in the society resulting from or remaining after the 
consolidation or merger without any other instrument, except 
that conveyances of real property may be evidenced by proper 
deeds, and the title to any real estate or interest therein, 
vested under the laws of this state in any of the societies 
consolidated or merged, shall not revert or be in any way 
impaired by reason of the consolidation or merger, but shall 
vest absolutely in the society resulting from or remaining after 
the consolidation or merger. 
    Subd. 5.  [AFFIDAVIT OF OFFICER.] 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 
duly addressed and mailed, shall be prima facie evidence that 
the notice or document has been furnished the addressees. 
    Sec. 15.  [64B.15] [CONVERSION OF FRATERNAL BENEFIT SOCIETY 
INTO MUTUAL LIFE INSURANCE COMPANY.] 
    A domestic fraternal benefit society may be converted and 
licensed as a mutual life insurance company by compliance with 
all the financial requirements for a mutual life insurance 
company.  A plan of conversion shall be prepared in writing by 
the board of directors setting forth in full 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 shall be necessary for the approval of the 
plan.  No conversion shall take effect unless and until approved 
by the commissioner who may give the approval if the 
commissioner finds that the proposed change is in conformity 
with the requirements of law and not prejudicial to the 
certificate holders of the society. 
    Sec. 16.  [64B.16] [BENEFITS.] 
    Subdivision 1.  [SCOPE.] A society may provide the 
following contractual benefits on an individual or nongroup 
basis: 
    (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) such other benefits as authorized for life insurers and 
which are not inconsistent with this chapter. 
    Subd. 2.  [PERSONS ELIGIBLE FOR BENEFITS; CHILDREN'S 
BENEFITS.] A society shall specify in its rules those persons 
who may be issued, or covered by, the contractual benefits in 
subdivision 1, 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 person. 
    Subd. 3.  [BENEFIT AUTHORITY CONTINUED.] Subdivision 1, 
clauses (1) to (6), continues the benefit authority provided in 
Minnesota Statutes 1984, chapter 64A.  Subdivision 1, clause 
(7), provides that the current parity between the types of 
products that fraternals and other life insurers can provide be 
maintained in the future. Under this provision, any new product 
authorities granted to life insurers will also be available to 
fraternals if the new products are not inconsistent with 
fraternal code provisions, such as membership, and 
representative forms of government.  
    Sec. 17.  [64B.17] [BENEFICIARIES.] 
    Subdivision 1.  [CHANGE; ELIGIBILITY; RIGHTS.] The owner of 
a benefit contract may at all times change the beneficiary or 
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 shall have or 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. 
    Subd. 2.  [SUPPORT AND OTHER PAYMENTS.] The member may at 
any time, by written instrument, authorize the society to 
provide and pay for the support, care, medical and surgical 
treatment, and funeral of a member and deduct the amount so 
paid, with legal interest, from the net reserve to the credit of 
the member's certificate or from the amount otherwise payable 
under the certificate to the beneficiary, or the member may, at 
any time, designate the society as beneficiary and, in such 
case, the society shall use this reserve or amount to the extent 
necessary for the purpose aforesaid. 
    Subd. 3.  [ABSENCE OF DESIGNATION.] If, at the death of any 
person insured under a benefit contract, there is no lawful 
beneficiary to whom the proceeds shall be payable, the amount of 
the benefit, except to the extent that funeral benefits may be 
paid, shall be payable to the personal representative of the 
deceased insured, provided that if the owner of the certificate 
is other than the insured, the proceeds shall be payable to the 
owner. 
    Sec. 18.  [64B.18] [BENEFITS NOT ATTACHABLE.] 
    Except as provided in chapter 256B, the money or other 
benefits, charity, relief, or aid to be paid, provided, or 
rendered by any society authorized to do business under this 
chapter shall, neither before nor after being paid, be liable to 
attachment, garnishment, or other process and shall not be 
ceased, taken, appropriated, or applied by any legal or 
equitable process or operation of laws to pay any debt or 
liability of a certificate holder or of any beneficiary named in 
the certificate, or of any person who may have any right 
thereunder.  
    Sec. 19.  [64B.19] [BENEFIT CONTRACT.] 
    Subdivision 1.  [CERTIFICATE.] 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 
provided thereby.  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 thereof, 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 shall be representations and not 
warranties.  Any waiver of this provision shall be void. 
    Subd. 2.  [AMENDMENTS TO LAWS.] Any changes, additions, or 
amendments to the laws of the society duly made or enacted 
subsequent to the issuance of the certificate, shall bind the 
owner and the beneficiaries, and shall govern and control the 
benefit contract in all respects the same as though the changes, 
additions, or amendments had been made prior to and were in 
force at the time of the application for insurance, except that 
no change, addition, or amendment shall destroy or diminish 
benefits that the society contracted to give the owner as of the 
date of issuance. 
    Subd. 3.  [MINOR BOUND BY CERTIFICATE.] A person upon whose 
life a benefit contract is issued prior to 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 the application. 
    Subd. 4.  [EXTRA ASSESSMENTS.] A society shall provide in 
its laws that if its reserves as to all or 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 such deficiency as ascertained by its board, and 
that if the payment is not made either (1) it shall stand as an 
indebtedness against the certificate and draw interest not to 
exceed the rate specified for certificate loans under the 
certificates; or (2) in lieu of or in combination with (1), 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. 
    Subd. 5.  [CERTIFIED COPY AS EVIDENCE.] Copies of any of 
the documents mentioned in this section, certified by the 
secretary or corresponding officer of the society, shall be 
received in evidence of the terms and conditions thereof. 
    Subd. 6.  [FILING OF CERTIFICATES; CONTENTS.] No 
certificate shall be delivered or issued for delivery in this 
state unless a copy of the form has been filed with the 
commissioner in the manner provided for like policies issued by 
life insurers in this state.  Every life, accident, health, or 
disability insurance certificate and every annuity certificate 
issued on or after one year from the effective date of this 
chapter shall meet the standard contract provision requirements 
not inconsistent with this chapter for like policies issued by 
life insurers in this state, except that 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, will 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 so 
expelled or suspended, except for nonpayment of a premium or 
within the contestable period for material misrepresentation in 
the application for membership or insurance, shall have the 
privilege of maintaining the certificate in force by continuing 
payment of the required premium. 
    Subd. 7.  [OWNERSHIP OF CERTIFICATES.] Benefit contracts 
issued on the lives of persons below the society's minimum age 
for adult membership may provide for transfer of control or 
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 such certificates and all rights, obligations, and 
liabilities incident thereto and connected therewith.  Ownership 
rights prior to the transfer shall be specified in the 
certificate. 
    Subd. 8.  [ASSIGNMENT OF CERTIFICATES.] A society may 
specify the terms and conditions on which benefit contracts may 
be assigned. 
    Subd. 9.  [PAYMENT TO WELFARE RECIPIENTS.] No society 
authorized to do business in this state which provides or pays 
for any health care benefits shall issue any certificate which 
contains any provision denying or reducing benefits because 
services are rendered to a certificate holder or beneficiary who 
is eligible for or receiving medical assistance pursuant to 
chapter 256B or services pursuant to section 252.27; 260.251, 
subdivision 1a; or 393.07, subdivision 1 or 2. 
    Subd. 10.  [DISABILITY OFFSET PROHIBITED.] No certificate, 
contract, or other evidence of coverage entered into, issued, 
amended, renewed, or delivered on or after January 1, 1976, 
shall contain any provision offsetting, or in any other manner 
reducing, any benefit to a member or other beneficiary by the 
amount of, or in any proportion to any increase in disability 
benefits received or receivable under the Social Security Act, 
United States Code, title 42, section 301 et seq., as amended 
subsequent to the date of commencement of the benefit. 
    Sec. 20.  [64B.20] [NONFORFEITURE BENEFITS, CASH SURRENDER 
VALUES, CERTIFICATE LOANS, AND OTHER OPTIONS.] 
    Subdivision 1.  [PRIOR CERTIFICATES.] For certificates 
issued prior to one year after the effective date of this 
chapter, 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 prior to the effective date of this chapter. 
     Subd. 2.  [FUTURE CERTIFICATES.] For certificates issued on 
or after one year from the effective date of this chapter for 
which reserves are computed on the Commissioner's 1941 Standard 
Ordinary Mortality Table, the Commissioner's 1941 Standard 
Industrial Table, the Commissioner's 1958 Standard Ordinary 
Mortality Table, or the Commissioner's 1980 Standard Mortality 
Table, or any more recent table made applicable to life 
insurers, every paid-up nonforfeiture benefit and the amount of 
any cash surrender value, loan, or other option granted shall 
not be less than the corresponding amount ascertained in 
accordance with the laws of this state applicable to life 
insurers issuing policies containing like benefits based upon 
such tables. 
     Sec. 21.  [64B.21] [INVESTMENTS.] 
    A society shall invest its funds only in investments 
authorized by the laws of this state for the investment of 
assets of life insurers and subject to the limitations thereon. 
Any foreign or alien society permitted or seeking to do business 
in this state that 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. 
     Sec. 22.  [64B.22] [FUNDS.] 
     Subdivision 1.  [ASSETS.] All assets 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 on the 
surrender of any part thereof, except as provided in the benefit 
contract. 
     Subd. 2.  [SPECIAL FUNDS.] 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. 
    Subd. 3.  [SEPARATE ACCOUNTS.] A society may, pursuant to 
resolution of its supreme governing body, establish and operate 
one or more separate accounts and issue contracts on a variable 
basis, subject to the provisions of law regulating life insurers 
establishing such accounts and issuing such contracts.  To the 
extent the society deems it necessary in order to comply with 
any applicable federal or state laws, or any rules issued 
thereunder, the society may adopt special procedures for the 
conduct of the business and affairs of a separate account, may, 
for persons having beneficial interests therein, provide special 
voting and other rights, including without limitation special 
rights and procedures relating to investment policy, investment 
advisor 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 section 19, subdivisions 2 and 4 shall not apply. 
     Subd. 4.  [AUTHORITY OF FRATERNAL BENEFIT SOCIETIES 
CLARIFIED.] Subdivision 3 clarifies the authority of a fraternal 
benefit society to establish separate accounts, and to provide 
that the open contract and maintenance of solvency provisions 
may be deleted from contracts issued on a variable basis if so 
required to be consistent with other state or federal laws 
regulating variable contracts.  The establishment of a separate 
account for variable products may be difficult to integrate into 
a society's existing mechanisms of representative form of 
government, so the statute emphasizes the care that must be 
taken in the decision by requiring that the supreme governing 
body authorize the establishment of the account.  
    Sec. 23.  [64B.23] [EXEMPTIONS.] 
    Subdivision 1.  [APPLICATION OF CHAPTER.] Except as herein 
provided, the societies shall be governed exclusively by this 
chapter and shall be exempt from all provisions of the insurance 
laws of this state, not only in governmental relations with the 
state, but for every other purpose, and no law hereafter passed 
shall apply to them unless they be expressly designated therein. 
     Subd. 2.  [DOMESTIC AND FOREIGN SOCIETIES.] All provisions 
of this chapter, except as otherwise provided, shall be taken 
and construed as applying to both domestic and foreign societies.
     Subd. 3.  [APPLICATION OF CERTAIN SECTIONS.] The provisions 
of sections 61A.39 to 61A.50 shall not apply to fraternal 
benefit societies nor shall anything therein be construed as 
governing or in any way regulating these societies. 
    Sec. 24.  [64B.24] [TAXATION.] 
    Fraternal benefit societies are declared to be charitable 
institutions, and the property held and used for lodge purposes, 
and the funds of these societies shall be exempt from taxation 
under the general tax or revenue laws of this state, except that 
the real estate of the society shall be taxable. 
    Sec. 25.  [64B.25] [VALUATION.] 
     Subdivision 1.  [PRIOR CERTIFICATES.] Standards of 
valuation for certificates issued prior to one year after the 
effective date of this chapter shall be those provided by the 
laws applicable immediately prior to the effective date of this 
chapter. 
     Subd. 2.  [FUTURE CERTIFICATES.] The minimum standards of 
valuation for certificates issued on or after one year from the 
effective date of this chapter shall be based on the following 
tables: 
    (1) For certificates of life insurance:  The Commissioner's 
1941 Standard Ordinary Mortality Table, the Commissioner's 1941 
Standard Industrial Mortality Table, the Commissioner's 1958 
Standard Ordinary Mortality Table, the Commissioner's 1980 
Standard Ordinary Mortality Table, or any more recent table made 
applicable to life insurers; 
    (2) For annuity and pure endowment certificates, total and 
permanent disability benefits, accidental death benefits, and 
noncancellable accident and health benefits:  Such tables as are 
authorized for use by life 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 insurers issuing 
policies containing like benefits. 
    Subd. 3.  [OTHER STANDARDS.] The commissioner may, in his 
or her discretion, accept other standards for valuation if the 
commissioner finds that the reserves produced thereby will not 
be less in the aggregate than reserves computed in accordance 
with the minimum valuation standard herein prescribed.  The 
commissioner may, in his or her discretion, 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. 
    Subd. 4.  [EXCESS RESERVES.] Any society, with the consent 
of the commissioner of the state of domicile of the society and 
under the conditions, if any, that the commissioner may impose, 
may establish and maintain reserves on its certificates in 
excess of the reserves required thereunder, but the contractual 
rights of any benefit member shall not be affected thereby. 
    Sec. 26.  [64B.26] [REPORTS.] 
    Reports shall be filed in accordance with the provisions of 
this section. 
    Every society transacting business in this state shall 
annually, on or before the first day of March, unless for cause 
shown such time has been extended by the commissioner, file with 
the commissioner a true statement of its financial condition, 
transactions, and affairs for the preceding calendar year.  The 
statement shall be in general form and context as approved by 
the National Association of Insurance Commissioners for 
fraternal benefit societies and as supplemented by additional 
information required by the commissioner. 
    As part of the annual statement herein required, each 
society shall, on or before the first day of March, file with 
the commissioner a valuation of its certificates in force on 
December 31 last preceding, provided the commissioner of 
insurance may, in his or her discretion 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 section 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 
department of insurance 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 
$100 for each day during which the neglect continues, and, upon 
notice by the commissioner to that effect, its authority to do 
business in this state shall cease while the default continues.  
    Sec. 27.  [64B.27] [ANNUAL LICENSE.] 
    Societies that are now authorized to transact business in 
this state may continue this business until the first day of 
June next succeeding the effective date of this chapter.  The 
authority of the societies and all societies hereafter licensed, 
may thereafter be renewed annually, subject to section 60A.13, 
subdivisions 1, 5, 6, and 7.  However, a license so issued shall 
continue in full force and effect until the new license is 
issued or specifically refused.  For each license or renewal the 
society shall pay the commissioner $20.  A duly 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. 
    Sec. 28.  [64B.28] [EXAMINATION OF SOCIETIES; NO ADVERSE 
PUBLICATIONS.] 
    Subdivision 1.  [PROCEDURE.] The commissioner, or any 
person he or she may appoint, 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 shall also be applicable to the examination of 
societies. 
    Subd. 2.  [EXPENSE.] 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 
commissioner. 
    Sec. 29.  [64B.29] [FOREIGN OR ALIEN SOCIETY; ADMISSION.] 
    No foreign or alien society shall transact business in this 
state without a license issued by the commissioner.  Any society 
desiring admission to this state shall comply substantially with 
the requirements and limitations of this chapter applicable to 
domestic societies.  A society may be licensed to transact 
business in this state upon filing with the commissioner: 
    (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 commissioner as prescribed 
in section 35; 
    (4) a statement of its business under oath of its president 
and secretary or corresponding officers in a form prescribed by 
the commissioner, duly verified by an examination made by the 
supervising insurance official of its home state or other state, 
territory, province, or country, satisfactory to the 
commissioner of this state; 
    (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 therein; 
    (6) copies of its certificate forms; 
    (7) such other information as the commissioner may deem 
necessary and upon a showing that its assets are invested in 
accordance with the provisions of this chapter. 
    Sec. 30.  [64B.30] [DOMESTIC ASSOCIATIONS; EXAMINATION; 
REHABILITATION; DISSOLUTION.] 
    Subdivision 1.  [VISITATION AND EXAMINATION.] The 
commissioner, or any person he may appoint, shall have the power 
of visitation and examination into the affairs of any domestic 
society.  The commissioner shall conduct an examination at least 
once in every three years.  He may: 
    (1) Employ assistance for the purposes of examination and 
he, or any person he may appoint, shall have free access to any 
books, papers, and documents that relate to the business of the 
association; and 
    (2) Summon and qualify as witnesses, under oath, and 
examine its officers, agents, and employees, or other persons, 
in relation to the affairs, transactions, and condition of the 
association. 
    Subd. 2.  [CONDITIONS.] Wherever the commissioner is 
satisfied that any of the conditions exist as stated in chapter 
60B, he may proceed as provided therein.  
    Sec. 31.  [64B.31] [SUSPENSION, REVOCATION, OR REFUSAL OF 
LICENSE OF FOREIGN OR ALIEN SOCIETY.] 
    Subdivision 1.  [GROUNDS FOR REVOCATION.] When the 
commissioner upon investigation finds that a foreign or alien 
society transacting or applying to transact business in this 
state: 
    (1) has exceeded its powers; 
    (2) has failed to comply with any of the provisions of this 
chapter; 
    (3) is not fulfilling its contracts in good faith; or 
    (4) is conducting its business fraudulently or in a manner 
hazardous to its members or creditors or the public;  
the commissioner shall notify the society of the deficiency or 
deficiencies and state in writing the reasons for his or her 
dissatisfaction.  The commissioner shall at once issue a written 
notice to the society requiring that the deficiency or 
deficiencies which exist are corrected.  After the notice the 
society shall have a 30-day period in which to comply with the 
commissioner's request for correction, and if the society fails 
to comply the commissioner shall notify the society of the 
findings of noncompliance and require the society to show cause 
on a date named why its license should not be suspended, 
revoked, or refused.  If on the date the society does not 
present good and sufficient reason why its authority to do 
business in this state should not be suspended, revoked, or 
refused, the commissioner may suspend or refuse the license of 
the society to do business in this state until satisfactory 
evidence is furnished to the commissioner that the suspension or 
refusal should be withdrawn or the commissioner may revoke the 
authority of the society to do business in this state. 
    Subd. 2.  [CONTINUANCE OF CONTRACTS.] Nothing contained in 
this section shall be taken or construed as preventing any 
society from continuing in good faith all contracts made in this 
state during the time the society was legally authorized to 
transact business herein. 
    Sec. 32.  [64B.32] [INJUNCTION.] 
    No application or petition for injunction against any 
domestic, foreign, or alien society, or lodge thereof, shall be 
recognized in any court of this state unless made by the 
attorney general upon request of the commissioner.  
    Sec. 33.  [64B.33] [LICENSING OF AGENTS.] 
    Agents of societies shall be licensed in accordance with 
the provisions of chapter 60A regulating the licensing, 
revocation, suspension, or termination of license of resident 
and nonresident agents, except as otherwise provided in section 
60A.17, subdivision 1c. 
    Sec. 34.  [64B.34] [UNFAIR METHODS OF COMPETITION AND 
UNFAIR AND DECEPTIVE ACTS AND PRACTICES.] 
    Every society authorized to do business in this state shall 
be subject to the provisions of chapter 72A relating to 
prohibitions and penalties in general and the regulation of 
trade practices; provided, however, that nothing in those 
provisions shall be construed as applying to or affecting the 
right of any society to determine its eligibility requirements 
for membership, or be construed as applying to or affecting the 
offering of benefits exclusively to members or persons eligible 
for membership in the society by a subsidiary corporation or 
affiliated organization of the society. 
    Sec. 35.  [64B.35] [SERVICE OF PROCESS.] 
    Subdivision 1.  [APPOINTMENT OF COMMISSIONER AS 
ATTORNEY.] Every society authorized to do business in this state 
shall appoint in writing the commissioner and each successor in 
office to be its true and lawful attorney upon whom all lawful 
process in any action or proceeding against it shall be served, 
and shall agree in writing that any lawful process against it 
which is served on the attorney shall be of the same legal force 
and validity as if served upon the society, and that the 
authority shall continue in force so long as any liability 
remains outstanding in this state.  Copies of the appointment, 
certified by the commissioner, shall be deemed sufficient 
evidence thereof and shall be admitted in evidence with the same 
force and effect as the original thereof might be admitted. 
    Subd. 2.  [SERVICE.] Service shall only be made upon the 
commissioner, or if absent, upon the person in charge of the 
commissioner's office.  It shall be made in duplicate and shall 
constitute sufficient service upon the society.  When legal 
process against a society is served upon the commissioner, the 
commissioner shall immediately forward one of the duplicate 
copies by registered mail, prepaid, directed to the secretary or 
corresponding officer.  No service shall require a society to 
file its answer, pleading, or defense in less than 30 days from 
the date of mailing the copy of the service to a society. Legal 
process shall not be served upon a society except in the manner 
herein provided.  At the time of serving any process upon the 
commissioner, the plaintiff or complainant in the action shall 
pay to the commissioner a fee as prescribed in section 60A.14. 
     Sec. 36.  [64B.36] [REVIEW.] 
     All decisions and findings of the commissioner made under 
the provisions of this chapter shall be subject to review by 
proper proceedings in any court of competent jurisdiction in 
this state. 
    Sec. 37.  [64B.37] [PENALTIES.] 
    Subdivision 1.  [VIOLATIONS GENERALLY.] Any person 
violating the provisions of section 14, subdivisions 2 and 3, 
shall be guilty of a felony; and, upon conviction, liable to a 
fine of not more than $10,000, or to imprisonment for not more 
than five years, or to both fine and imprisonment. 
    Subd. 2.  [FALSE OR FRAUDULENT STATEMENTS OR 
REPRESENTATIONS.] Any person, officer, member, or examining 
physician, who shall knowingly or willfully make any false or 
fraudulent statement or representation in, or with reference to, 
any application for membership for the purpose of obtaining 
money from or benefit in any society transacting business under 
this chapter shall be guilty of a misdemeanor: 
    (1) any person who shall willfully make a false statement 
of any material fact or thing in a sworn statement as to the 
death or disability of a certificate holder in any such society, 
for the purpose of procuring payment of a benefit named in the 
certificate of such holder, and any person who shall willfully 
make any false statement and any verified report or declaration 
under oath, required or authorized under this article, shall be 
guilty of perjury and shall be proceeded against and punished as 
provided by the statutes of this state in relation to the crime 
of perjury; 
    (2) any person who shall solicit membership for, or in any 
manner assist in procuring membership in, any society not 
licensed to do business in this state, or who shall solicit 
membership for or in any manner assist in procuring membership 
in, any such society not authorized to do business in this 
state, shall be guilty of a misdemeanor; and, upon conviction 
thereof, punished by fine of not more than $100; 
    (3) any society, or any officer, agent, or employee 
thereof, neglecting, refusing to comply with, or violating, any 
of the provisions of this chapter, the penalty for which 
neglect, refusal, or violation is not specified in this section, 
shall be fined not exceeding $100 upon conviction thereof. 
    Sec. 38.  [64B.38] [CERTAIN ORGANIZATIONS EXEMPT.] 
    Subdivision 1.  [APPLICATION OF CHAPTER.] Nothing contained 
in this chapter shall be construed to affect or apply to: 
    (1) grand or subordinate lodges of Masons, Odd Fellows, 
Elks, or Knights of Pythias, exclusive of the insurance branch 
of the supreme lodge of Knights of Pythias, or to similar orders 
which do not issue insurance certificates; 
    (2) to associations which admit to membership only persons 
engaged in one or more hazardous occupations, in the same or 
similar lines of business; 
    (3) to local lodges of an association which was doing 
business in this state at the time of the enactment of Laws 
1907, chapter 345, that provide death benefits not exceeding 
$600 to any one person, or disability benefits not exceeding 
$600 in any one year to any one person, or both; 
    (4) to any contracts or reinsurance of or between such 
local lodges of such associations now doing business on such 
plan in this state; 
    (5) to domestic associations which limit their membership 
to the employees of a particular city or town, designated firm, 
business house, or corporation; 
    (6) to domestic lodges, orders, or associations of a purely 
religious, charitable, and benevolent description, which do not 
operate with a view to profit, and which do not provide for a 
death benefit of more than $100, or for disability benefits of 
more than $150 to any one person in any one year; or 
    (7) to any domestic lodge, order, or association which was 
incorporated under the laws of this state prior to 1917 and has 
been doing business in this state since incorporation and which 
now has less than $4,000 in cash or in securities acceptable to 
the commissioner and which has agreed in its constitution or 
bylaws to pay $300 as death benefits and $200 as funeral 
expenses, and which does not operate with a view to profit and 
which shall hereafter pay no funeral expenses and pay not more 
than $300 as death benefits, and shall hereafter collect from 
its members, at their then attained ages, regular payments or 
assessments not lower than those required by the National 
Fraternal Congress table of mortality, with interest at four 
percent per annum; and save and except as in this section 
otherwise specifically modified, limited, or qualified that any 
such domestic order or association which has more than 500 
members, and provides for death or disability benefits, and any 
such domestic lodge, order, or association which issues to any 
person a certificate providing for the payment of benefits shall 
not be exempt by the provisions of this section, but shall 
comply with the requirements of this chapter.  All foreign 
associations transacting business in this state shall comply 
with the provisions of section 35. 
    Subd. 2.  [AID ASSOCIATIONS.] Any aid association confining 
its membership to one religious denomination, not operating for 
profit, and not charging stipulated premiums, which has been so 
operating in this state for more than 30 years and which pays 
death benefits not exceeding $2,000 in any one case, shall not 
be subject to the insurance laws of this state. 
     Subd. 3.  [INFORMATION FURNISHED COMMISSIONER.] The 
commissioner may require from any association such information 
as will enable him or her to determine whether the association 
is exempt from the provisions of this chapter.  No association 
which is exempt by the provisions of this section from the 
requirements of this chapter shall give or allow, or promise to 
give or allow, to any person any compensation for procuring new 
members. 
    Sec. 39.  [64B.39] [BENEFICIARY ASSOCIATIONS.] 
     Subdivision 1.  [DEFINITIONS.] "Beneficiary association" 
means a corporation, society, or voluntary association 
heretofore organized and now existing and carried on for the 
sole benefit of its members and their families, relatives, or 
dependents, but not for profit, to insure the lives of its 
members only upon the whole life assessment plan, so-called, and 
in which organization admission to membership by a vote of the 
members or some governing body thereof, is a prerequisite to 
being entitled to such relief or policy of insurance, and which 
association sells neither endowments nor annuities. 
     Subd. 2.  [BENEFITS.] Any beneficiary association may make 
provisions for the payment of benefits in case of sickness, or 
temporary or permanent physical disability, as a result of 
disease, accident, or age exceeding 70 years, and may also 
provide for the payment of funeral expenses of a member not 
exceeding $250; in any case, all of these benefits to be paid, 
subject to compliance by its members with its constitution and 
bylaws, out of funds derived from assessments and dues collected 
from its members. 
     Subd. 3.  [ELIGIBLE BENEFICIARIES.] Payments of death 
benefits shall be made only to the families, heirs, blood 
relatives, adopted children, fiancee of the member, or persons 
dependent upon him or her, or, when his or her certificate of 
membership may so provide, the executor or administrator of the 
estate of the member in trust for the person or persons above 
mentioned as may be designated in the certificate.  Any member 
who, by reason of old age, or other disability, is dependent for 
his or her support, in whole or in part, upon another, whether 
or not such other stands in the above relationship to him or 
her, may, with the consent of the association, and under 
regulations it prescribes, designate the person upon whom he or 
she is so dependent as a beneficiary under his or her 
certificate; and, in that case, the death benefits shall be paid 
according to this designation. 
    Subd. 4.  [RESERVE; TAXATION.] Every association may create 
and maintain a reserve fund for that purpose and shall be held 
to be an institution of public charity, and shall be exempt from 
payment of any taxes for state, county, or municipal purposes, 
except that the real estate of the association shall be taxed as 
other real estate in the state. 
    Subd. 5.  [LAW APPLICABLE.] The beneficiary society or 
association shall be governed by the provisions of this chapter 
not inconsistent with this section and be excluded from all 
provisions of the insurance laws of this state to the same 
extent as fraternal beneficiary associations. 
    Sec. 40.  Minnesota Statutes 1984, section 61B.02, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SCOPE.] Sections 61B.01 to 61B.16 apply to 
direct life insurance policies, health insurance policies, 
annuity contracts, and contracts supplemental to life and health 
insurance policies or annuity contracts, issued by persons 
authorized at any time to transact insurance in this state.  
Sections 61B.01 to 61B.16 do not apply to: 
    (a) Any policy or contract or part thereof under which the 
risk is borne by the policyholder; 
    (b) Any policy or contract or part thereof assumed by an 
impaired insurer under a contract of reinsurance other than 
reinsurance for which assumption certificates have been issued; 
    (c) Any policy or contract issued by an assessment benefit 
association operating under chapter 63, or a fraternal 
beneficiary association benefit society operating under chapter 
64A 64B; 
    (d) Any subscriber contract issued by a nonprofit health 
service plan corporation operating under chapter 62C; or 
    (e) Any health insurance policies issued by a person other 
than a person authorized to write life insurance in this state 
or other than a person whose corporate charter would permit the 
writing of life insurance but who is authorized to write only 
health insurance in this state.  
    Sec. 41.  [INSTRUCTIONS TO REVISOR.] 
    The revisor of statutes is directed to change any reference 
to chapter 64A to chapter 64B in Minnesota Statutes 1986 and any 
subsequent editions, and to make any necessary cross reference 
changes consistent with the renumbering. 
    Sec. 42.  [REPEALER.] 
    Minnesota Statutes 1984, sections 64A.01; 64A.02; 64A.03; 
64A.04; 64A.05; 64A.06; 64A.07; 64A.08; 64A.09; 64A.10; 64A.11; 
64A.12; 64A.13; 64A.14; 64A.15; 64A.16; 64A.17; 64A.18; 64A.19; 
64A.20; 64A.21; 64A.22; 64A.221; 64A.23; 64A.24; 64A.25; 64A.26; 
64A.27; 64A.28; 64A.29; 64A.30; 64A.31; 64A.32; 64A.33; 64A.34; 
64A.35; 64A.36; 64A.37; 64A.39; 64A.40; 64A.41; 64A.42; 64A.43; 
64A.44; 64A.45; 64A.46; 64A.47; and 64A.48 are repealed. 
    Approved April 29, 1985