Section 4514. Creation and maintenance of separate funds; premiums; assessments and other contributions of members

(a)  Every  authorized  society  shall  create  a  separate fund or funds for the payment of all
  insurance benefits as defined in section four thousand five hundred  one
  of  this article, under all certificates or other contracts issued by it
  or under any provisions of its constitution  or  by-laws  which  require
  payment  of  premiums  or  other contributions as consideration for such
  benefits. All such funds shall be known as the insurance funds  of  such
  society.  In  addition  to  such  insurance  funds, any such society may
  create, maintain, invest, disburse and apply, separate  and  independent
  from  such  insurance funds, any general, expense, emergency, patriotic,
  relief or other similar funds in accordance with  its  constitution  and
  by-laws.  Except as provided in subsection (g) hereof, all such funds of
  any such society may be invested only as permitted by paragraph  two  of
  subsection  (a)  of  section  one  thousand  four  hundred three of this
  chapter. All such funds shall be held, invested and  disbursed  for  the
  use  and benefit of the society, and no member or beneficiary shall have
  or  acquire  individual  rights  therein,  or  become  entitled  to  any
  apportionment or the surrender of any part thereof, except in accordance
  with  the  terms and provisions of an insurance or annuity contract made
  by such society.
    (b) In a provision of its by-laws relating to the payment of  premiums
  or  other  required  periodical  contributions by insured members, every
  such society shall distinctly indicate the amount  or  portion  of  such
  premium  or  contribution which is to be used for insurance benefits, to
  be known as the insurance contribution, and the amount or portion  which
  may  be  used  for  expenses  and  other  purposes.  The  amount of such
  insurance contributions shall be not less  than  that  required  by  the
  standard  of  valuation  applicable  to  such certificate or contract in
  accordance with the provisions of this  chapter.  Every  such  insurance
  contribution  shall  without  any  deduction  be paid into the insurance
  funds of such society.
    (c) No authorized society shall issue or  deliver  in  this  state  or
  elsewhere  any  certificate  which  does  not  require stated periodical
  premiums or contributions at least equal to those required according  to
  the  minimum  valuation standards set forth in subsection (c) of section
  four thousand five hundred seventeen of this  article;  nor  shall  such
  society  insure  in  this  state  or  elsewhere members for temporary or
  permanent disability benefits or for hospital expense  or  surgical  and
  medical  expense unless the rates thereof are adequate upon the basis of
  tables based upon reliable experience with an  interest  assumption  not
  higher than three percent per annum.
    (d)  The  insurance  funds  of every such society shall consist of the
  insurance  contributions  and  of  all  interest  or  other  income   on
  investments  in  such funds and all other accretions to such funds. Such
  insurance funds may be used  for  the  payment  of  benefits  under  any
  insurance  or  annuity  contract  and  for  the  payment  of expenses of
  investment of such funds. No part of such insurance funds shall be  used
  for  any  other expenses or other purposes, except that any such society
  having admitted assets, as shown by its last annual statement filed with
  the superintendent, in excess of one hundred five percent of its  entire
  liabilities,  including  its required reserves computed on a net tabular
  basis, may transfer or allocate  such  excess  insurance  funds  to  the
  expense   or  other  funds  of  the  society,  in  accordance  with  its
  constitution and by-laws; but the amount so transferred in any  calendar
  year  shall  not  exceed whichever is the smaller of (i) five percent of
  the total contributions to the mortuary fund or funds  of  such  society

  during  the next preceding calendar year or (ii) seventy-five per centum
  of the sum of
    (1)  the savings in mortality during the preceding calendar year under
  certificates issued  on  rates  creating  and  maintaining  reserves  in
  accordance with the table of mortality used, and
    (2)   the  excess  interest  earnings  over  and  above  the  interest
  requirements to maintain reserves, after deducting  from  such  sum  the
  dividends,  if  any,  paid  to  members,  as determined by the valuation
  report and annual statement required by this  chapter,  but  no  society
  shall  make  any  such  transfer  or allocation within the limits herein
  described which pays or agrees to pay a first year commission in  excess
  of  fifty-five  percent  of  the  year's  premium  on any life insurance
  certificate or annuity contract issued by such society. In  addition  to
  any  transfer  or  allocation made within the limits herein described, a
  society may transfer or allocate from the mortuary fund or funds to  the
  general  or  expense fund, surrender charges, if any, provided for under
  terminated life insurance contracts on a legal reserve basis.
    (e) Any such  society  may  ascertain  and  distribute  any  divisible
  surplus  accruing under its certificates on an equitable basis, provided
  that any apportionment of such surplus shall be only on an annual basis.
    (f)  Whenever  any  authorized  society  heretofore  organized  in  or
  licensed  to do business in this state has substantially separate groups
  or classes of certificates in force on which premiums or assessments are
  payable according  to  substantially  different  tables  of  rates,  the
  superintendent may require such society to file a separate accounting in
  its annual report of such major classifications of certificates.
    (g)  Any  such  society,  for the accomplishment of any lawful purpose
  provided for in its charter or constitution,  may  own,  hold  or  lease
  personal  and  real  property located within or without this state, with
  necessary buildings thereon; but no such personal or real property shall
  be deemed an admitted asset of such society, within the meaning of  this
  chapter,  except  the  home office building of such society to an amount
  not exceeding that permitted by paragraph seven  of  subsection  (a)  of
  section one thousand four hundred four of this chapter. Any such real or
  personal property may be acquired and maintained only out of the general
  or  expense  fund  of such society, any voluntary contributions which it
  may receive therefor, and such reasonable charges as may be made for the
  facilities or services furnished thereby.
    (h) Every authorized society shall at all times maintain a surplus not
  less than the minimum amount established by rule of the superintendent.