Full Text of SB2819 96th General Assembly
SB2819enr 96TH GENERAL ASSEMBLY
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| AN ACT concerning insurance.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Illinois Insurance Code is amended by | 5 |
| changing Sections 224 and 408.3 as follows: | 6 |
| (215 ILCS 5/224) (from Ch. 73, par. 836) | 7 |
| Sec. 224. Standard provisions for life policies. | 8 |
| (1) After the
first day of July, 1937, no policy of life | 9 |
| insurance other than
industrial, group or annuities and pure | 10 |
| endowments with or without
return of premiums or of premiums | 11 |
| and interest, may be issued or
delivered in this State, unless | 12 |
| such policy contains in substance the
following provisions: | 13 |
| (a) A provision that all premiums after the first shall | 14 |
| be payable
in advance either at the home office of the | 15 |
| company or to an agent of
the company, upon delivery of a | 16 |
| receipt signed by one or more of the
officers who shall be | 17 |
| designated in the policy, when such receipt is
requested by | 18 |
| the policyholder. | 19 |
| (b) A provision that the insured is entitled to a grace | 20 |
| period
either of 30 days or of one month within which the | 21 |
| payment of any
premium after the first may be made, subject | 22 |
| at the option of the
company to an interest charge not in | 23 |
| excess of 6% per annum for the
number of days of grace |
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| elapsing before the payment of the premium,
during which | 2 |
| period of grace the policy shall continue in force, but in
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| case the policy becomes a claim during the grace period | 4 |
| before the
overdue premium is paid, or the deferred | 5 |
| premiums of the current policy
year, if any, are paid, the | 6 |
| amount of such premium or premiums with
interest thereon | 7 |
| may be deducted in any settlement under the policy. | 8 |
| (c) A provision that the policy, together with the | 9 |
| application
therefor, a copy of which shall be endorsed | 10 |
| upon or attached to the
policy and made a part thereof, | 11 |
| shall constitute the entire contract
between the parties | 12 |
| and that after it has been in force during the
lifetime of | 13 |
| the insured a specified time, not later than 2 years from
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| its date, it shall be incontestable except for nonpayment | 15 |
| of premiums
and except at the option of the company, with | 16 |
| respect to provisions
relative to benefits in the event of | 17 |
| total and permanent disability, and
provisions which grant | 18 |
| additional insurance specifically against death
by | 19 |
| accident and except for violations of the conditions of the | 20 |
| policy
relating to naval or military service in time of war | 21 |
| or for violation of
an express condition, if any, relating | 22 |
| to aviation, (except riding as a
fare-paying passenger of a | 23 |
| commercial air line flying on regularly
scheduled routes | 24 |
| between definitely established airports) in which case
the | 25 |
| liability of the company shall be fixed at a definitely | 26 |
| determined
amount not less than the full reserve for the |
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| policy and any dividend
additions; provided that the | 2 |
| application therefor need not be attached
to or made a part | 3 |
| of any policy containing a clause making the policy
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| incontestable from date of issue. | 5 |
| (d) A provision that if it is found at any time before | 6 |
| final
settlement under the policy that the age of the | 7 |
| insured (or the age of
the beneficiary, if considered in | 8 |
| determining the premium) has been
misstated, the amount | 9 |
| payable under the policy shall be such as the
premium would | 10 |
| have purchased at the correct age or ages, according to
the | 11 |
| company's published rate at date of issue. | 12 |
| (e) A provision that the policy shall participate | 13 |
| annually in the
surplus of the company beginning not later | 14 |
| than the end of the third
policy year; and any policy | 15 |
| containing provision for annual
participation beginning at | 16 |
| the end of the first policy year, may also
provide that | 17 |
| each dividend be paid subject to the payment of the
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| premiums for the next ensuing year; and the insured under | 19 |
| any annual
dividend policy shall have the right each year | 20 |
| to have the dividend
arising from such participation either | 21 |
| paid in cash, or applied in
reduction of premiums, or | 22 |
| applied to the purchase of paid-up additional
insurance, or | 23 |
| be left to accumulate to the credit of the policy, with
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| interest at such rate as may be determined from time to | 25 |
| time by the
company, but not less than a guaranteed minimum | 26 |
| rate specified in the
policy, and payable at the maturity |
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| of the policy, but withdrawable on
any anniversary date, | 2 |
| subject to such further provisions as the policy may
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| provide regarding the application of dividends toward the | 4 |
| payment of any
premiums unpaid at the end of the grace | 5 |
| period; and if the insured fails
to notify the company in
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| writing of his election within the period of grace allowed | 7 |
| for the
payment of premium, the policy shall further | 8 |
| provide which of such
options are effective. | 9 |
| (f) A provision that after the policy has been in force | 10 |
| 3 full years
the company at any time, while the policy is | 11 |
| in force, will advance, on
proper assignment or pledge of | 12 |
| the policy and on the sole security
thereof, at a specified | 13 |
| maximum fixed or adjusted rate of interest in
accordance
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| with Section 229.5, a sum equal to, or at the
option of the | 15 |
| insured less than the amount required by Section 229.3
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| under the conditions specified thereby and with | 17 |
| notification as required
by Section 229.5; and that the | 18 |
| company will deduct
from such loan value any indebtedness | 19 |
| not already deducted in
determining such value and any | 20 |
| unpaid balance of the premium for the
current policy year, | 21 |
| and may collect interest in advance on the loan to
the end | 22 |
| of the current policy year; and any policy may also provide | 23 |
| that
if the interest on the loan is not paid when due it | 24 |
| shall be added to
the existing loan and shall bear interest | 25 |
| at the same rate. No
condition other than as provided | 26 |
| herein or in Sections 229.3 and 229.5 shall be
exacted as a |
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| prerequisite to any such loan. This clause shall not apply
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| to term insurance. | 3 |
| (g) A provision for nonforfeiture benefits and cash | 4 |
| surrender
values in accordance with the requirements of | 5 |
| paragraph (1) of Section
229.1 or, Section 229.2. | 6 |
| (h) A table showing in figures the loan values and the | 7 |
| options
available under the policy each year, upon default | 8 |
| in premium payments,
during at least the first 20 years of | 9 |
| the policy; the policy to contain
a provision that the | 10 |
| company will furnish upon request an extension of
such | 11 |
| table beyond the years shown in the policy. | 12 |
| (i) A provision that in event of default in premium | 13 |
| payments the
value of the policy is applied to the purchase | 14 |
| of other insurance as
provided in this Section, and if such | 15 |
| insurance is in force and the
original policy is not | 16 |
| surrendered to the company and cancelled, the
policy may be | 17 |
| reinstated within 3 years from such default, upon evidence
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| of insurability satisfactory to the company and payment of | 19 |
| arrears of
premiums and the payment or reinstatement of any | 20 |
| other indebtedness to
the company upon the policy, with | 21 |
| interest on the premiums
at a rate not exceeding 6% per | 22 |
| annum payable annually and with interest
on the | 23 |
| indebtedness at a rate not exceeding the rate prescribed by | 24 |
| Section
229.5. | 25 |
| (j) A provision that when a policy is a claim by the | 26 |
| death of the
insured settlement shall be made upon receipt |
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| of due proof of death . | 2 |
| Such proof shall be in writing and establish (1) the | 3 |
| fact and date of the insured's death, (2) the claimant's | 4 |
| identity, and (3) the claimant's interest and the extent | 5 |
| thereof. Such proof includes information and documents | 6 |
| necessary for the insurer to determine its liability, pay | 7 |
| the claim in compliance with all laws and regulations, and | 8 |
| be discharged from liability. A claimant shall not be | 9 |
| required to provide documents otherwise available to the | 10 |
| insurer. Settlement shall be made and
not later than 2 | 11 |
| months after the receipt of such proof. | 12 |
| (k) If the policy provides for payment of its proceeds | 13 |
| in
installments, a table showing the amount and period of | 14 |
| such installments
shall be included in the policy. | 15 |
| (l) Interest shall accrue on the proceeds payable | 16 |
| because of the
death of the insured, from date of death, at | 17 |
| the rate of 9% on the
total
amount payable or the face | 18 |
| amount if payments are to be made in
installments until the | 19 |
| total payment or first installment is paid,
unless payment | 20 |
| is made within fifteen (15) days from the date of receipt
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| by the company of due proof of loss. This provision need | 22 |
| not appear in
the policy, however, the company shall notify | 23 |
| the beneficiary at the
time of claim of this provision. The | 24 |
| payment of interest shall apply to
all policies now in | 25 |
| force, as well as those written after the effective
date of | 26 |
| this amendment. |
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| Due proof of loss shall consist of information and | 2 |
| documents necessary for the insurer to determine its | 3 |
| liability, pay the proceeds, and be discharged from | 4 |
| liability. An insurer may include a provision in the policy | 5 |
| describing proof of loss, provided that such provision is | 6 |
| not inconsistent with this subsection. | 7 |
| (m) Title on the face and on the back of the policy | 8 |
| briefly
describing its form. | 9 |
| (n) A provision, or a notice attached to the policy, to | 10 |
| the effect
that during a period of ten days from the date | 11 |
| the policy is delivered
to the policy owner, it may be | 12 |
| surrendered to the insurer together with
a written request | 13 |
| for cancellation of the policy and in such event, the
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| insurer will refund any premium paid therefor, including | 15 |
| any policy fees
or other charges. The Director may by rule | 16 |
| exempt specific types of
policies from the requirements of | 17 |
| this subsection. | 18 |
| (2) In the case of the replacement of life insurance, as | 19 |
| defined in the
rule promulgated by the Director, the replacing | 20 |
| insurer shall either (1)
delay the issuance of its policy for | 21 |
| not less than 20 days from the date
it has transmitted a policy | 22 |
| summary to the existing insurer, or (2) provide
in a form | 23 |
| titled "Notice Regarding Replacement of Life Insurance", as | 24 |
| well
as in its policy, or in a separate notice delivered with | 25 |
| the policy, that
the insured has the right to an unconditional | 26 |
| refund of all premiums paid,
and that such right may be |
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| exercised within a period of 20 days commencing
from the date | 2 |
| of delivery of such policy. Where option (2) is exercised,
the | 3 |
| replacing insurer shall also transmit a policy summary to the | 4 |
| existing
insurer within 3 working days after the date the | 5 |
| replacement policy is issued. | 6 |
| (3) Any of the foregoing provisions or portions thereof not
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| applicable to single premium or nonparticipating or term | 8 |
| policies shall
to that extent not be incorporated therein. This | 9 |
| Section shall not
apply to policies of reinsurance nor to | 10 |
| policies issued or granted
pursuant to the nonforfeiture | 11 |
| provisions prescribed in subparagraph (g)
of paragraph (1) of | 12 |
| this Section. | 13 |
| (Source: P.A. 92-139, eff. 7-24-01.)
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| (215 ILCS 5/408.3) (from Ch. 73, par. 1020.3)
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| Sec. 408.3. Insurance Financial Regulation Fund; uses. The | 16 |
| monies
deposited into the Insurance Financial
Regulation Fund | 17 |
| shall be used only for (i) payment of the expenses of the
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| Department, including related administrative expenses, | 19 |
| incurred in
analyzing, investigating and examining the | 20 |
| financial condition or control
of insurance companies and other | 21 |
| entities licensed or seeking to be
licensed by the Department, | 22 |
| including the collection, analysis and
distribution of | 23 |
| information on insurance premiums, other income, costs and
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| expenses, and (ii) to pay internal costs and expenses of the | 25 |
| Interstate
Insurance Receivership Commission allocated to this |
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| State and authorized and
admitted companies doing an insurance | 2 |
| business in this State under Article X of
the Interstate | 3 |
| Receivership Compact. All distributions and payments from the
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| Insurance Financial Regulation Fund shall be subject to | 5 |
| appropriation as
otherwise provided by law for
payment of such | 6 |
| expenses.
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| Sums appropriated under clause (ii) of the preceding | 8 |
| paragraph shall be
deemed to satisfy, pro tanto, the | 9 |
| obligations of insurers doing business in
this
State under | 10 |
| Article X of the Interstate Insurance Receivership Compact.
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| Nothing in this Code shall prohibit the General Assembly | 12 |
| from
appropriating funds from the General Revenue Fund to the | 13 |
| Department for the
purpose of administering this Code.
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| No fees collected pursuant to Section 408 of this Code | 15 |
| shall be used
for the regulation of pension funds or activities | 16 |
| by the Department in the
performance of its duties under | 17 |
| Article 22 of the Illinois Pension Code.
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| If at the end of a fiscal year the balance in the Insurance | 19 |
| Financial
Regulation Fund which remains unexpended or | 20 |
| unobligated exceeds the amount
of funds that the Director may | 21 |
| certify is needed for the purposes
enumerated in this Section, | 22 |
| then the General Assembly may appropriate that
excess amount | 23 |
| for purposes other than those enumerated in this Section.
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| Moneys in the Insurance Financial Regulation Fund may be | 25 |
| transferred to the Professions Indirect Cost Fund, as | 26 |
| authorized under Section 2105-300 of the Department of |
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| Professional Regulation Law of the Civil Administrative Code of | 2 |
| Illinois.
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| (Source: P.A. 94-91, eff. 7-1-05.)
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