| (a) The following are membership fee plans. (1) Plan 1. The first three monthly assessments may be stipulated as a membership fee and may be placed in the expense fund. All other premiums or assessments shall be known as regular premium assessments and shall be divided as follows. (A) The regular premium assessments on all life policies, including life coverages in accident and health policies, shall be divided so as to place an amount at least equal to the renewal net premium in the mortuary fund in accordance with approved statutory reserve standards adopted by the company or association. All other portions of the premiums or assessments may be placed in the expense fund. All policy claims may be paid out of the mortuary fund. (B) The regular premium assessments on all health, accident, accidental death, sickness, and hospitalization policies shall be divided so that at least 60% of such premiums shall be placed
in the mortuary fund of the company or association. All other portions of the premiums or assessments may be placed in the expense fund. All policy claims may be paid out of the mortuary fund. (2) Plan 2. The first six monthly assessments may be stipulated as a membership fee and may be placed in the expense fund. All other premiums or assessments shall be known as regular premium assessments and shall be divided as follows. (A) The regular premium assessments on all life policies, including life coverages in accident and health policies, shall be divided so as to place an amount at least equal to the renewal net premium in the mortuary fund in accordance with approved statutory reserve standards adopted by the company or association. All other portions of the premiums or assessments may be placed in the expense fund. All policy claims may be paid out of the mortuary fund. (B) The regular premium assessments on all health,
accident, accidental death, sickness, and hospitalization policies shall be divided so that at least 60% of such premiums shall be placed in the mortuary fund of the company or association. All other portions of the premiums or assessments may be placed in the expense fund. All policy claims may be paid out of the mortuary fund. (3) Plan 3. One hundred percent of the premiums of assessments for the first policy year on health, accident, accidental death, sickness, and hospitalization policies, excluding life coverages in such policies, may be stipulated as a membership fee and may be placed in the expense fund. All first-year claims shall be paid from the expense fund. All other premiums or assessments shall be known as regular premium assessments and divided so that at least 60% of such premiums are to be placed in the mortuary fund of the company or association. All other portions of the premiums or assessments may be placed in the expense fund. All second and
subsequent year claims may be paid out of the mortuary fund. Plan 3 is not applicable to life policies or life coverages. Any company adopting Plan 3 for collection of membership fees must make the statutory deposit from the expense fund and replenish it from that fund when necessary. In lieu of a deposit from the expense fund, but in addition to the mortuary fund statutory deposit, a company may file a bond in the form and in an amount equal to the statutory deposit, executed by a licensed surety acceptable to the State Board of Insurance. The expense of such bond shall be borne by the expense fund. (4) Plan 4. All premiums or assessments, including the first, shall be known as regular premium assessments and shall be divided as follows. (A) The regular premium assessments on all life policies, including life coverages in accident and health policies, shall be divided so as to place an amount at least equal to the renewal net premium in the
mortuary fund in accordance with approved statutory reserve standards adopted by the company or association. All other portions of the premiums or assessments may be placed in the expense fund. All policy claims may be paid out of the mortuary fund. (B) The regular premium assessments on all health, accident, accidental death, sickness, and hospitalization policies shall be divided so that at least 60% of such premiums shall be placed in the mortuary fund of the company or association. All other portions of the premiums or assessments may be placed in the expense fund. All policy claims may be paid out of the mortuary fund. (b) Each company or association, other than those operating on the assessment as needed basis under the provisions of the Insurance Code, Article 14.31, shall adopt and follow one of the membership fee plans established by this section if it has not already done so, and shall have appropriate provisions therefor in its
constitution and bylaws. It is not required that the same membership fee plan be adopted for both life and accident and health policies. (c) Bylaws may provide that upon advance approval of the State Board of Insurance the board of directors may change the plan of operation to another plan or plans provided any plan adopted is in accordance with a plan then prescribed by the State Board of Insurance. (d) At the time of receiving an application for a policy, the agent or other person acting for the company or association shall collect from the applicant all the funds required and shall give to the applicant a written receipt for such funds.
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