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1 | AN ACT concerning insurance.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 1. Short title. This Act may be cited as the | |||||||||||||||||||
5 | Insurable Interests Act. | |||||||||||||||||||
6 | Section 5. Insurable interest. Any individual of lawful age | |||||||||||||||||||
7 | may take out an insurance contract upon himself for the benefit | |||||||||||||||||||
8 | of any person. No person shall knowingly procure or cause to be | |||||||||||||||||||
9 | procured any insurance contract upon another individual unless | |||||||||||||||||||
10 | the benefits under the contract are payable to (i) the insured | |||||||||||||||||||
11 | or his personal representative; or (ii) a person having an | |||||||||||||||||||
12 | insurable interest in the insured at the time the contract was | |||||||||||||||||||
13 | made. | |||||||||||||||||||
14 | Section 10. Definitions. In this Act: | |||||||||||||||||||
15 | "Insurable interest" means: | |||||||||||||||||||
16 | (a) in the case of individuals related closely by blood | |||||||||||||||||||
17 | or by law, or who would be, but for the individuals being | |||||||||||||||||||
18 | of the same gender and a marriage between them not then | |||||||||||||||||||
19 | recognized by this State, a substantial interest | |||||||||||||||||||
20 | engendered by love and affection; | |||||||||||||||||||
21 | (b) in the case of other persons, a lawful and | |||||||||||||||||||
22 | substantial economic interest in the life, health, and |
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1 | bodily safety of the insured. "Insurable interest" shall | ||||||
2 | not include an interest that arises only upon the death, | ||||||
3 | disability, or injury of the insured; | ||||||
4 | (c) an employer providing life, health, disability, | ||||||
5 | retirement, or similar benefits to some or all of its | ||||||
6 | employees or the employees of its affiliates, or their | ||||||
7 | dependents or beneficiaries has an insurable interest in | ||||||
8 | the lives of all its employees or the employees of its | ||||||
9 | affiliates. The trustees of a trust established by an | ||||||
10 | employer substantially for the benefit of the employer, or | ||||||
11 | for the benefit of some or all of the employees in which | ||||||
12 | such employer has an insurable interest, or the dependents | ||||||
13 | or beneficiaries of such employees has the same insurable | ||||||
14 | interest in the life of such employees as does the | ||||||
15 | employer; | ||||||
16 | (d) in the case of a party to a contract or option for | ||||||
17 | the purchase or sale, including a redemption of an interest | ||||||
18 | in a business proprietorship, partnership, or firm or of | ||||||
19 | shares of stock of a corporation or of an interest in such | ||||||
20 | shares, the lawful and substantial economic interest | ||||||
21 | required in subsection (b) of this Section shall be deemed | ||||||
22 | to exist in each individual party to such contract or | ||||||
23 | option and for the purpose of such contract or option only, | ||||||
24 | in addition to any insurable interest that may otherwise | ||||||
25 | exist as to the life of such individual; | ||||||
26 | (e) in the case of a trustee, the lawful and |
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1 | substantial economic interest required in subsection (b) | ||||||
2 | of this Section shall be deemed to exist in (i) the | ||||||
3 | individual insured who established the trust, (ii) each | ||||||
4 | individual in whose life the owner of the trust for federal | ||||||
5 | income tax purposes has an insurable interest, and (ii) | ||||||
6 | each individual in whose life a beneficiary of a trust has | ||||||
7 | an insurable interest; | ||||||
8 | (f) in the case of an organization described in | ||||||
9 | paragraph (3), (4), (5), (9), or (10) of subsection (c) of | ||||||
10 | Section 501 of the Internal Revenue Code, the lawful and | ||||||
11 | substantial economic interest required in subsection (b) | ||||||
12 | of this Section shall be deemed to exist where (i) the | ||||||
13 | insured or proposed insured has either assigned all or part | ||||||
14 | of his ownership rights in a policy of contract to such an | ||||||
15 | organization or has executed a written consent to the | ||||||
16 | issuance of a policy or contract to such organization and | ||||||
17 | (ii) such organization is named in the policy or contract | ||||||
18 | as owner or as beneficiary. | ||||||
19 | "Employee" includes any and all directors, officers, | ||||||
20 | partners, employees, and retired employees and it shall include | ||||||
21 | any other former employees, but only for the purpose of | ||||||
22 | replacing existing life insurance policies that will be | ||||||
23 | surrendered in exchange for new life insurance policies in an | ||||||
24 | amount not exceeding the insurance being surrendered, except | ||||||
25 | that the amount of new life insurance may exceed the insurance | ||||||
26 | being surrendered to the extent the application of the cash |
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1 | surrender value from the old insurance as a premium under the | ||||||
2 | new life insurance contract requires a larger amount of | ||||||
3 | insurance to qualify as life insurance, and not be treated as a | ||||||
4 | modified endowment contract for federal income tax purposes. | ||||||
5 | "Employer" includes corporations, limited liability | ||||||
6 | companies or partnerships, statutory trusts, business trusts, | ||||||
7 | and other business entities, including associations of | ||||||
8 | employers and their affiliates. | ||||||
9 | Section 15. Application. This Act shall apply to all trusts | ||||||
10 | existing before, on, or after its enactment, regardless of the | ||||||
11 | effective date of the governing instrument under which the | ||||||
12 | trust was created.
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13 | Section 99. Effective date. This Act takes effect upon | ||||||
14 | becoming law.
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