Code of Virginia

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Code of Virginia
Title 38.2. Insurance
Subtitle .
Chapter 40. Burial Societies

Chapter 40. Burial Societies.

§ 38.2-4000. Societies to which chapter applies.

The provisions of this chapter apply to every person designated as a "burial society." A "burial society" is any person engaged in the business of providing benefits for any payment of funeral, burial or other expenses of deceased members, by levying assessments or dues that are collected or are to be collected from the members of the society, or from the members of a class of the society.

Code 1950, § 38-143; 1952, c. 317, § 38.1-550; 1986, c. 562.

§ 38.2-4001. Society may be incorporated.

Any existing burial society licensed and operating in this Commonwealth that is an unincorporated association may be incorporated under the provisions of Article 3 (§ 13.1-818 et seq.) of Chapter 10 of Title 13.1 and, except as otherwise provided in this title, shall be subject to all the general restrictions and shall have all the general powers imposed and conferred upon such corporations by law. All burial societies shall be under the supervision and control of the Commission.

Code 1950, §§ 38-145, 38-146; 1952, c. 317, § 38.1-551; 1956, c. 431; 1986, c. 562.

§ 38.2-4002. Continuation of existing societies.

Any burial society that was licensed and operating as a burial society on July 1, 1952, in this Commonwealth may continue to operate as a burial society as long as it complies with the provisions of this chapter and all other applicable statutes.

1952, c. 317, § 38.1-552; 1986, c. 562.

§ 38.2-4003. Licensing of additional societies prohibited.

Any burial society that was not licensed and operating as a burial society in this Commonwealth on July 1, 1952, shall not be issued a license as a burial society in this Commonwealth. On or after July 1, 1952, only a renewal of a license held by a society for the preceding year will be issued.

1952, c. 317, § 38.1-553; 1986, c. 562.

§ 38.2-4004. What laws applicable.

All burial societies shall comply with all of the provisions of this title relating to insurance companies generally. In the event of conflict between the provisions of this chapter and other provisions of this title, the provisions of this chapter shall be controlling.

Code 1950, §§ 38-145, 38-146; 1952, c. 317, § 38.1-554; 1986, c. 562.

§ 38.2-4005. License may be renewed annually.

Each license to a burial society shall expire on the June 30 next occurring after its effective date and may be renewed by the Commission annually.

Code 1950, § 38-146; 1952, c. 317, § 38.1-556; 1978, c. 4; 1986, c. 562.

§ 38.2-4006. Annual meeting.

Each burial society shall hold, within the city or county in which the principal office is located in this Commonwealth, a stated annual meeting of its members, or representatives of local boards or subordinate bodies, subject to any regulations, restrictions and provisions the constitution or bylaws of the society may provide.

Code 1950, §§ 38-145, 38-455; 1952, c. 317, §§ 38.1-531, 38.1-555; 1986, c. 562.

§ 38.2-4007. Adoption of bylaws.

Each burial society now authorized to do business in this Commonwealth shall, before the adoption of any bylaw or amendment, mail the proposed bylaw or amendment to the members and directors of the society, together with a notice of the time and place when the proposed bylaw or amendment will be considered.

Code 1950, §§ 38-145, 38-456; 1952, c. 317, §§ 38.1-532, 38.1-555; 1986, c. 562.

§ 38.2-4008. Fidelity bond required.

As a condition of licensing, each burial society, on behalf of its officers who are charged with the duty of handling its funds, shall obtain, and thereafter for as long as the license remains in effect keep in force, a surety bond with corporate security approved by the Commission. The bond shall be in an amount, not less than $10,000 nor more than $100,000, to be fixed by the Commission. The bond shall secure to the society and its members the faithful performance of its officers' duties and a proper accounting of its funds. The Commission may require the society to provide certification of compliance with the requirements of this section.

Code 1950, § 38-148; 1952, c. 317, § 38.1-558; 1986, c. 562; 2001, c. 706; 2002, c. 147.

§ 38.2-4009. Inspection of books and papers.

The books and papers of the burial society shall be open for examination by members or their representatives at all reasonable times.

Code 1950, §§ 38-145, 38-457; 1952, c. 317, §§ 38.1-533, 38.1-555; 1986, c. 562.

§ 38.2-4010. Accumulation of reserve for an emergency fund.

A. In addition to provision for liability incurred on account of claims reported but not settled, claims incurred but not reported, and premiums, dues or assessments collected in advance, every company shall accumulate and maintain a reserve for an emergency fund, which in the preparation of financial statements shall be considered a liability of the corporation, of at least $10,000.

B. Each burial society shall, in each calendar year, add to that reserve for an emergency fund at least five percent of its net receipts from premiums, dues or assessments from policies of life insurance until the total accumulated reserve fund equals twenty percent of the total benefits provided in the outstanding certificates of life insurance. However, when the corporation has issued policies of life insurance on a legal reserve basis, the net receipts from those policies shall not be considered in the calculation of the reserve for an emergency fund, but the burial society shall be required to maintain only the reserve provided for in the certificates.

Code 1950, §§ 38-149, 38-461; 1952, c. 317, §§ 38.1-534, 38.1-559; 1986, c. 562.

§ 38.2-4011. Maintenance of reserve for an emergency fund.

When the reserve for an emergency fund accumulated in accordance with the provisions of § 38.2-4010 equals the maximum amount provided in subsection B of that section, it shall be maintained at not less than that amount. However, no burial society shall be required, in any one year, to set aside more than five percent of its net receipts from premiums, dues or assessments from certificates of life insurance, other than certificates issued on a legal reserve basis.

Code 1950, § 38-462; 1952, c. 317, § 38.1-535; 1986, c. 562.

§ 38.2-4012. Disposition of reserve for an emergency fund; discontinuance of business; receiver.

The reserve for an emergency fund required by § 38.2-4010, together with the income earned on that fund, shall be a trust fund for the payment of death claims. Whenever the reserve for an emergency fund exceeds the amount of the maximum sum provided by the certificates issued and in force by the society, the investment income generated by the reserve or an emergency fund shall be added back into that fund. It may apply that excess, or any portion of that excess, (i) in reduction of assessments upon certificate holders, or (ii) in any other equitable division or apportionment that its rules or contracts provide for the payment of claims. When any society discontinues business, delinquency proceedings against the society may be instituted and conducted as provided in Chapter 15 (§ 38.2-1500 et seq.) of this title. In the delinquency proceedings, any unexhausted portion of the reserve for an emergency fund shall be used in payment of accrued claims upon certificates. If this amount is insufficient to pay the claims in full, then the payment of the claims shall be on a pro rata basis; and if a balance remains, the payment of claims shall then be made in the order of their occurrence. Any remaining balance shall be distributed among the members in proportion to their respective premium payments during the latest full year of active business of the society.

Code 1950, § 38-464; 1952, c. 317, § 38.1-537; 1986, c. 562.

§ 38.2-4013. Certificates of membership.

Each burial society shall issue certificates of membership to each member of the society. Each certificate shall state the amount of the benefit payable and the name of the beneficiary.

Code 1950, § 38-150; 1952, c. 317, § 38.1-560; 1986, c. 562.

§ 38.2-4014. Required grace period.

Each certificate shall have a provision that the certificate holder is entitled to a grace period of thirty-one days within which the payment of any call or assessment may be paid after the first month. The provision shall also state that during the grace period the certificate shall continue in full force, but if a claim arises under the policy during the grace period but before the call or assessment is paid, the amount of the call or assessment may be deducted from the amount payable under the certificate.

Code 1950, §§ 38-145, 38-449; 1952, c. 317, §§ 38.1-543, 38.1-555; 1986, c. 562.

§ 38.2-4015. Certificate to specify amount of payment and when to be paid.

Each certificate issued by any burial society shall specify the sum of money payable upon the occurrence of the risk insured against. The amount payable shall not be larger than one assessment upon the entire membership. Each certificate shall also state that within thirty days after due proof of the occurrence of the insured risk, payment shall be made.

Code 1950, §§ 38-145, 38-450; 1952, c. 317, §§ 38.1-544, 38.1-555; 1986, c. 562.

§ 38.2-4016. Payments become liens on society's property.

Upon the occurrence of the risk insured against, the burial society shall be obligated to the beneficiary for payment of the claim unless the contract is invalid because of fraud or other reason. This indebtedness shall be a lien upon all the property, effects and bills receivable of the society. This indebtedness shall have priority over all future incurred indebtedness, except as provided in this chapter in the case of the distribution of assets of an insolvent corporation, and as to rights of third parties.

Code 1950, §§ 38-145, 38-451; 1952, c. 317, §§ 38.1-545, 38.1-555; 1986, c. 562.

§ 38.2-4017. Notice of assessment.

Each notice of assessment made by any burial society upon any of its members shall state the cause and purpose of the assessment.

Code 1950, §§ 38-145, 38-453; 1952, c. 317, §§ 38.1-547, 38.1-555; 1986, c. 562.

§ 38.2-4018. Liability on officers and directors for failing to levy assessments.

The officers or directors of any society who, after due proof of death has been filed, for sixty days refuse or neglect to levy an assessment to pay a claim not disputed by reason of fraud or validity when the death or emergency fund is insufficient to pay the claim, shall be liable to the beneficiary of the certificate. The liability of the officers or directors shall be for a sum not exceeding the face amount of the claim.

Code 1950, §§ 38-145, 38-454; 1952, c. 317, §§ 38.1-549, 38.1-555; 1986, c. 562.

§ 38.2-4019. Beneficiaries.

No person other than a spouse, relative by blood to the fourth degree, parent-in-law, child-in-law, stepparent, stepchild, or child by legal adoption of the member, or one who is dependent upon the member or one who has an insurable interest in the life of the member as described in § 38.2-301, shall be named a beneficiary of the member's certificate. Within the above limitations, each member shall have the right to designate his beneficiary and to change his beneficiary, upon due notice to the society. If the beneficiary is not living or if no allowable beneficiary has been designated, any proceeds otherwise payable shall be payable to the member's estate.

Code 1950, § 38-151; 1952, c. 317, § 38.1-561; 1986, c. 562; 2020, c. 900.

§ 38.2-4020. When certificate invalid.

A certificate of membership shall be invalid if:

1. The certificate holder was ill at the time the certificate was procured;

2. Any person concerned in the procurement of the certificate had reason to believe that the illness existed at that time;

3. The illness continued to the death of the certificate holder and was a contributing cause of death;

4. Health questions were not asked on the application for coverage; and

5. The certificate holder died within sixty days from the date the certificate was issued.

Code 1950, § 38-153; 1952, c. 317, § 38.1-562; 1986, c. 562.

§ 38.2-4021. Interest in benefits; assignability; liability to attachment, etc.

No beneficiary shall have or obtain any vested interest in a benefit until the benefit has become due and payable upon the death of the member. No certificate of membership in any burial society, nor any interest or rights in the certificate shall be assigned unless the assignment is to a person authorized by § 38.2-4019 to be named as a beneficiary except for the purpose of funding or paying for a preneed funeral contract as defined in § 54.1-2800, notwithstanding the provisions of § 38.2-4022, and so long as such assignment is revocable by the assignor. No money or other benefit provided by any burial society shall be liable to attachment, garnishment or other process, or be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary, or any other person who may have a right to the benefit, either before or after payment.

Code 1950, § 38-152; 1952, c. 317, § 38.1-563; 1983, c. 94; 1986, c. 562; 1987, c. 647; 1989, c. 684.

§ 38.2-4022. Certain contracts with undertakers, etc., forbidden.

No burial society shall contract to pay or pay benefits provided under certificates of membership, to any official or designated undertaker or mortician or person engaged in the business of conducting and servicing funerals, so as to deprive the representatives or family of the deceased member from, or in any way control them in, obtaining funeral supplies and services in an open competitive market.

Code 1950, § 38-155; 1952, c. 317, § 38.1-565; 1986, c. 562.