Full Text of SB1876 102nd General Assembly
SB1876enr 102ND GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Insurance Code is amended by | 5 | | changing Section 231.1 as follows:
| 6 | | (215 ILCS 5/231.1) (from Ch. 73, par. 843.1)
| 7 | | Sec. 231.1. Group Life Insurance Standard Provision. No | 8 | | policy of group
life insurance shall be delivered in this | 9 | | State unless it contains in substance
the following | 10 | | provisions, or provisions which in the opinion of the Director
| 11 | | are more favorable to the persons insured, or at least as | 12 | | favorable to the
persons insured and more favorable to the | 13 | | policyholder, provided, however,
(a) that provisions (F) to | 14 | | (K) inclusive shall not apply to policies insuring
the lives | 15 | | of debtors; (b) that the standard provisions
required for | 16 | | individual life insurance policies shall not apply to group
| 17 | | life insurance policies; and (c) that if the group life | 18 | | insurance policy
is on a plan of insurance other than the term | 19 | | plan, it shall contain a nonforfeiture
provision which in the | 20 | | opinion of the Director is equitable to the insured
persons | 21 | | and to the policyholder, but nothing herein shall be construed | 22 | | to
require that group life insurance policies contain the same | 23 | | nonforfeiture
provisions as are required for individual life |
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| 1 | | insurance policies:
| 2 | | (A) A provision that the policyholder is entitled to a | 3 | | grace period of
31 days for the payment of any premium due | 4 | | except the first, during which
grace period the death benefit | 5 | | coverage shall continue in force, unless
the policyholder | 6 | | shall have given the insurer written notice of discontinuance
| 7 | | in advance of the date of discontinuance and in accordance | 8 | | with the terms
of the policy. The policy may provide that the | 9 | | policyholder shall be liable
to the insurer for the payment of | 10 | | a pro rata premium for the time the policy
was in force during | 11 | | such grace period.
| 12 | | (B) A provision that validity of the policy shall not be | 13 | | contested, except
for nonpayment of premiums, after it has | 14 | | been in force for two years from
its date of issue; and that no | 15 | | statement made by any person insured under
the policy relating | 16 | | to his insurability shall be used in contesting the
validity | 17 | | of the insurance with respect to which such statement was made
| 18 | | after such insurance has been in force prior to the contest for | 19 | | a period
of two years during such person's lifetime nor unless | 20 | | it is contained in
a written instrument signed by him; | 21 | | provided, however, that no such provision
shall preclude the | 22 | | assertion at any time of defenses based upon provisions
in the | 23 | | policy which relate to eligibility for coverage.
| 24 | | (C) A provision that a copy of the application, if any, of | 25 | | the policyholder
shall be attached to the policy when issued, | 26 | | and that all statements made by
the policyholder shall be |
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| 1 | | deemed representations and not warranties, and
that no | 2 | | statement made by any person insured shall be used in any | 3 | | contest
unless a copy of the instrument containing the | 4 | | statement
is or has been furnished to such person or, in the | 5 | | event of death or incapacity
of the insured person, to his | 6 | | beneficiary or personal representative.
| 7 | | (D) A provision setting forth the conditions, if any, | 8 | | under which the
insurer reserves the right to require a person | 9 | | eligible for insurance to
furnish evidence of individual | 10 | | insurability satisfactory to the insurer
as a condition to | 11 | | part or all of his coverage.
| 12 | | (E) A provision specifying an equitable adjustment of | 13 | | premiums or of benefits
or of both to be made in the event the | 14 | | age of a person insured has been
misstated, such provision to | 15 | | contain a clear statement of the method of
adjustment to be | 16 | | made.
| 17 | | (F) A provision that any sum becoming due by reason of the | 18 | | death of the
person insured shall be payable to the | 19 | | beneficiary designated by the person
insured, except that | 20 | | where the policy contains conditions pertaining to
family | 21 | | status the beneficiary may be the family member specified by | 22 | | the
policy terms, subject to the provisions of the policy in | 23 | | the event there
is no designated beneficiary, as to all or any | 24 | | part of such sum, living
at the death of the person insured, | 25 | | and subject to any right reserved by
the insurer in the policy | 26 | | and set forth in the certificate to pay at its
option a part of |
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| 1 | | such sum not exceeding $2,000 to any person appearing to
the | 2 | | insurer to be equitably entitled thereto by reason of having | 3 | | incurred
funeral or other expenses incident to the last | 4 | | illness or death of the person insured.
| 5 | | (G) A provision that the insurer will issue to the | 6 | | policyholder for delivery
to each person insured a certificate | 7 | | setting forth a statement as to the
insurance protection to | 8 | | which he is entitled, to whom the insurance benefits
are | 9 | | payable, a statement as to any dependent's coverage included | 10 | | in such
certificate, and the rights and conditions set forth | 11 | | in provisions (H),
(I), (J) and (K) following.
| 12 | | (H) A provision that if the insurance, or any portion of | 13 | | it, on a person
covered under the policy or on the dependent of | 14 | | a person covered, ceases
because of termination of employment | 15 | | or of membership in the class or classes
eligible for coverage | 16 | | under the policy, such person shall be entitled to
have issued | 17 | | to him by the insurer, without evidence of insurability, an
| 18 | | individual policy of life insurance without disability or | 19 | | other supplementary
benefits, unless such right to convert | 20 | | such coverage was provided for
in the group policy and is | 21 | | applied for in the application for conversion,
provided that | 22 | | an application for the individual policy shall be made,
and | 23 | | the first premium paid to the insurer, within 31 days after | 24 | | such termination,
and provided further that:
| 25 | | (1) the individual policy may, at the option of such | 26 | | person, be on any
one of the forms then customarily issued |
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| 1 | | by the insurer at the age and for
the amount applied for, | 2 | | except that the group policy may exclude the option
to | 3 | | elect term insurance;
| 4 | | (2) the individual policy shall be in an amount equal | 5 | | to, unless such
person chooses to elect a lesser amount, | 6 | | the amount
of life insurance which ceases because of such | 7 | | termination, less the amount of any
life insurance for | 8 | | which such person becomes eligible under the same or
any | 9 | | other group policy within 31 days after such termination, | 10 | | provided that
any amount of insurance which shall have | 11 | | matured on or before the date of
such termination as an | 12 | | endowment payable to the person insured, whether
in one | 13 | | sum or in installments or in the form of an annuity, shall | 14 | | not, for
the purposes of this provision, be included in | 15 | | the amount which is considered
to cease because of such | 16 | | termination; and
| 17 | | (3) the premium on the individual policy shall be at | 18 | | the insurer's then
customary rate applicable to the form | 19 | | and amount of the individual policy,
to the class of risk | 20 | | to which such person then belongs,
and to such person's
| 21 | | age attained on the effective date of the individual | 22 | | policy.
| 23 | | (4) If any individual insured under a group life | 24 | | insurance policy becomes
entitled under the terms of such | 25 | | policy to have an individual policy of
life insurance | 26 | | issued and if such individual is not given notice of the
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| 1 | | existence of such right at least 15 days prior to the | 2 | | expiration date of
such period, then in such event the | 3 | | individual shall have an additional
period within which to | 4 | | exercise such right, but nothing herein contained
shall be | 5 | | construed to continue any insurance beyond the period | 6 | | provided
in such policy. This additional period shall | 7 | | expire 15 days next after
the individual is given such | 8 | | notice but in no event shall such additional
period extend | 9 | | beyond 60 days next after the expiration date of the | 10 | | period
provided in such policy. Written notice presented | 11 | | to the individual or
mailed by the policyholder to the | 12 | | last known address of the individual or
mailed by the | 13 | | insurer to the last known address of the individual as | 14 | | furnished
by the policyholder shall constitute notice for | 15 | | the purpose of this Section.
| 16 | | Subject to the same conditions set forth above the | 17 | | conversion privilege
shall be available (i) to a surviving | 18 | | dependent, if any, at the death of
the employee or member, with | 19 | | respect to the coverage under the group policy
which | 20 | | terminates by reason of such death and (ii) to the dependent of | 21 | | the
employee or member upon termination of coverage of the | 22 | | dependent, while
the employee or member remains under the | 23 | | group policy, by reason of the
dependent ceasing to be a | 24 | | qualified family member under the group policy.
| 25 | | (I) A provision, except in the case of a policy described | 26 | | in paragraph
(B) of Section 230.1, that the termination of the |
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| 1 | | employment of an employee
or the membership of a member shall | 2 | | not terminate the insurance of such
employee or member under | 3 | | the group policy until the expiration of such period
for which | 4 | | the premium for such employee or member has been paid, not | 5 | | exceeding 31 days.
| 6 | | (J) A provision that from time to time all new employees or | 7 | | members eligible
for insurance and desiring the same shall be | 8 | | added to the group or class
thereof originally insured.
| 9 | | (K) A provision that if the group policy terminates or is
| 10 | | amended so as to terminate the insurance of any class of | 11 | | insured persons,
every person insured thereunder at the date | 12 | | of such termination whose insurance
terminates, including the | 13 | | insured dependent of a covered person, and who
has been so | 14 | | insured for at least five years prior to such termination date | 15 | | shall be
entitled to have issued by the insurer an individual | 16 | | policy of life insurance,
subject to the same conditions and | 17 | | limitations as are provided by provision
(H) above, except | 18 | | that the group policy may provide that the amount of such
| 19 | | individual policy shall not exceed the smaller of (a) the | 20 | | amount of the
person's life insurance protection ceasing | 21 | | because of the termination or amendment of
the group policy, | 22 | | less the amount of any life insurance for which he is
or | 23 | | becomes eligible under a group policy issued or reinstated by | 24 | | the same
or another insurer within 31 days after such | 25 | | termination, or (b) $10,000.
| 26 | | (L) A provision that if a person insured under the group |
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| 1 | | policy, or the
insured dependent of a covered person, dies | 2 | | during the period within which
the individual would have been | 3 | | entitled to have an individual policy issued
in accordance | 4 | | with provisions (H) or (I) above and before such an individual
| 5 | | policy shall have become effective, the amount of life | 6 | | insurance which he
would have been entitled to have issued | 7 | | under such individual policy shall
be payable as a claim under | 8 | | the group policy, whether or not application
for the | 9 | | individual policy or the payment of the first premium therefor | 10 | | has been made.
| 11 | | (M) If active employment is a condition of insurance, a | 12 | | provision
that an insured may continue coverage during the | 13 | | insured's total disability
by timely payment to the | 14 | | policyholder of that portion, if any, of the premium
that | 15 | | would have been required from the insured had total disability | 16 | | not
occurred. The continuation shall be on a premium paying | 17 | | basis for a period
of six months from the date on which the | 18 | | total disability started, but not
beyond the earlier of (a) | 19 | | approval by the insurer of continuation of the
coverage under | 20 | | any disability provision which the group insurance policy
may | 21 | | contain or (b) the discontinuance of the group insurance | 22 | | policy.
| 23 | | (N) In the case of a policy of group life insurance | 24 | | replacing another policy of group life insurance in force with | 25 | | another insurance carrier immediately prior to the effective | 26 | | date of the new policy, a provision preventing loss of |
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| 1 | | coverage, subject to premium payments, for those active | 2 | | employees who are not actively at work on the effective date of | 3 | | the new policy if the following conditions are met: | 4 | | (1) the active employee was insured under the prior | 5 | | carrier's group life insurance policy immediately prior to | 6 | | the effective date of the policy; | 7 | | (2) the active employee is not actively at work on the | 8 | | effective date of the new policy; | 9 | | (3) the active employee is a member of an eligible | 10 | | class under the policy; and | 11 | | (4) the active employee is not receiving or eligible | 12 | | to receive benefits under the prior carrier's group life | 13 | | insurance policy. | 14 | | (O) (N) In the case of a policy insuring the lives of | 15 | | debtors,
a provision that the insurer will furnish to the | 16 | | policyholder for delivery
to each debtor insured under the | 17 | | policy a certificate of insurance describing
the coverage and | 18 | | specifying that the death benefit shall first be applied
to | 19 | | reduce or extinguish the indebtedness. Whenever the amount of | 20 | | insurance
payable exceeds the amount of outstanding | 21 | | indebtedness the excess benefit
shall be payable to the person | 22 | | otherwise contractually or legally entitled
thereto; if there | 23 | | be no person determined to be so entitled, such excess
shall be | 24 | | paid to the estate of the insured person.
| 25 | | (Source: P.A. 83-1465.)
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