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92_HB2554enr HB2554 Enrolled LRB9202146JSpc 1 AN ACT concerning payment of insurance claims. 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 Sections 224 and 357.9a 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, 12 unless such policy contains in substance the following 13 provisions: 14 (a) A provision that all premiums after the first shall 15 be payable in advance either at the home office of the 16 company or to an agent of the company, upon delivery of a 17 receipt signed by one or more of the officers who shall be 18 designated in the policy, when such receipt is requested by 19 the policyholder. 20 (b) A provision that the insured is entitled to a grace 21 period either of 30 days or of one month within which the 22 payment of any premium after the first may be made, subject 23 at the option of the company to an interest charge not in 24 excess of 6% per annum for the number of days of grace 25 elapsing before the payment of the premium, during which 26 period of grace the policy shall continue in force, but in 27 case the policy becomes a claim during the grace period 28 before the overdue premium is paid, or the deferred premiums 29 of the current policy year, if any, are paid, the amount of 30 such premium or premiums with interest thereon may be 31 deducted in any settlement under the policy. HB2554 Enrolled -2- LRB9202146JSpc 1 (c) A provision that the policy, together with the 2 application therefor, a copy of which shall be endorsed upon 3 or attached to the policy and made a part thereof, shall 4 constitute the entire contract between the parties and that 5 after it has been in force during the lifetime of the insured 6 a specified time, not later than 2 years from its date, it 7 shall be incontestable except for nonpayment of premiums and 8 except at the option of the company, with respect to 9 provisions relative to benefits in the event of total and 10 permanent disability, and provisions which grant additional 11 insurance specifically against death by accident and except 12 for violations of the conditions of the policy relating to 13 naval or military service in time of war or for violation of 14 an express condition, if any, relating to aviation, (except 15 riding as a fare-paying passenger of a commercial air line 16 flying on regularly scheduled routes between definitely 17 established airports) in which case the liability of the 18 company shall be fixed at a definitely determined amount not 19 less than the full reserve for the policy and any dividend 20 additions; provided that the application therefor need not be 21 attached to or made a part of any policy containing a clause 22 making the policy incontestable from date of issue. 23 (d) A provision that if it is found at any time before 24 final settlement under the policy that the age of the insured 25 (or the age of the beneficiary, if considered in determining 26 the premium) has been misstated, the amount payable under the 27 policy shall be such as the premium would have purchased at 28 the correct age or ages, according to the company's published 29 rate at date of issue. 30 (e) A provision that the policy shall participate 31 annually in the surplus of the company beginning not later 32 than the end of the third policy year; and any policy 33 containing provision for annual participation beginning at 34 the end of the first policy year, may also provide that each HB2554 Enrolled -3- LRB9202146JSpc 1 dividend be paid subject to the payment of the premiums for 2 the next ensuing year; and the insured under any annual 3 dividend policy shall have the right each year to have the 4 dividend arising from such participation either paid in cash, 5 or applied in reduction of premiums, or applied to the 6 purchase of paid-up additional insurance, or be left to 7 accumulate to the credit of the policy, with interest at such 8 rate as may be determined from time to time by the company, 9 but not less than a guaranteed minimum rate specified in the 10 policy, and payable at the maturity of the policy, but 11 withdrawable on any anniversary date, subject to such further 12 provisions as the policy may provide regarding the 13 application of dividends toward the payment of any premiums 14 unpaid at the end of the grace period; and if the insured 15 fails to notify the company in writing of his election within 16 the period of grace allowed for the payment of premium, the 17 policy shall further provide which of such options are 18 effective. 19 (f) A provision that after the policy has been in force 20 3 full years the company at any time, while the policy is in 21 force, will advance, on proper assignment or pledge of the 22 policy and on the sole security thereof, at a specified 23 maximum fixed or adjusted rate of interest in accordance with 24 Section 229.5, a sum equal to, or at the option of the 25 insured less than the amount required by Section 229.3 under 26 the conditions specified thereby and with notification as 27 required by Section 229.5; and that the company will deduct 28 from such loan value any indebtedness not already deducted in 29 determining such value and any unpaid balance of the premium 30 for the current policy year, and may collect interest in 31 advance on the loan to the end of the current policy year; 32 and any policy may also provide that if the interest on the 33 loan is not paid when due it shall be added to the existing 34 loan and shall bear interest at the same rate. No condition HB2554 Enrolled -4- LRB9202146JSpc 1 other than as provided herein or in Sections 229.3 and 229.5 2 shall be exacted as a prerequisite to any such loan. This 3 clause shall not apply to term insurance. 4 (g) A provision for nonforfeiture benefits and cash 5 surrender values in accordance with the requirements of 6 paragraph (1) of Section 229.1 or, Section 229.2. 7 (h) A table showing in figures the loan values and the 8 options available under the policy each year, upon default in 9 premium payments, during at least the first 20 years of the 10 policy; the policy to contain a provision that the company 11 will furnish upon request an extension of such table beyond 12 the years shown in the policy. 13 (i) A provision that in event of default in premium 14 payments the value of the policy is applied to the purchase 15 of other insurance as provided in this Section, and if such 16 insurance is in force and the original policy is not 17 surrendered to the company and cancelled, the policy may be 18 reinstated within 3 years from such default, upon evidence of 19 insurability satisfactory to the company and payment of 20 arrears of premiums and the payment or reinstatement of any 21 other indebtedness to the company upon the policy, with 22 interest on the premiums at a rate not exceeding 6% per annum 23 payable annually and with interest on the indebtedness at a 24 rate not exceeding the rate prescribed by 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 of 27 due proof of death and not later than 2 months after the 28 receipt of such proof. 29 (k) If the policy provides for payment of its proceeds 30 in installments, a table showing the amount and period of 31 such installments shall be included in the policy. 32 (l) Interest shall accrue on the proceeds payable 33 because of the death of the insured, from date of death, at 34 the rate of 9%6%on the total amount payable or the face HB2554 Enrolled -5- LRB9202146JSpc 1 amount if payments are to be made in installments until the 2 total payment or first installment is paid, unless payment is 3 made within fifteen (15) days from the date of receipt by the 4 company of due proof of loss. This provision need not appear 5 in the policy, however, the company shall notify the 6 beneficiary at the time of claim of this provision. The 7 payment of interest shall apply to all policies now in force, 8 as well as those written after the effective date of this 9 amendment. 10 (m) Title on the face and on the back of the policy 11 briefly describing its form. 12 (n) A provision, or a notice attached to the policy, to 13 the effect that during a period of ten days from the date the 14 policy is delivered to the policy owner, it may be 15 surrendered to the insurer together with a written request 16 for cancellation of the policy and in such event, the insurer 17 will refund any premium paid therefor, including any policy 18 fees or other charges. The Director may by rule exempt 19 specific types of policies from the requirements of this 20 subsection. 21 (2) In the case of the replacement of life insurance, as 22 defined in the rule promulgated by the Director, the 23 replacing insurer shall either (1) delay the issuance of its 24 policy for not less than 20 days from the date it has 25 transmitted a policy summary to the existing insurer, or (2) 26 provide in a form titled "Notice Regarding Replacement of 27 Life Insurance", as well as in its policy, or in a separate 28 notice delivered with the policy, that the insured has the 29 right to an unconditional refund of all premiums paid, and 30 that such right may be exercised within a period of 20 days 31 commencing from the date of delivery of such policy. Where 32 option (2) is exercised, the replacing insurer shall also 33 transmit a policy summary to the existing insurer within 3 34 working days after the date the replacement policy is issued. HB2554 Enrolled -6- LRB9202146JSpc 1 (3) Any of the foregoing provisions or portions thereof 2 not applicable to single premium or nonparticipating or term 3 policies shall to that extent not be incorporated therein. 4 This Section shall not apply to policies of reinsurance nor 5 to policies issued or granted pursuant to the nonforfeiture 6 provisions prescribed in subparagraph (g) of paragraph (1) of 7 this Section. 8 (Source: P.A. 83-598.) 9 (215 ILCS 5/357.9a) (from Ch. 73, par. 969.9a) 10 Sec. 357.9a. Delay in payment of claims. Periodic 11 payments of accrued indemnities for loss-of-time coverage 12 under accident and health policies shall commence not later 13 than 30 days after the receipt by the company of the required 14 written proofs of loss. An insurer which violates this 15 Section if liable under said policy, shall pay to the 16 insured, in addition to any other penalty provided for in 17 this Code, interest at the rate of 9%8 per centper annum 18 from the 30th day after receipt of such proofs of loss to the 19 date of late payment of the accrued indemnities, provided 20 that interest amounting to less than one dollar need not be 21 paid. 22 (Source: P.A. 79-792.) 23 Section 99. Effective date. This Act takes effect upon 24 becoming law.