N.J. Stat. tit. 17, ch. 45

in effect

N.J. Stat. § 17:45-1 Mutual benefit association defined

For the purpose of this chapter a mutual benefit association is hereby declared to be a corporation, society or voluntary association, other than a fraternal beneficiary society, order, or association and other than an insurance corporation, organized without capital stock, and carried on for the sole benefit of its members who shall be residents of this State and their beneficiaries and not for profit, and making provision for the payment of benefits in case of sickness, disability or death of its members, the fund from which the payment of such benefits shall be made and the fund from which the expenses of such association shall be defrayed being derived from fees, dues, assessments or other contributions collected from its members. Amended by L.1950, c. 148, p. 305, s. 1.

N.J. Stat. § 17:45-2 Certificate of authority prerequisite to transacting business

No mutual benefit association shall hereafter undertake to provide any specified benefit in the event of disablement by accident or sickness to any member, or to any other person, or contract with any of its members to pay death benefits until such association shall have complied with the requirements of this chapter and shall have received a certificate of authority setting forth that such association has complied with the provisions of this chapter and that it is authorized to provide benefits in the event of disablement by sickness or accident or to contract with members to pay death benefits, or both of them, within the limitations established by the act under which it is organized and by this chapter.

N.J. Stat. § 17:45-3 Prerequisites to issuance of certificate; time for qualifying

The commissioner may issue such certificate of authority to any such incorporated association of this state when it shall have filed in the department a certified copy of its charter or certificate of incorporation, a copy of its constitution or by-laws, a statement of its financial condition in such form and detail as the commissioner shall require, signed and sworn to by its president and secretary or other proper officers, copies of all forms of benefit certificates which the association proposes to issue and the commissioner is satisfied, on the basis of examination or otherwise, that the association has complied with the requirements of this chapter and that its condition or methods of operation are not such as would render its operations hazardous to the public or to its members. No change in, amendment to, alteration in, addition to, or substitution for any document, instrument or other paper so filed shall become operative or effective until the same shall also have been filed in a similar manner. No such certificate of authority shall be issued to any mutual benefit association not incorporated under the laws of this state nor shall any such certificate be granted to any such association of this state after January first, one thousand nine hundred thirty-eight, which shall not have qualified therefor within one year after its date of incorporation.

N.J. Stat. § 17:45-4 Certificates; limitations; age limits; exceptions

Every mutual benefit association to which a certificate of authority has been issued under the provisions of this chapter shall issue to each of its members a certificate setting forth the benefits to which he is entitled by reason of his membership, except that if application is made by an adult for a family certificate providing for hospital expenses, the association may issue one benefit certificate to include the member, spouse and unmarried children under the age of eighteen years. Notwithstanding any provisions or limitations established by the act under which any such mutual benefit association has been incorporated, no such association shall contract with any member to pay a death benefit exceeding one thousand dollars ($1,000.00), nor shall such association undertake to provide sickness or accident disability benefits in excess of forty dollars ($40.00) weekly to any member except that where part or all of these disability benefits are for payment of hospital or medical expenses, or both, incurred by such member such association may undertake to provide sickness or accident disability benefits of not more than fifty dollars ($50.00) weekly to any member, nor shall such association provide for the payment of cash benefits to any member, or other person, except in the event of death or disability. Any certificate which provides disability benefits only for payment of hospital or medical expenses, or both, incurred by a member may also provide that the weekly benefit payable will be doubled for the first week of hospital confinement. Every such association shall be permitted to issue more than one certificate providing benefits at death of any member and more than one certificate providing for sickness and accident disability benefits; provided, that the aggregate amount of the benefits in said certificates does not exceed the limitations in this act. Certificates providing for sickness or accident disability benefits may provide for a special accidental death benefit not exceeding one thousand dollars ($1,000.00). No persons under the age of sixteen years nor over the age of sixty-five years shall be admitted to membership, but a benefit certificate may be issued to any child on application of an adult member liable for such child's support and who shall exercise the privileges of membership of such child until he or she shall have attained age sixteen years after which such child shall exercise all privileges of membership, but the amounts of death benefits provided for shall not exceed the limitations now provided by law for insurance on the lives of children. Amended by L.1950, c. 148, p. 305, s. 2.

N.J. Stat. § 17:45-5 Provisions required in death benefit certificates

No certificate, contracting to pay a death benefit, other than a cash benefit on accidental death only, shall be issued, by any association authorized to transact business under the provisions of this chapter unless the same shall contain the following provisions: a. A provision setting forth the amounts of all fees, dues or other contributions on such certificate and the time and place where payment of such fees, dues or other contributions shall be made. b. A provision that when claim for the death benefit is made thereunder, settlement shall be made immediately upon or within a specified period not more than two months after satisfactory proof of death of the member is received by the association. c. A provision that if the age of the member has been understated the amount payable under the certificate shall be such as the contributions paid would have provided for at the correct age. d. A provision that the benefit certificate and the application therefor, if any, provided that a copy thereof is attached to the certificate when issued, together with the by-laws of the association as they then exist, shall constitute the entire contract between the association and the member. e. A provision specifying the basis of a reserve to be maintained by the association on the certificate, the legal minimum standard for which shall be the standard industrial table of mortality with interest at the rate of three and one-half per cent per annum calculated according to the modified preliminary term method permitted by law for the valuation of industrial life insurance policies. f. A provision, which, in the event of default in payment of contributions or assessments after such certificate shall have been in force for a period of not less than three years, will secure to the member a stipulated form of benefit, the net value of which shall be not less than the entire reserve held by the association on the certificate, less a specified percentage, not more than three per cent of the face amount of the certificate. g. A provision for four weeks' grace for the payment of all fees, dues, contributions and assessments, except initial membership contributions or fees, during which time benefits will continue in force, provided that overdue contributions may be deducted from any benefit which may be payable. h. A provision that in the event that the assets of the association become less than its liabilities including all guarantee, benefit and reserve funds provided for and required by this act, the deficiency shall be made good and the trustees may levy an assessment on the members. i. A provision that all statements of the member in his application or on his behalf shall constitute representations and not warranties and that the membership and benefit certificate shall be incontestable after the certificate shall have been in force for two years, except for nonpayment of dues, contributions or assessments. j. A provision specifying the basis on which the certificate may be reinstated after lapse, but all reinstatements shall be for full benefits if the certificate shall previously have been in force for at least two years, and the reinstatement may be contested for misrepresentation or fraud for a period of not more than two years thereafter.

N.J. Stat. § 17:45-6 Provisions required in accident and sick benefit certificates

No certificate providing for specified benefits in the event of sickness or accident disability, or for a cash benefit on accidental death only, shall hereafter be issued to any member by any such association unless it shall contain the following provisions: a. A provision for two weeks' grace in the payment of fees, dues and contributions and assessments, except initial membership contributions or fees, during which time benefits will continue in force, provided the overdue contributions may be deducted from any benefits which may be payable to such member. b. A provision that the benefit certificate and the application therefor, if any, provided that a copy thereof is attached to the certificate of membership when issued, together with the by-laws of the association as they then exist shall constitute the entire contract between the association and the member. c. A provision that in the event that the assets of the association become less than its liabilities including all guarantee, benefit and reserve funds provided for and required by this chapter, the deficiency shall be made good and the trustees may levy an assessment on the members. d. A provision specifying the time within which notice of accident or disability shall be given, which shall be not less than twenty days from the date of the accident nor less than ten days from the date of the beginning of disability from sickness upon which claim is based, but in case of accidental death immediate notice thereof may be required. e. A provision that such notice given on behalf of the member or beneficiary, as the case may be, to the association at its home office, or to an agent of the association, with particulars sufficient to identify the member, shall be deemed notice to the association and that failure to give notice of accident or disability within the time provided in the certificate shall not invalidate any claim if it shall be shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible. f. A provision that the association may terminate the certificate and benefits provided for therein on the due date of any contribution thereon, provided that the association shall have notified the member, by written notice delivered to him or directed to him by registered mail at his last known address, of its intention to terminate such certificate, at least ten days prior to the date of such termination, but such termination shall be without prejudice to any benefit or claim arising out of disability or sickness beginning or death occurring prior to the date of such termination.

N.J. Stat. § 17:45-7 Certain provisions prohibited; fees

No certificate contracting to pay a death benefit or providing sickness or accident benefits which contain any of the following provisions shall be issued by any association authorized under this chapter: a. A provision which limits the time within which any action at law of in equity may be commenced to less than five years after the cause of action shall accrue in the case of a certificate making provision for a death benefit only or less than one year in the case of a certificate providing for sickness or accident disability benefits. b. A provision by which maximum benefits provided in the certificate become effective after the lapse of more than one year from the effective date of the certificate. c. A provision which restricts or reduces benefits payable in the event of death from diseases specified in such certificate where such death occurs more than two years after the effective date of the certificate. d. Any provision for the payment of an initial membership fee in excess of three dollars, a registration fee of more than one dollar or a reinstatement fee of more than one dollar. No initial membership fee shall be collected from any member whose previous membership, if any, lapsed less than one year prior to the date of issue of his new certificate, nor shall a registration fee be collected more than once from any member.

N.J. Stat. § 17:45-8 Minimum guarantee fund; investment or deposit; replenishment

Every such association shall establish a minimum guarantee fund of twelve thousand dollars ($12,000.00). Such fund, if not accumulated prior to January second, one thousand nine hundred and thirty-seven, shall be accumulated by equal cash contributions from all members of the association, who shall number not less than one hundred, before the association may undertake to grant death, sickness or accident disability benefits. Such fund may be held in cash or may be invested in bonds issued by or guaranteed by the government of the United States. The guarantee fund shall be deposited in trust with a bank of this State and funds therefrom shall be disbursed only for the payment of claims for benefits under its outstanding certificates, but only on certification of the president and secretary of the association, after notice to the Commissioner of Banking and Insurance, that the benefit fund hereinafter provided for is insufficient to meet existing claims payable therefrom or that payment of such claims would result in the impairment of the reserve fund hereinafter provided for. In the event that the guarantee fund is reduced by such disbursements to less than the amount required by this chapter, the deficiency therein shall be made good by an assessment on all members within six months after the notice above provided for and the by-laws of the association shall establish the procedure to be adopted in making such assessment. Amended by L.1950, c. 148, p. 307, s. 3.

N.J. Stat. § 17:45-9 Benefit fund; use; additions; transfer of excess

Every such association shall establish a benefit fund into which shall be placed a specified percentage, not less than fifty per centum (50%), of all dues and contributions collected by the association or by an agent thereof on sickness and accident disability benefit certificates hereafter issued, except dues and contributions for the first year following issue of such certificates. There shall also be placed into such fund a similar percentage of all dues and contributions hereafter collected on all death benefit certificates and sickness and accident disability benefit certificates issued prior to January second, one thousand nine hundred and thirty-seven, except dues and contributions for the first year following issue of such certificates. Into such fund shall be placed all investment accretions thereon and from such fund shall be paid all benefits except benefits incurred during the first year following issue of such certificates and costs of prosecuting or defending suits under such benefit certificates specified above in this section. When the association shall have accumulated the minimum guarantee fund required by this chapter it shall place into the benefit fund a specified percentage, not less than five per centum (5%), of all dues and contributions thereafter collected on death benefit certificates issued after the aforementioned date. Whenever the benefit fund shall equal or exceed in amount one-half of one annual contribution on all its outstanding sickness and accident disability benefits together with a reserve on death benefits issued prior to the aforementioned date according to the reserve basis described in section 17:45-5 of this Title, the association may transfer to the reserve fund hereinafter referred to the amount of reserve applicable to the death benefit certificates issued prior to the aforementioned date; provided, it shall have first received the consent of the commissioner to such transfer. Thereafter, no contribution to the benefit fund will be required on account of death benefit certificates and the benefit fund shall be maintained as above provided but only for certificates providing for sickness and accident disability benefits; provided, however, whenever the amount in the benefit fund shall exceed one-half of one annual contribution on all outstanding sickness and accident certificates, such excess or any part thereof may be transferred with the consent of the commissioner to the minimum guarantee fund or to the reserve fund or to the expense fund but in no event shall any such association be required to maintain in the benefit fund an amount in excess of three-fourths of one annual contribution on all outstanding sickness and accident certificates. Amended by L.1950, c. 148, p. 307, s. 4.

N.J. Stat. § 17:45-10 Reserve fund; increases; amount annually certified to commissioner

Every such association shall maintain a reserve fund which shall consist of the net reserve on all death benefit certificates issued after January second, one thousand nine hundred and thirty-seven, according to the table of mortality and rate of interest specified therein. When an association has completed the transfer of funds provided for in section 17:45-9 of this title and all contributions to the benefit fund on account of death benefit certificates have ceased, the reserve fund of such association shall be increased by the amount of the net reserve on death benefit certificates, issued prior to January second, one thousand nine hundred and thirty-seven, according to the reserve standard specified in section 17:45-5 of this title. Each year every such association shall file in the department of banking and insurance with its annual statement, as required by section 17:45-12 of this title, the certification of a competent actuary as to the amount of the reserve fund required by this chapter.

N.J. Stat. § 17:45-11 Expense fund; contracts for payment of fees; certain contracts prohibited; investments

Any such association may maintain expense funds or surplus funds out of which the expenses of the association shall be defrayed, but no assessment on the members for the purpose of providing expense moneys will be valid without having received the approval of the commissioner. No contract or agreement, written or implied, shall be made by any association whereby any person or organization shall receive any specified portion of the fees, dues, contributions or assessments collected from members, for management of the association or otherwise, except bona fide commissions to members for the procurement of new members, or for the collection of fees, dues or contributions from members and no contract of employment shall be made with any individual or firm for a period of more than one year nor except at a stated salary or fee, and any such contract made is void. All funds of such associations may be held in cash or may be invested only in accordance with the requirements of law for the investment of funds of life insurance companies, but the guarantee fund shall be invested only in accordance with the provisions of section 17:45-8 of this title.

N.J. Stat. § 17:45-12 Annual statement; time for filing; extension; inquiries by commissioner

Every such association transacting business in this state shall annually on or before March first file in the department a statement, subscribed and sworn to by its president and secretary, or in their absence, by two of its principal officers, showing its financial condition at the close of business on December thirty-first of the year last preceding, and its business for that year, which statement shall be in such form and contain such matters as the commissioner shall prescribe. The commissioner may also address inquiries to any such association or its officers in relation to its condition or affairs, or any matter connected with its transactions, and the officers of such association shall promptly reply in writing to all such inquiries. For good cause shown the commissioner may extend the time within which any such statement may be filed.

N.J. Stat. § 17:45-13 Failure to file annual statement or answer inquiries; penalty; authority to cease on notice

Any such association which neglects to make and file its annual statement in the form and within the time provided by section 17:45-12 of this Title or to reply in writing to inquiries of the commissioner within such reasonable time as may be specified by him shall forfeit twenty-five dollars ($25.00) for each day's neglect, to be recovered in a civil action, and upon notice by the commissioner to that effect its authority to do new business in this State shall cease while such default continues. Amended by L.1953, c. 17, p. 275, s. 157.

N.J. Stat. § 17:45-14 Examination of companies; expenses; expenses when association insolvent; gifts to authorities prohibited

The commissioner may, whenever he deems it expedient, make or cause to be made an examination of the assets and liabilities, method of conducting business and all other affairs of every such association authorized or which has made application for authority to transact business under the provisions of this chapter. For the purpose of such examination the commissioner may authorize and employ such persons to conduct the same or to assist therein as he may deem advisable, which examination may be conducted in any State in which the association examined has an office, agent or place of business. The reasonable expense of such examination shall be fixed and determined by the commissioner, and he shall collect the same from the association examined, which shall pay same on presentation of a detailed account of such expense. If any association, after such examination, shall be adjudged by the Superior Court to be insolvent, the expense of such examination, if unpaid, shall be ordered paid out of the assets of the association. No association shall, either directly or indirectly, pay, by way of gift, credit or otherwise, any other or further sum to the commissioner or to any person in the employ of the department, for extra service or for purposes of legislation, or for any other purpose whatsoever. Amended by L.1953, c. 17, p. 275, s. 158.

N.J. Stat. § 17:45-16 Fees to be paid by association

Every association to which this chapter shall be applicable shall pay the following fee to the commissioner for enforcement of the provisions of this chapter, viz.: for filing its application and charter, ten dollars; for filing each annual statement, five dollars; for each copy of any paper filed in the department, twenty cents a sheet or folio of one hundred words and one dollar for certifying the same.

N.J. Stat. § 17:45-17 Penalty for violation; recovery; misrepresentation by employee or agent a misdemeanor

Any mutual benefit association of this or any other State, country or province which shall have violated any of the provisions of, or shall have neglected, failed or refused to comply with any of the requirements of this chapter, except the failure to file an annual statement, shall be liable to a penalty of five hundred dollars ($500.00), to be sued for and collected by the commissioner in a civil action in the name of the State. Each such penalty when recovered shall be paid by the commissioner into the State treasury for the use of the State. Any officer, agent, employee or member of any such association doing business in this State who shall issue, circulate or cause or permit to be circulated, any estimate, illustration, circular of any sort misrepresenting the terms of any certificate issued by such association or any other association authorized to transact business under this chapter, misrepresent the benefits or advantages promised thereby, use any name or title of any certificate or class of certificates misrepresenting the true nature thereof, solicit, negotiate or effect the sale of any benefit contract or membership certificate of any mutual benefit association which shall have neglected, failed or refused to procure a certificate of authority as provided for by the provisions of this chapter, or accept any dues, contributions, fees, assessments or thing of value of any kind in consideration for such benefit contract or membership certificate on behalf of such association, shall be guilty of a misdemeanor. Amended by L.1953, c. 17, p. 277, s. 160.

N.J. Stat. § 17:45-18 Chapter inapplicable to certain associations and companies

The provisions of this chapter shall not apply to any corporation, society, or association carrying on the business of life, health or accident insurance for profit or gain or to fraternal beneficiary associations as defined in section 17:39-1 of this Title, nor shall it affect or apply to any supreme, grand or subordinate body of the Ancient Order of Free and Accepted Masons, Independent Order of Odd Fellows, Improved Order of Red Men, Junior Order of United American Mechanics, Knights of Pythias, Patriotic Order Sons of America, Patriotic Order of America, Foresters of America, Companions of the Forest of America, Fraternal Order of Beavers, Ladies' Auxiliary, Ancient Order of Hibernians, Fraternal Order of Eagles, Italian American War Veterans of the United States, Incorporated, Ordine Figli d'Italia of America, Daughters of America, Sons and Daughters of Liberty, Knights of Columbus, nor to similar orders, nor to any mutual association which admits to membership only members of such exempted societies, orders, or associations, nor to associations formed exclusively of employees of one or more counties, cities, boroughs, towns, townships, villages, or school districts of the State, firemen's relief and patrolmen's benevolent associations, any firemen's or policemen's organization, employees of a designated firm, business house or corporation, nor to plans operated by any hospital or group of hospitals approved by the department of institutions and agencies which offer to subscribers free hospital service when needed. The provisions of this chapter shall not apply to any mutual benefit association of this State, which admits to membership only persons residing within this State, which restricts membership to persons meeting a test as to religion or nationality established in its constitution and by-laws, which grants no pecuniary remuneration to any person, firm or corporation for the procurement of new members, which pays no commissions for the collection of contributions from members, which holds regular meetings of its members at least 6 times annually, at which members may vote only in person, and all of whose trustees and officers serve without substantial pecuniary remuneration, except that any such association may allow annual stipends aggregating not more than $1,000.00 to its officers who shall be charged with the maintenance of the records of the association and may allow to its officers and trustees such reasonable expenses as may be incurred by them in the discharge of their duties. The provisions of this chapter shall not be construed to confer on the commissioner any right of supervision, any right of investigation or any jurisdiction or authority whatever, with respect to any corporation, society or association exempt therefrom as provided in this section or any subordinate, affiliate, or auxiliary body thereof now in existence or which shall hereafter be created. Nothing in this chapter shall be construed to give any department of the State the right to pass upon alleged defects and alleged illegalities in the charters of such exempt corporations, societies or associations, or any subordinate, affiliate or auxiliary body thereof. Amended by L.1965, c. 88, s. 1.

N.J. Stat. § 17:45-19 Certificates issued under prior law continued; conditions

All certificates of authority issued by the commissioner pursuant to the provisions of the act entitled "A supplement to an act entitled "An act to incorporate associations not for pecuniary profit,' approved April twenty-first, one thousand eight hundred and ninety-eight," approved June seventh, one thousand nine hundred and thirty-five, shall be deemed to have been issued pursuant to the provisions of this chapter and shall be of equal force as though issued pursuant thereto, but the possession of such certificate of authority shall not relieve any association from compliance with the provisions of this chapter, except that the minimum guarantee fund provided for in this chapter, with respect to associations holding such certificates, shall be one thousand dollars increased by five per cent of all the dues, contributions and assessments collected after September first, one thousand nine hundred thirty-five, but such fund shall not be required to exceed the minimum established by section 17:45-8 of this title.

N.J. Stat. § 17:45-20 Partial unconstitutionality; chapter void if section 17:45-18 invalid

If section 17:45-18 of this title shall be held unconstitutional or invalid in whole or in part this entire chapter shall be null and void and of no further force or effect, but if any other section, clause or provision of this chapter shall be held unconstitutional or invalid, such determination shall not be held to affect any other clause, section or provision hereof.

N.J. Stat. § 17:45-21 Chapter inapplicable to certain associations

The provisions of chapter forty-five of Title 17 of the Revised Statutes shall not apply to any mutual benefit association incorporated under the laws of this State, which admits to membership only persons living in this State, which limits death benefits to two hundred and fifty dollars ($250.00), which has and maintains assets of a market value in an amount equal to the reserve required by the standard industrial table of mortality, with interest at the rate of three and one-half per centum (3 1/2 %) per annum, calculated according to the modified preliminary term method for valuation of industrial life insurance policies, on all certificates in force contracting to pay death benefits, and which association shall have additional assets of a market value equal to the total amount of disability benefits paid to members during the last preceding calendar year; provided, that every such association shall have assets of a market value, in the opinion of the Commissioner of Banking and Insurance of this State, of not less than two hundred and fifty thousand dollars ($250,000.00); provided, further, that every such association shall annually, on or before the first day of March, file with the Department of Banking and Insurance of this State, a statement, subscribed and sworn to by its president and secretary, showing the market value of its assets and the amount of disability benefits paid to its members during the last preceding calendar year, together with a certified statement by a competent actuary of reserve required by the standard industrial table of mortality, computed as above set forth. L.1938, c. 60, p. 165, s. 1.

N.J. Stat. § 17:45-22 Death benefits payable notwithstanding section 17:45-21 or other laws

Any mutual benefit association incorporated under the laws of this State and to which the provisions of chapter forty-five of Title 17 of the Revised Statutes do not, or shall not, apply pursuant to the provisions of the act to which this act is a supplement, may provide for, and pay, death benefits to five hundred dollars ($500.00) notwithstanding the provisions of the act to which this act is a supplement, or of any other law applicable to any such mutual benefit association. L.1948, c. 467, p. 1913, s. 1.

N.J. Stat. § 17:45-23 Minimum assets

Every such mutual benefit association shall have, and maintain, assets of a market value, in the opinion of the Commissioner of Banking and Insurance of this State, of not less than three hundred thousand dollars ($300,000.00). L.1948, c. 467, p. 1913, s. 2.

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