REPORT TITLE:
Insurance Coverage


DESCRIPTION:
Extends medical and other insurance benefits to reciprocal
beneficiaries.  Requires the Public Employees Health Fund to
establish a reciprocal beneficiary family coverage health
benefits plan.  (SD1)

 
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THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO INSURANCE.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 87, Hawaii Revised Statutes, is amended
 
 2 by adding a new section to be appropriately designated and to
 
 3 read as follows:
 
 4      "§87-     Reciprocal beneficiary family coverage defined;
 
 5 reciprocal beneficiary employees, State and counties, and fund
 
 6 responsibility costs.  (a)  The board of trustees shall establish
 
 7 a reciprocal beneficiary family coverage health benefits plan for
 
 8 an employee who is a reciprocal beneficiary under chapter 572C
 
 9 and elects to enroll in reciprocal beneficiary family coverage.
 
10      (b)  As used in this section, "reciprocal beneficiary family
 
11 coverage" means coverage under a health benefits plan that
 
12 insures, originally or upon subsequent amendment, an employee who
 
13 is a reciprocal beneficiary, the other party to the employee's
 
14 reciprocal beneficiary relationship, and any dependent-
 
15 beneficiary of the employee, any unmarried child of the non-
 
16 employee reciprocal beneficiary under age nineteen, or a
 
17 surviving reciprocal beneficiary of the employee."
 
18      SECTION 2.  Section 431:10-206, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 

 
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 1      "§431:10-206  Application for insurance:  consent of insured
 
 2 required.  No life or disability insurance contract upon an
 
 3 individual shall be made or effectuated unless at the time of the
 
 4 making of the contract the individual insured, being of competent
 
 5 legal capacity to contract, applies for or consents to the
 
 6 insurance in writing, except in the following cases:
 
 7      (1)  A spouse or reciprocal beneficiary may effectuate such
 
 8           insurance upon the other spouse[.] or reciprocal
 
 9           beneficiary.
 
10      (2)  Any person having an insurable interest in the life of
 
11           a minor, or any person upon whom a minor is dependent
 
12           for support and maintenance, may effectuate insurance
 
13           upon the life of or pertaining to the minor.
 
14 This section shall not apply to contracts of group life insurance
 
15 or of group or blanket disability insurance as defined in this
 
16 code."
 
17      SECTION 3.  Section 431:10-232, Hawaii Revised Statutes, is
 
18 amended by amending subsections (a) and (b) to read as follows:
 
19      "(a)  All proceeds payable because of the death of the
 
20 insured and the aggregate net cash value of any or all life and
 
21 endowment policies and annuity contracts payable to a spouse or
 
22 reciprocal beneficiary of the insured, or to a child, parent, or
 
23 other person dependent upon the insured, whether the power to
 

 
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 1 change the beneficiary is reserved to the insured or not, and
 
 2 whether the insured or the insured's estate is a contingent
 
 3 beneficiary or not, shall be exempt from execution, attachment,
 
 4 garnishment, or other process, for the debts or liabilities of
 
 5 the insured incurred subsequent to May 19, 1939, except as to
 
 6 premiums paid in fraud of creditors within the period limited by
 
 7 law for the recovery of such payments.
 
 8      (b)  When the terms of any life or endowment policy or
 
 9 annuity contract require that the proceeds thereof be retained by
 
10 the insurer upon the death of the insured, or other maturity of
 
11 the policy or contract, for payment to any beneficiary other than
 
12 the insured in accordance with a settlement plan selected by the
 
13 insured, the beneficiary shall have no right or power, nor shall
 
14 the beneficiary be permitted by any insurer, to commute,
 
15 encumber, assign, or otherwise anticipate the beneficiary's
 
16 interests under the plan if the right or power is expressly
 
17 denied the beneficiary by the terms of the contract or policy.
 
18 If the beneficiary under the settlement plan is or was the spouse
 
19 or reciprocal beneficiary of the insured, or a child, parent, or
 
20 other person dependent upon the insured, the beneficiary's
 
21 interests thereunder, in any case, shall be exempt from
 
22 execution, attachment, garnishment, or other process for the
 
23 beneficiary's debts or liabilities incurred after December 31,
 

 
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 1 1955."
 
 2      SECTION 4.  Section 431:10A-103, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "§431:10A-103  Family coverage defined.  As used in this
 
 5 part, family coverage means a policy that insures, originally or
 
 6 upon subsequent amendment, an adult member of a family who shall
 
 7 be deemed the policyholder and any two or more eligible members
 
 8 of that family, including spouse, reciprocal beneficiary,
 
 9 dependent children or any children under a specified age which
 
10 shall not exceed nineteen years, and any other person dependent
 
11 upon the policyholder."
 
12      SECTION 5.  Section 431:10A-105, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "§431:10A-105  Required provisions.  Except as provided in
 
15 section 431:10A-107, each policy of accident and sickness
 
16 insurance delivered or issued for delivery to any person in this
 
17 State shall contain the provisions set forth below.  These
 
18 provisions shall be in the words in which they appear below,
 
19 provided that the insurer may substitute corresponding provisions
 
20 of different wording approved by the commissioner which are in
 
21 each instance not less favorable in any respect to the insured or
 
22 the beneficiary.  The provisions shall be preceded individually
 
23 by the specified caption, or by such appropriate individual or
 

 
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 1 group captions or subcaptions as the commissioner may approve.
 
 2 The provisions are as follows:
 
 3      (1)  "Entire Contract; Changes:  This policy, including the
 
 4           endorsements and the attached papers, if any,
 
 5           constitutes the entire contract of insurance.  No
 
 6           change in this policy shall be valid until approved by
 
 7           an executive officer of the insurer and unless the
 
 8           approval is endorsed on or attached to this policy.  No
 
 9           agent has authority to change this policy or to waive
 
10           any of its provisions."
 
11      (2)  (A)  "Time Limit on Certain Defenses:
 
12                (i)  After three years from the date of issue of
 
13                     this policy no misstatements, except
 
14                     fraudulent misstatements, made by the
 
15                     applicant in the application for this policy
 
16                     shall be used to void this policy or to deny
 
17                     a claim for loss incurred or disability (as
 
18                     defined in the policy) commencing after the
 
19                     expiration of the three-year period.
 
20               (ii)  No claim for loss incurred or disability (as
 
21                     defined in the policy) commencing after three
 
22                     years from the date of issue of this policy
 
23                     shall be reduced or denied on the ground that
 

 
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 1                     a disease or physical condition not excluded
 
 2                     from coverage by name or specific description
 
 3                     effective on the date of loss had existed
 
 4                     prior to the effective date of coverage of
 
 5                     this policy."
 
 6           (B)  The policy provision set forth in subparagraph
 
 7                (A)(i) shall not be construed to affect any legal
 
 8                requirement for avoidance of a policy or denial of
 
 9                a claim during the initial three-year period, nor
 
10                to limit the application of section 431:10A-106(1)
 
11                through (4) in the event of misstatement with
 
12                respect to age or occupation or other insurance.
 
13           (C)  A policy which the insured has the right to
 
14                continue in force subject to its terms by the
 
15                timely payment of premium until at least age fifty
 
16                or, in the case of a policy issued after age
 
17                forty-four, for at least five years from its date
 
18                of issue, may contain in lieu of subparagraph
 
19                (A)(i) the following provision (from which the
 
20                clause in parentheses may be omitted at the
 
21                insurer's option):  "Incontestable:  After this
 
22                policy has been in force for a period of three
 
23                years during the lifetime of the insured
 

 
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 1                (excluding any period during which the insured is
 
 2                disabled), it shall become incontestable as to the
 
 3                statements contained in the application."
 
 4      (3)  (A)  "Grace period:  A grace period of days (insert a
 
 5                number not less than seven for weekly premium
 
 6                policies, ten for monthly premium policies, and
 
 7                thirty-one for all other policies) will be granted
 
 8                for the payment of each premium falling due after
 
 9                the first premium, during which grace period the
 
10                policy shall continue in force."
 
11           (B)  A policy which contains a cancellation provision
 
12                may add at the end of the above provision:
 
13                "subject to the right of the insurer to cancel in
 
14                accordance with the cancellation provision."
 
15           (C)  A policy in which the insurer reserves the right
 
16                to refuse any renewal shall have at the beginning
 
17                of the above provision:  "Unless not less than
 
18                thirty days prior to the premium due date the
 
19                insurer has delivered to the insured or has mailed
 
20                to the insured's last address as shown by the
 
21                records of the insurer written notice of its
 
22                intention not to renew this policy beyond the
 
23                period for which the premium has been accepted."
 

 
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 1      (4)  (A)  "Reinstatement:  If any renewal premium is not
 
 2                paid within the time granted the insured for
 
 3                payment, a subsequent acceptance of premium by the
 
 4                insurer or by any agent duly authorized by the
 
 5                insurer to accept the premium, without requiring
 
 6                in connection therewith an application for
 
 7                reinstatement, shall reinstate the policy;
 
 8                provided[, however,] that if the insurer or agent
 
 9                requires an application for reinstatement and
 
10                issues a conditional receipt for the premium
 
11                tendered, the policy shall be reinstated upon
 
12                approval of the application by the insurer or,
 
13                lacking approval, upon the forty-fifth day
 
14                following the date of conditional receipt unless
 
15                the insurer has previously notified the insured in
 
16                writing of its disapproval of the application.
 
17                The reinstated policy shall cover only loss
 
18                resulting from accidental injury as may be
 
19                sustained after the date of reinstatement and loss
 
20                due to sickness as may begin more than ten days
 
21                after that date.  In all other respects the
 
22                insured and insurer shall have the same rights as
 
23                they had under the policy immediately before the
 

 
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 1                due date of the defaulted premium, subject to any
 
 2                provisions endorsed hereon or attached hereto in
 
 3                connection with the reinstatement.  Any premium
 
 4                accepted in connection with the reinstatement
 
 5                shall be applied to a period for which premium has
 
 6                not been previously paid, but not to any period
 
 7                more than sixty days prior to the date of
 
 8                reinstatement."
 
 9           (B)  The last sentence of the above provision may be
 
10                omitted from any policy which the insured has the
 
11                right to continue in force subject to its terms by
 
12                the timely payment of premiums until at least age
 
13                fifty or, in the case of a policy issued after age
 
14                forty-four, for at least five years from its date
 
15                of issue.
 
16      (5)  (A)  "Notice of Claim:  Written notice of claim must be
 
17                given to the insurer within twenty days after the
 
18                occurrence or commencement of any loss covered by
 
19                the policy, or as soon thereafter as is reasonably
 
20                possible.  Notice given by or on behalf of the
 
21                insured or the beneficiary to the insurer at
 
22                (insert the location of the office as the insurer
 
23                may designate for the purpose) or to any
 

 
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 1                authorized agent of the insurer, with information
 
 2                sufficient to identify the insured, shall be
 
 3                deemed notice to the insurer."
 
 4           (B)  In a policy providing a loss of time benefit which
 
 5                may be payable for at least two years, an insurer
 
 6                may at its option insert the following between the
 
 7                first and second sentences of the above provision:
 
 8                "Subject to the qualification set forth below, if
 
 9                the insured suffers loss of time on account of
 
10                disability for which indemnity may be payable for
 
11                at least two years, the insured shall, at least
 
12                once in every six months after having given notice
 
13                of claim, give to the insurer notice of
 
14                continuance of the disability, except in the event
 
15                of legal incapacity.  The period of six months
 
16                following any filing of proof by the insured or
 
17                any payment by the insurer on account of the claim
 
18                or any denial of liability in whole or in part by
 
19                the insurer shall be excluded in applying this
 
20                provision.  Delay in giving notice shall not
 
21                impair the insured's right to any indemnity which
 
22                would otherwise have accrued during the period of
 
23                six months preceding the date on which notice is
 

 
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 1                actually given."
 
 2      (6)  "Claim Forms:  The insurer, upon receipt of a notice of
 
 3           claim, will furnish to the claimant the forms, that are
 
 4           usually furnished by it for filing proofs of loss.  If
 
 5           the forms are not furnished within fifteen days after
 
 6           the giving of notice the claimant shall be deemed to
 
 7           have complied with the requirements of this policy as
 
 8           to proof of loss upon submitting, within the time fixed
 
 9           in the policy for filing proofs of loss, written proof
 
10           covering the occurrence, the character, and the extent
 
11           of the loss for which claim is made."
 
12      (7)  "Proofs of Loss:  In case of claim for loss for which
 
13           this policy provides any periodic payment contingent
 
14           upon continuing loss, written proof of loss must be
 
15           furnished to the insurer at its office within ninety
 
16           days after the termination of the period for which the
 
17           insurer is liable, and in case of claim for any other
 
18           loss within ninety days after the date of loss.
 
19           Failure to furnish proof of loss within the time
 
20           required shall not invalidate nor reduce any claim if
 
21           it was not reasonably possible to give proof within the
 
22           time required, provided proof is furnished as soon as
 
23           reasonably possible and in no event, except in the
 

 
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 1           absence of legal capacity, later than fifteen months
 
 2           from the time proof is otherwise required."
 
 3      (8)  "Time of Payment of Claims:  Indemnities payable under
 
 4           this policy for any loss other than loss for which this
 
 5           policy provides any periodic payment will be paid
 
 6           immediately upon receipt of due written proof of loss.
 
 7           Subject to due written proof of loss, all accrued
 
 8           indemnities for loss for which this policy provides
 
 9           periodic payment will be paid (insert period for
 
10           payment which must not be less frequently than monthly)
 
11           and any balance remaining unpaid upon the termination
 
12           of liability will be paid immediately upon receipt of
 
13           due written proof."
 
14      (9)  (A)  "Payment of Claims:  Indemnity for loss of life
 
15                will be payable in accordance with the beneficiary
 
16                designation and the provisions respecting payment
 
17                which may be prescribed herein and effective at
 
18                the time of payment.  If no designation or
 
19                provision is then effective, the indemnity shall
 
20                be payable to the estate of the insured.  Any
 
21                other accrued indemnities unpaid at the insured's
 
22                death [may], at the option of the insurer, may be
 
23                paid either to the designated beneficiary or to
 

 
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 1                the estate of the insured.  All other indemnities
 
 2                will be payable to the insured."
 
 3           (B)  The following provisions, or either of them, may
 
 4                be included with the above provision at the option
 
 5                of the insurer:
 
 6                (i)  "If any indemnity of this policy shall be
 
 7                     payable to the estate of the insured, or to
 
 8                     an insured or beneficiary who is a minor or
 
 9                     otherwise not competent to give a valid
 
10                     release, the insurer may pay the indemnity,
 
11                     up to an amount not exceeding $2,000 to any
 
12                     relative by blood or connection by marriage
 
13                     or through reciprocal beneficiary status of
 
14                     the insured or beneficiary who is deemed by
 
15                     the insurer to be equitably entitled thereto.
 
16                     Any payment made by the insurer in good faith
 
17                     pursuant to this provision shall fully
 
18                     discharge the insurer to the extent of the
 
19                     payment."
 
20               (ii)  "Subject to any written direction of the
 
21                     insured in the application or otherwise all
 
22                     or a portion of any indemnities provided by
 
23                     this policy on account of hospital, nursing,
 

 
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 1                     medical, or surgical services [may], at the
 
 2                     insurer's option and unless the insured
 
 3                     requests otherwise in writing not later than
 
 4                     the time of filing proofs of loss, may be
 
 5                     paid directly to the hospital or person
 
 6                     rendering the services; but it is not
 
 7                     required that the service be rendered by a
 
 8                     particular hospital or person."
 
 9     (10)  "Physical Examinations and Autopsy:  The insurer at its
 
10           own expense shall have the right and opportunity to
 
11           examine the person of the insured when and as often as
 
12           it may reasonably require during the pendency of a
 
13           claim hereunder and to make an autopsy in case of death
 
14           where it is not forbidden by law."
 
15     (11)  "Legal Actions:  No action at law or in equity shall be
 
16           brought to recover on this policy prior to the
 
17           expiration of sixty days after written proof of loss
 
18           has been furnished in accordance with the requirements
 
19           of this policy.  No action at law or in equity shall be
 
20           brought after the expiration of three years after the
 
21           time written proof of loss is required to be
 
22           furnished."
 
23     (12)  (A)  "Change of Beneficiary:  Unless the insured makes
 

 
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 1                an irrevocable designation of beneficiary, the
 
 2                right to change of beneficiary is reserved to the
 
 3                insured and the consent of the beneficiary or
 
 4                beneficiaries shall not be requisite to surrender
 
 5                or assignment of this policy or to any change of
 
 6                beneficiary or beneficiaries, or to any other
 
 7                changes in this policy."
 
 8           (B)  The first clause of the above provision, relating
 
 9                to the irrevocable designation of beneficiary, may
 
10                be omitted at the insurer's option."
 
11      SECTION 6.  Section 431:10A-202, Hawaii Revised Statutes, is
 
12 amended to read as follows:
 
13      "§431:10A-202  Health care groups.  A policy of group
 
14 disability insurance may be issued to a corporation, as
 
15 policyholder, existing primarily for the purpose of assisting
 
16 individuals who are its subscribers in securing medical,
 
17 hospital, dental, and other health care services for themselves
 
18 and their dependents[,] including reciprocal beneficiaries,
 
19 covering all and not less than five hundred such subscribers and
 
20 dependents, with respect only to medical, hospital, dental, and
 
21 other health care services."
 
22      SECTION 7.  Section 431:10A-401, Hawaii Revised Statutes, is
 
23 amended to read as follows:
 

 
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 1      "§431:10A-401  Purpose.  It is the purpose of this part to
 
 2 provide a means of more adequately meeting the needs of persons
 
 3 who are sixty-five years of age or older and their spouses or
 
 4 reciprocal beneficiaries for insurance coverage against financial
 
 5 loss from accident or disease through the combined resources and
 
 6 experience of a number of insurers; to make possible the fullest
 
 7 extension of such coverage by encouraging insurers to combine
 
 8 their resources and experience and to exercise their collective
 
 9 efforts in the development and offering of policies of such
 
10 insurance to all such applicants at costs lower than those
 
11 generally available through individual insurers; and to regulate
 
12 the joint activities herein authorized in accordance with the
 
13 intent of Congress as expressed in the Act of Congress of
 
14 March 9, 1945 (Public Law 15, 79th Congress), as amended."
 
15      SECTION 8.  Section 431:10A-403, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "§431:10A-403  Association of insurers; policyholder;
 
18 policy.(a)  Any insurer may join with one or more other
 
19 insurers to plan, develop, underwrite, offer, and provide to any
 
20 person who is sixty-five years of age or older and to the spouse
 
21 or reciprocal beneficiary of such person, extended health
 
22 insurance against financial loss from accident or disease, or
 
23 both.  The insurance may be offered, issued, and administered
 

 
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 1 jointly by two or more insurers by a group policy issued to a
 
 2 policyholder through an association formed for the purpose of
 
 3 offering, selling, issuing, and administering such insurance.
 
 4      (b)  The policyholder may be an association, a trustee, or
 
 5 any other person.  A master group policy issued to an association
 
 6 or to a trustee or any person appointed by an association for the
 
 7 purpose of providing the insurances described in this part shall
 
 8 be another form of group disability insurance.
 
 9      Any form of policy approved by the commissioner for an
 
10 association shall be offered throughout the State to all persons
 
11 sixty-five and older and their spouses[,] or reciprocal
 
12 beneficiaries, and the coverage of any person insured under such
 
13 a form of policy shall not be cancellable except for nonpayment
 
14 of premiums unless the coverage of all persons insured under such
 
15 form of policy is also cancelled.
 
16      (c)  Any such policy may provide, among other things, that
 
17 the benefits payable under the policy are subject to reduction if
 
18 the individual insured has any other coverage providing hospital,
 
19 surgical, or medical benefits whether on an indemnity basis or a
 
20 provision of service basis resulting in such insured being
 
21 eligible for more than one hundred per cent of covered expenses
 
22 which the insured is required to pay.  Any insurer issuing
 
23 individual policies providing extended hospital, surgical, or
 

 
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 1 medical benefits to persons sixty-five years of age and older and
 
 2 their spouses or reciprocal beneficiaries may also use such a
 
 3 policy provision."
 
 4      SECTION 9.  Section 431:10A-601, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "[[]§431:10A-601[]]  Reciprocal beneficiary [family]
 
 7 coverage [defined; policyholder and employer responsibility for
 
 8 costs; availability].  [(a)]  Any other law to the contrary
 
 9 notwithstanding, for purposes of this article, reciprocal
 
10 [beneficiary family coverage, as defined in subsection (b), shall
 
11 be made available to reciprocal beneficiaries, as defined in
 
12 chapter 572C, but only to the extent that family coverage, as
 
13 defined in section 431:10A-103, is currently available to
 
14 individuals who are not reciprocal beneficiaries.
 
15      (b)  As used in this section, reciprocal beneficiary family
 
16 coverage means a policy that insures, originally or upon
 
17 subsequent amendment, a reciprocal beneficiary who shall be
 
18 deemed the policyholder, the other party to the policyholder's
 
19 reciprocal beneficiary relationship registered pursuant to
 
20 chapter 572C, dependent children or any child of any other person
 
21 dependent upon either reciprocal beneficiary.
 
22      (c)  If a reciprocal beneficiary policyholder incurs
 
23 additional costs or premiums, if any, by electing reciprocal
 

 
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 1 beneficiary family coverage under this section, the employer may
 
 2 pay additional costs or premiums.] beneficiaries shall be offered
 
 3 the same coverage as is offered to spouses."
 
 4      SECTION 10.  Section 431:10B-105, Hawaii Revised Statutes,
 
 5 is amended by amending subsection (a) to read as follows:
 
 6      "(a)  Credit life insurance.
 
 7      (1)  The initial amount of credit life insurance shall not
 
 8           exceed the total amount repayable under the contract of
 
 9           indebtedness and, where an indebtedness is repayable in
 
10           substantially equal installments, the amount of
 
11           insurance shall at no time exceed the scheduled or
 
12           actual amount of unpaid indebtedness, whichever is
 
13           greater; except that if the sole purpose of the loan is
 
14           to provide future advances to the debtor to meet
 
15           education or education related expenses of the debtor,
 
16           the debtor's spouse, reciprocal beneficiary, children,
 
17           or other dependents, the amount of insurance may equal,
 
18           but may not exceed, the total amount of the described
 
19           expenses forecast at the time of entry into the loan
 
20           agreement with the creditor, less the amount of all
 
21           repayments by the debtor.  In the case of revolving
 
22           loan or revolving charge accounts, the insurance shall
 
23           at no time exceed the unpaid indebtedness.
 

 
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 1      (2)  Notwithstanding [the provisions of] subsection (a)(1),
 
 2           insurance on agricultural credit transaction
 
 3           commitments not exceeding one year in duration may be
 
 4           written up to the amount of the loan commitment, on a
 
 5           nondecreasing or level term plan."
 
 6      SECTION 11.  Section 431:10C-111, Hawaii Revised Statutes,
 
 7 is amended by amending subsection (c) to read as follows:
 
 8      "(c)  No insurer shall refuse to continue a motor vehicle
 
 9 insurance policy based solely upon a person's race, creed, ethnic
 
10 extraction, age, sex, length of driving experience, marital or
 
11 reciprocal beneficiary status, residence, physical handicap, or
 
12 because an insured has elected to obtain any required or optional
 
13 coverage or deductible required by law.  If an insured alleges
 
14 that the insurer's refusal to continue the motor vehicle
 
15 insurance policy is based solely upon the insured's race, creed,
 
16 ethnic extraction, age, sex, length of driving experience,
 
17 marital or reciprocal beneficiary status, residence, physical
 
18 handicap, or because the insured has elected to obtain any
 
19 required or optional coverage or deductible provided by law, the
 
20 burden of proof shall rest with the insurer to prove that the
 
21 refusal to continue the policy was not based on noncompliance
 
22 with this subsection."
 
23      SECTION 12.  Section 431:10C-207, Hawaii Revised Statutes,
 

 
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 1 is amended to read as follows:
 
 2      "§431:10C-207  Discriminatory practices prohibited.  No
 
 3 insurer shall base any standard or rating plan, in whole or in
 
 4 part, directly or indirectly, upon a person's race, creed, ethnic
 
 5 extraction, age, sex, length of driving experience, credit bureau
 
 6 rating, marital or reciprocal beneficiary status, or physical
 
 7 handicap."
 
 8      SECTION 13.  Section 431:10C-302, Hawaii Revised Statutes,
 
 9 is amended by amending subsection (a) to read as follows:
 
10      "(a)  In addition to the motor vehicle insurance coverages
 
11 described in section 431:10C-301, every insurer issuing a motor
 
12 vehicle insurance policy shall make available to the insured the
 
13 following optional insurance under the following conditions.
 
14 Every insurer issuing a commercial motor vehicle insurance policy
 
15 shall make available to the insured the following optional
 
16 insurance, except for those benefits under paragraphs (4), (5),
 
17 (9), (10), and (11) under the following conditions:
 
18      (1)  At the option of the insured, provisions covering loss
 
19           resulting from damage to the insured's motor vehicle
 
20           with such deductibles, including but not limited to
 
21           collision and comprehensive deductibles of $50, $100,
 
22           $250, $500, $1,000, $1,500, and $2,000, at
 
23           appropriately reduced premium rates, as the
 

 
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 1           commissioner, by rule, shall provide;
 
 2      (2)  At the option of the insured, compensation to the
 
 3           insured, the insured's spouse, the insured's reciprocal
 
 4           beneficiary, any dependents, or any occupants of the
 
 5           insured's vehicle for damages not covered by personal
 
 6           injury protection benefits;
 
 7      (3)  Additional coverages and benefits with respect to any
 
 8           injury or any other loss from motor vehicle accidents
 
 9           or from operation of a motor vehicle for which the
 
10           insurer may provide for aggregate limits with respect
 
11           to such additional coverage so long as the basic
 
12           liability coverages provided are not less than those
 
13           required by section 431:10C-301(b)(1) and (2);
 
14      (4)  At the option of the insured, an option in writing for
 
15           coverage for wage loss benefits for monthly earnings
 
16           loss for injury arising out of a motor vehicle
 
17           accident.  Any change in the wage loss benefits
 
18           coverage selected by an insured shall apply only to
 
19           benefits arising out of motor vehicle accidents
 
20           occurring after the date the change becomes effective.
 
21           Coverage shall be offered in multiples of $500 a
 
22           month/$3,000 per accident per person, from $500 a
 
23           month/$3,000 per accident to $2,000 a month/$12,000 per
 

 
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 1           accident; however, nothing shall prevent an insurer
 
 2           from making available higher limits of coverage; 
 
 3      (5)  An option in writing for minimum coverage for death
 
 4           benefits for death arising out of a motor vehicle
 
 5           accident in an amount of $25,000, to be paid to the
 
 6           surviving spouse[,] or reciprocal beneficiary, for the
 
 7           benefit of the spouse or reciprocal beneficiary and
 
 8           dependent children, or if there are no surviving
 
 9           spouse, reciprocal beneficiary, or dependent children,
 
10           then to the estate. Coverage shall also be made
 
11           available for increased death benefits in increments of
 
12           $25,000 up to $100,000; however, nothing shall prevent
 
13           an insurer from making available higher limits of
 
14           coverage.  At the option of the insured, coverage for
 
15           funeral expenses of $2,000 shall be made available;
 
16      (6)  Terms, conditions, exclusions, and deductible clauses,
 
17           coverages, and benefits which:
 
18           (A)  Are consistent with the required provisions of the
 
19                policy[,];
 
20           (B)  Limit the variety of coverage available so as to
 
21                give buyers of insurance reasonable opportunity to
 
22                compare the cost of insuring with various
 
23                insurers; and
 

 
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 1           (C)  Are approved by the commissioner as fair and
 
 2                equitable;
 
 3      (7)  At appropriately reduced premium rates, deductibles
 
 4           applicable only to claims of an insured in the amounts
 
 5           of $100, $300, $500, and $1,000 from all personal
 
 6           injury protection benefits otherwise payable; provided
 
 7           that if two or more insureds to whom the deductible is
 
 8           applicable under the contract of insurance are injured
 
 9           in the same accident, the aggregate amount of the
 
10           deductible applicable to all of them shall not exceed
 
11           the specified deductible, which amount where necessary
 
12           shall be allocated equally among them;
 
13      (8)  Every insurer shall fully disclose the availability of
 
14           all required and optional coverages and deductibles,
 
15           including the nature and amounts, at the issuance or
 
16           delivery of the policy; or, for a policy already issued
 
17           on January 1, 1998, disclosure shall be made at the
 
18           first renewal after January 1, 1998.  The insurer shall
 
19           also disclose at issuance or renewal, as applicable,
 
20           the effect on premium rates and savings of each option
 
21           and deductible.  Further offers or disclosures
 
22           thereafter shall be required to be included with every
 
23           other renewal or replacement policy.  All elections of
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           coverages, options, and deductibles by a named insured
 
 2           shall be binding upon additional insureds covered under
 
 3           the named insured's policy.  The purpose of this
 
 4           paragraph is to inform insureds or prospective insureds
 
 5           of the coverages under this article;
 
 6      (9)  (A)  An insurer may make available, and provide at the
 
 7                option of the named insured, the benefits
 
 8                described in section 431:10C-103.5(a) through
 
 9                managed care providers such as a health
 
10                maintenance organization or a preferred provider
 
11                organization.  The option may include conditions
 
12                and limitations to coverage, including deductibles
 
13                and coinsurance requirements, as approved by the
 
14                commissioner. The commissioner shall approve those
 
15                conditions and limitations which are substantially
 
16                comparable to or exceed the coverage provided
 
17                under section 431:10C-103.6;
 
18           (B)  An insurer may make available, and provide at the
 
19                option of the named insured, deductible and
 
20                coinsurance arrangements whereby the recipient of
 
21                care, treatment, services, products, expenses, or
 
22                accommodations shares in the payment obligation;
 
23           (C)  No deductible or coinsurance under a policy
 

 
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 1                covered under section 431:10C-302(a)(9)(A) or (B)
 
 2                shall be applied with respect to care, treatment,
 
 3                services, products, or accommodation provided or
 
 4                expenses incurred by an insured during the first
 
 5                twenty-four hours in which emergency treatment has
 
 6                been provided or until the insured patient's
 
 7                emergency medical condition is stabilized,
 
 8                whichever is longer;
 
 9           (D)  (i)  The optional coverage prescribed in section
 
10                     431:10C-302(a)(9)(A) and (B) shall apply only
 
11                     to the named insured, resident spouse, or
 
12                     resident relative; and
 
13               (ii)  "Resident relative" means a person who, at
 
14                     the time of the accident, is related by
 
15                     blood, marriage, or adoption to the named
 
16                     insured [or], resident spouse, or reciprocal
 
17                     beneficiary and who resides in the named
 
18                     insured's household, even if temporarily
 
19                     living elsewhere, and any ward or foster
 
20                     child who usually resides with the named
 
21                     insured, even if living elsewhere;
 
22           (E)  An agreement made under section 431:10C-302(a)(9)
 
23                must be a voluntary agreement between the insured
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1                and the insurer, and no insurer shall require an
 
 2                insured to agree to those policy provisions as a
 
 3                condition of providing insurance coverage.
 
 4                Requiring an agreement as a precondition to the
 
 5                provision of insurance shall constitute an unfair
 
 6                insurance practice and shall be subject to the
 
 7                provisions, remedies, and penalties provided in
 
 8                article 13; and
 
 9           (F)  An insurer providing the coverages authorized in
 
10                section 431:10C-302(a)(9)(A) and (B) shall
 
11                demonstrate in rate filings submitted to the
 
12                commissioner the savings to the insured to be
 
13                realized under the plan;
 
14     (10)  An insurer shall make available optional coverage for
 
15           naturopathic, acupuncture, nonmedical remedial care,
 
16           and treatment rendered in accordance with the
 
17           teachings, faith, or belief of any group which relies
 
18           upon spiritual means through prayer for healing; and
 
19     (11)  An insurer may make available optional coverage for
 
20           chiropractic treatment in addition to chiropractic
 
21           treatment provided under [§] section 431:10C-103.6 for
 
22           not more than the lesser of the following:
 
23           (A)  Thirty additional visits at no more than $75 a
 

 
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 1                visit; or
 
 2           (B)  Treatment as defined by the Hawaii Chiropractic
 
 3                Association guidelines in effect on January 25,
 
 4                1997.
 
 5      The commissioner shall adopt rules, including policy limits,
 
 6 terms, and conditions as necessary to implement the requirements
 
 7 of this section."
 
 8      SECTION 14.  Section 431:10C-305, Hawaii Revised Statutes,
 
 9 is amended by amending subsection (b) to read as follows:
 
10      "(b) (1)  Except as provided in paragraph (2), personal
 
11           injury protection benefits shall be paid primarily from
 
12           the following sources in the following conditions:
 
13           (A)  The insurance on the vehicle occupied by the
 
14                injured person at the time of the accident; or
 
15           (B)  The insurance on the vehicle which caused
 
16                accidental harm if the injured person is a
 
17                pedestrian (including a bicyclist).
 
18           If there is no insurance on the vehicle, any other
 
19           motor vehicle insurance applicable to the injured
 
20           person shall apply.  No person shall recover personal
 
21           injury protection benefits from more than one insurer
 
22           for accidental harm as a result of the same accident;
 
23      (2)  All personal injury protection benefits shall be paid
 

 
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 1           secondarily and net of any benefits a person is
 
 2           entitled to receive because of the accidental harm from
 
 3           workers' compensation laws; provided that:
 
 4           (A)  The total amount a person is entitled to receive
 
 5                for monthly earnings loss under this article shall
 
 6                be limited to the amount of any applicable
 
 7                coverage under section 431:10C-302, without any
 
 8                deduction of any amount received as compensation
 
 9                for lost earnings under any workers' compensation
 
10                law;
 
11           (B)  The aggregate of the payments from both sources
 
12                shall not exceed eighty per cent of the person's
 
13                monthly earnings as provided in section
 
14                431:10C-302(a)(4).  However, if the person's
 
15                employer provides both workers' compensation and
 
16                personal injury protection payments, the aggregate
 
17                shall not exceed the person's net monthly earnings
 
18                (computed by subtracting the total of federal and
 
19                state income taxes and employee social security
 
20                contributions from the gross monthly earnings),
 
21                provided that the workers' compensation payments
 
22                shall not be less than required by chapter 386;
 
23                and
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           (C)  This section shall not apply to benefits payable
 
 2                to a surviving spouse or reciprocal beneficiary
 
 3                and any surviving dependent as provided under
 
 4                section 431:10C-304.
 
 5           If the person does not collect such benefits under the
 
 6           workers' compensation laws by reason of the contest of
 
 7           this right to so collect by the person or organization
 
 8           responsible for payment thereof, the injured person, if
 
 9           otherwise eligible, shall, nevertheless, be entitled to
 
10           receive personal injury protection benefits and, upon
 
11           payment thereof, the personal injury protection insurer
 
12           shall be subrogated to the injured person's rights to
 
13           collect such benefits."
 
14      SECTION 15.  Section 431:10C-409, Hawaii Revised Statutes,
 
15 is amended to read as follows:
 
16      "§431:10C-409  Establishment and criteria.  The commissioner
 
17 shall, after consultation with the board, establish and
 
18 promulgate the rating rules, classification standards and rules,
 
19 rates, rating plans, territories, and policy forms for use in the
 
20 provision of all motor vehicle insurance issued under the joint
 
21 underwriting plan, in accordance with the following provisions:
 
22      (1)  Rates shall not be excessive, inadequate, or unfairly
 
23           discriminatory.
 

 
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 1      (2)  Consideration shall be given to the following:
 
 2           (A)  The plan's past and prospective loss experience
 
 3                within the State;
 
 4           (B)  Contingencies in the administration of motor
 
 5                vehicle insurance sold;
 
 6           (C)  Past and prospective expenses in the sale and
 
 7                administration of motor vehicle insurance;
 
 8           (D)  Income from investments of premiums and other
 
 9                proceeds received on account of joint underwriting
 
10                plan motor vehicle insurance sold; and
 
11           (E)  All other factors demonstrated to be relevant by a
 
12                current actuarially sound study of the definable
 
13                risks involved.
 
14      (3)  The commissioner may:
 
15           (A)  Establish rating territories and group risks by
 
16                classifications for the establishing of rates and
 
17                minimum premiums;
 
18           (B)  Provide for, by regulation, a uniform
 
19                classification of risks and rating territories for
 
20                the various coverages;
 
21           (C)  Modify classification rates to produce rates in
 
22                accordance with rating plans which establish
 
23                standards for measuring variations in hazards or
 

 
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 1                expense provisions, or both.  Such standards may
 
 2                measure any differences among risks including
 
 3                vehicles, occupations, past traffic convictions,
 
 4                and involvement in past accidents, provided they
 
 5                are established to have a demonstrable effect upon
 
 6                losses or expense; and
 
 7           (D)  Ensure that no standard or rating plan shall be
 
 8                based, in whole or in part, directly or
 
 9                indirectly, upon a person's race, creed, ethnic
 
10                extraction, age, sex, length of driving
 
11                experience, credit bureau rating, marital or
 
12                reciprocal beneficiary status, or physical
 
13                handicap."
 
14      SECTION 16.  Section 431:10D-104, Hawaii Revised Statutes,
 
15 is amended by amending subsection (c) to read as follows:
 
16      "(c)  Cash surrender value - life:
 
17      (1)  Any cash surrender value available under the policy in
 
18           the event of default in a premium payment due on any
 
19           policy anniversary, whether or not required by
 
20           subsection (b), shall be an amount not less than the
 
21           excess, if any, of the present value, on the
 
22           anniversary, of the future guaranteed benefits which
 
23           would have been provided for by the policy including
 

 
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 1           any existing paid-up additions, if there had been no
 
 2           default, over the sum of:
 
 3           (A)  The then present value of the adjusted premiums as
 
 4                defined in subsection (e) corresponding to
 
 5                premiums which would have fallen due on and after
 
 6                the anniversary[,]; and
 
 7           (B)  The amount of any indebtedness to the insurer on
 
 8                account of or secured by the policy.  Provided
 
 9                that for any policy issued on or after the
 
10                operative date of subsection (e)(8) as defined
 
11                therein, which provides supplemental life
 
12                insurance or annuity benefits at the option of the
 
13                insured and for an identifiable additional premium
 
14                by rider or supplemental policy provision, the
 
15                cash surrender value referred to in [item]
 
16                paragraph (1) shall be an amount not less than the
 
17                sum of the cash surrender value as defined in such
 
18                paragraph for an otherwise similar policy issued
 
19                at the same age without such rider or supplemental
 
20                policy provision and the cash surrender value as
 
21                defined in such paragraph for a policy which
 
22                provides only the benefits otherwise provided by
 
23                such rider or supplemental policy provision.
 

 
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 1                     Provided further that for any family policy
 
 2                issued on or after the operative date of
 
 3                subsection (e)(8) as defined therein, which
 
 4                defines a primary insured and provides term
 
 5                insurance on the life of the spouse or reciprocal
 
 6                beneficiary of the primary insured expiring before
 
 7                the spouse's or reciprocal beneficiary's age
 
 8                seventy-one, the cash surrender value referred to
 
 9                in [item] paragraph (1) shall be an amount not
 
10                less than the sum of the cash surrender value as
 
11                defined in such paragraph for an otherwise similar
 
12                policy issued at the same age without such term
 
13                insurance on the life of the spouse or reciprocal
 
14                beneficiary and the cash surrender value as
 
15                defined in such paragraph for an otherwise similar
 
16                policy issued at the same age without such rider
 
17                or supplemental policy provision and the cash
 
18                surrender value as defined in such paragraph
 
19                [[]for[]] a policy which provides only the
 
20                benefits otherwise provided by such term insurance
 
21                on the life of the spouse[.] or reciprocal
 
22                beneficiary.
 
23      (2)  Any cash surrender value available within thirty days
 

 
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 1           after any policy anniversary, of the future guaranteed
 
 2           benefits provided for by the policy including any
 
 3           existing paid-up additions, decreased by any
 
 4           indebtedness to the insurer on account of or secured by
 
 5           the policy."
 
 6      SECTION 17.  Section 431:10D-114, Hawaii Revised Statutes,
 
 7 is amended to read as follows:
 
 8      "§431:10D-114  Miscellaneous proceeds.  Upon the death of
 
 9 the insured and except as is otherwise expressly provided by the
 
10 policy or premium deposit agreement, a life insurer may pay to
 
11 the surviving spouse[,] or reciprocal beneficiary, children,
 
12 beneficiary, or person other than the insured's estate, appearing
 
13 to the insurer to be equitably entitled to such payment, sums
 
14 then held by it and comprising:
 
15      (1)  Premiums paid in advance, if such premiums did not fall
 
16           due prior to the death, or funds held on deposit for
 
17           the payment of future premiums.
 
18      (2)  Dividends theretofore declared on the policy and held
 
19           by the insurer under the insured's option.
 
20      (3)  Dividends becoming payable on or after the death of the
 
21           insured."
 
22      SECTION 18.  Section 431:10D-201, Hawaii Revised Statutes,
 
23 is amended by amending subsection (b) to read as follows:
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      "(b)  Subsection (a) shall not apply to contracts of life
 
 2 insurance insuring only individuals:
 
 3      (1)  Related by marriage, by a reciprocal beneficiary
 
 4           relationship, by blood, or by legal adoption;  or
 
 5      (2)  Having a common interest through ownership of a
 
 6           business enterprise, or of a substantial legal interest
 
 7           or equity in the business enterprise, and who are
 
 8           actively engaged in its management; or
 
 9      (3)  Otherwise having an insurable interest in each other's
 
10           lives."
 
11      SECTION 19.  Section 431:10D-203, Hawaii Revised Statutes,
 
12 is amended to read as follows:
 
13      "§431:10D-203  Debtor groups.  The lives of a group of
 
14 individuals may be insured under a policy issued to a creditor or
 
15 its parent holding company or to a trustee or trustees or agent
 
16 designated by two or more creditors, which creditor, holding
 
17 company, affiliate, trustee, trustees, or agent shall be deemed
 
18 the policyholder, to insure debtors of the creditor or creditors,
 
19 subject to the following requirements:
 
20      (1)  The debtors eligible for insurance under the policy
 
21           shall be all of the debtors of the creditor or
 
22           creditors or all of any class or classes thereof.  The
 
23           policy may provide that the term debtors shall include:
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           (A)  Borrowers of money or purchasers or lessees of
 
 2                goods, services, or property for which payment is
 
 3                arranged through a credit transaction;
 
 4           (B)  The debtors of one or more subsidiary
 
 5                corporations; and
 
 6           (C)  The debtors of one or more affiliated
 
 7                corporations, proprietorships, or partnerships, if
 
 8                the business of the policyholder and the affiliate
 
 9                is under common control.
 
10      (2)  The premiums for the policy shall be paid either from
 
11           the creditor's funds, or from charges collected from
 
12           the insured debtors, or from both.  A policy on which
 
13           part or all of the premiums is to be derived from the
 
14           collection from the insured debtors of identifiable
 
15           charges not required of uninsured debtors shall not
 
16           include, in the class or classes of debtors eligible
 
17           from insurance, debtors under obligations outstanding
 
18           at its date of issue without evidence of individual
 
19           insurability unless at least seventy-five per cent of
 
20           the then eligible debtors elect to pay the required
 
21           charges.  Except as provided in [item] paragraph (3), a
 
22           policy on which no part of the premium is to be derived
 
23           from the collection of such identifiable charges must
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           insure all eligible debtors.
 
 2      (3)  An insurer may exclude any debtors as to whom evidence
 
 3           of individual insurability is not satisfactory to the
 
 4           insurer.
 
 5      (4)  The policy may be issued only if the group of eligible
 
 6           debtors is then receiving new entrants at the rate of
 
 7           at least one hundred persons yearly, or may reasonably
 
 8           be expected to receive at least one hundred new
 
 9           entrants during the first policy year, and only if the
 
10           policy reserves to the insurer the right to require
 
11           evidence of individual insurability if less than
 
12           seventy-five per cent of the new entrants become
 
13           insured.
 
14      (5)  The amount of the insurance on the life of any debtor
 
15           shall at no time exceed the greater of the scheduled or
 
16           actual amount of unpaid indebtedness to the creditor,
 
17           except that if the sole purpose of the loan is to
 
18           provide future advances to the debtor to meet education
 
19           or education-related expenses of the debtor, the
 
20           debtor's spouse, reciprocal beneficiary, children, or
 
21           other dependents, the amount of insurance may equal,
 
22           but may not exceed, the total amount of the described
 
23           expenses forecast at the time of entry into the loan
 

 
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 1           agreement with the creditor, less the amount of all
 
 2           repayments by the debtor.  In the case of revolving
 
 3           loan or revolving charge accounts, the insurance shall
 
 4           at no time exceed the unpaid indebtedness.
 
 5      (6)  The insurance shall be payable to the creditor or any
 
 6           successor to the right, title, and interest of the
 
 7           creditor.  The payment shall reduce or extinguish the
 
 8           unpaid indebtedness of the debtor to the extent of the
 
 9           payment and, whenever the amount of insurance exceeds
 
10           the unpaid indebtedness, any such excess shall be
 
11           payable to a beneficiary, other than the creditor,
 
12           named by the debtor or to the debtor's estate.
 
13      (7)  Payment by the debtor insured under any such group life
 
14           insurance contract of an amount not in excess of the
 
15           premium charged the creditor by the insurer for such
 
16           insurance pertaining to the debtor, shall not be deemed
 
17           to constitute a charge upon a loan in violation of any
 
18           banking or usury law or any law regulating installment
 
19           sales."
 
20      SECTION 20.  Section 431:10D-212, Hawaii Revised Statutes,
 
21 is amended to read as follows:
 
22      "§431:10D-212  Spouses, reciprocal beneficiaries, and
 
23 dependents of insured individuals.  Except for a policy issued
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 under [section] sections 431:10D-203 and [section] 431:10D-211,
 
 2 insurance under any group life insurance policy issued pursuant
 
 3 to this article may be extended to insure the employees or
 
 4 members of such groups against loss due to the death of their
 
 5 spouses, reciprocal beneficiaries, and dependent children subject
 
 6 to the following:
 
 7      (1)  The spouse, reciprocal beneficiary, and dependent of
 
 8           the individual insured may be covered in amounts of
 
 9           insurance equivalent to the amount of coverage of the
 
10           insured individual, provided that in the case of a
 
11           dependent other than a spouse or reciprocal beneficiary
 
12           of the insured individual the amount of insurance for
 
13           the dependent shall not be in excess of fifty per cent
 
14           of the coverage of the insured individual or $5,000
 
15           whichever is less, and provided further that in the
 
16           case of a dependent whose age at death is under six
 
17           months, the amount shall not be in excess of $2,000.
 
18      (2)  The premiums for the insurance of the spouse,
 
19           reciprocal beneficiary, or dependent shall be paid
 
20           either from funds contributed by the employer, union,
 
21           association, or other person to whom the policy has
 
22           been issued, or from funds contributed by the
 
23           individual insured, or from both.
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      (3)  An insurer may exclude or limit the coverage on any
 
 2           spouse, reciprocal beneficiary, or dependent child as
 
 3           to whom evidence of individual insurability is not
 
 4           satisfactory to the insurer.
 
 5      (4)  For purposes of this section:
 
 6           (A)  A dependent shall be a child of the insured
 
 7                individual:
 
 8                (i)  Under eighteen years of age; or
 
 9               (ii)  Under twenty-three years of age who is
 
10                     attending an educational institution and
 
11                     relying upon the insured individual for
 
12                     financial support; or
 
13              (iii)  Regardless of age who is incapable of self-
 
14                     sustaining employment by reason of mental
 
15                     retardation or physical handicap and is
 
16                     chiefly dependent upon the insured individual
 
17                     for support and maintenance.
 
18           (B)  The term individual shall be deemed to include a
 
19                person or a member of any group provided in
 
20                section 431:10D-202 and [section] sections
 
21                431:10D-204 [through section] to 431:10D-210."
 
22      SECTION 21.  Section 431:10D-308, Hawaii Revised Statutes,
 
23 is amended to read as follows:
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      "§431:10D-308  Facility of payment.  Such a policy may also
 
 2 provide that if the beneficiary designated in the policy does not
 
 3 surrender the policy with due proof of death within the period
 
 4 stated in the policy, which shall not be less than thirty days
 
 5 after the death of the insured, or if the beneficiary is the
 
 6 estate of the insured or is a minor, or dies before the insured
 
 7 or is not legally competent to give a valid release, then the
 
 8 insurer may make payment under the policy to the personal
 
 9 representative of the insured, or to any of the insured's
 
10 relatives by blood, legal adoption, or connection by marriage[,]
 
11 or by reciprocal beneficiary relationship, or to any person
 
12 appearing to the insurer to be equitably entitled to such payment
 
13 by reason of having been named beneficiary, or by reason of
 
14 having incurred expense for the maintenance, medical attention,
 
15 or burial of the insured.  The policy may also include a similar
 
16 provision applicable to any other payment due under the policy."
 
17      SECTION 22.  Chapter 432, Hawaii Revised Statutes, is
 
18 amended by adding to part VI of article I a new section to be
 
19 appropriately designated and to read as follows:
 
20      "§432:1-    Reciprocal beneficiary coverage.  Any other law
 
21 to the contrary notwithstanding, all individual and group
 
22 hospital or medical service plan contracts which offer coverage
 
23 for a subscriber's or member's spouse shall offer the same
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 coverage for a subscriber's or member's reciprocal beneficiary."
 
 2      SECTION 23.  Section 432D-23, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "§432D-23  Required provisions and benefits.  (a)
 
 5 Notwithstanding any provision of law to the contrary, each
 
 6 policy, contract, plan, or agreement issued in the State after
 
 7 January 1, 1995, by health maintenance organizations pursuant to
 
 8 this chapter, shall include benefits provided in sections
 
 9 431:10-212, 431:10A-115, 431:10A-115.5, 431:10A-116,
 
10 431:10A-116.5, 431:10A-116.6, [and] 431:10A-119, and 431:10A-120
 
11 and chapter 431M.
 
12      (b)  Notwithstanding any provision of law to the contrary,
 
13 each policy, contract, plan, or agreement issued in the State
 
14 after July 1, 2000, by health maintenance organizations pursuant
 
15 to this chapter, shall offer the same coverage to reciprocal
 
16 beneficiaries as is offered to spouses."
 
17      SECTION 24.  If any provision of this Act, or the
 
18 application thereof to any person or circumstance is held
 
19 invalid, the invalidity does not affect other provisions or
 
20 applications of the Act which can be given effect without the
 
21 invalid provision or application, and to this end the provision
 
22 of this Act are severable.
 
23      SECTION 25.  Statutory material to be repealed is bracketed.
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 New statutory material is underscored.
 
 2      SECTION 26.  This Act shall take effect upon its approval.
 

 
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