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Public Act 102-0743


 

Public Act 0743 102ND GENERAL ASSEMBLY

  
  
  

 


 
Public Act 102-0743
 
SB2963 EnrolledLRB102 21801 BMS 30921 b

    AN ACT concerning regulation.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Insurance Code is amended by
changing Section 231.1 as follows:
 
    (215 ILCS 5/231.1)  (from Ch. 73, par. 843.1)
    Sec. 231.1. Group Life Insurance Standard Provision. No
policy of group life insurance shall be delivered in this
State unless it contains in substance the following
provisions, or provisions which in the opinion of the Director
are more favorable to the persons insured, or at least as
favorable to the persons insured and more favorable to the
policyholder, provided, however, (a) that provisions (F) to
(K) inclusive shall not apply to policies insuring the lives
of debtors; (b) that the standard provisions required for
individual life insurance policies shall not apply to group
life insurance policies; and (c) that if the group life
insurance policy is on a plan of insurance other than the term
plan, it shall contain a nonforfeiture provision which in the
opinion of the Director is equitable to the insured persons
and to the policyholder, but nothing herein shall be construed
to require that group life insurance policies contain the same
nonforfeiture provisions as are required for individual life
insurance policies:
    (A) A provision that the policyholder is entitled to a
grace period of 31 days for the payment of any premium due
except the first, during which grace period the death benefit
coverage shall continue in force, unless the policyholder
shall have given the insurer written notice of discontinuance
in advance of the date of discontinuance and in accordance
with the terms of the policy. The policy may provide that the
policyholder shall be liable to the insurer for the payment of
a pro rata premium for the time the policy was in force during
such grace period.
    (B) A provision that validity of the policy shall not be
contested, except for nonpayment of premiums, after it has
been in force for two years from its date of issue; and that no
statement made by any person insured under the policy relating
to his insurability shall be used in contesting the validity
of the insurance with respect to which such statement was made
after such insurance has been in force prior to the contest for
a period of two years during such person's lifetime nor unless
it is contained in a written instrument signed by him;
provided, however, that no such provision shall preclude the
assertion at any time of defenses based upon provisions in the
policy which relate to eligibility for coverage.
    (C) A provision that a copy of the application, if any, of
the policyholder shall be attached to the policy when issued,
and that all statements made by the policyholder shall be
deemed representations and not warranties, and that no
statement made by any person insured shall be used in any
contest unless a copy of the instrument containing the
statement is or has been furnished to such person or, in the
event of death or incapacity of the insured person, to his
beneficiary or personal representative.
    (D) A provision setting forth the conditions, if any,
under which the insurer reserves the right to require a person
eligible for insurance to furnish evidence of individual
insurability satisfactory to the insurer as a condition to
part or all of his coverage.
    (E) A provision specifying an equitable adjustment of
premiums or of benefits or of both to be made in the event the
age of a person insured has been misstated, such provision to
contain a clear statement of the method of adjustment to be
made.
    (F) A provision that any sum becoming due by reason of the
death of the person insured shall be payable to the
beneficiary designated by the person insured, except that
where the policy contains conditions pertaining to family
status the beneficiary may be the family member specified by
the policy terms, subject to the provisions of the policy in
the event there is no designated beneficiary, as to all or any
part of such sum, living at the death of the person insured,
and subject to any right reserved by the insurer in the policy
and set forth in the certificate to pay at its option a part of
such sum not exceeding $2,000 to any person appearing to the
insurer to be equitably entitled thereto by reason of having
incurred funeral or other expenses incident to the last
illness or death of the person insured.
    (G) A provision that the insurer will issue to the
policyholder for delivery to each person insured a certificate
setting forth a statement as to the insurance protection to
which he is entitled, to whom the insurance benefits are
payable, a statement as to any dependent's coverage included
in such certificate, and the rights and conditions set forth
in provisions (H), (I), (J) and (K) following.
    (H) A provision that if the insurance, or any portion of
it, on a person covered under the policy or on the dependent of
a person covered, ceases because of termination of employment
or of membership in the class or classes eligible for coverage
under the policy, such person shall be entitled to have issued
to him by the insurer, without evidence of insurability, an
individual policy of life insurance without disability or
other supplementary benefits, unless such right to convert
such coverage was provided for in the group policy and is
applied for in the application for conversion, provided that
an application for the individual policy shall be made, and
the first premium paid to the insurer, within 31 days after
such termination, and provided further that:
        (1) the individual policy may, at the option of such
    person, be on any one of the forms then customarily issued
    by the insurer at the age and for the amount applied for,
    except that the group policy may exclude the option to
    elect term insurance;
        (2) the individual policy shall be in an amount equal
    to, unless such person chooses to elect a lesser amount,
    the amount of life insurance which ceases because of such
    termination, less the amount of any life insurance for
    which such person becomes eligible under the same or any
    other group policy within 31 days after such termination,
    provided that any amount of insurance which shall have
    matured on or before the date of such termination as an
    endowment payable to the person insured, whether in one
    sum or in installments or in the form of an annuity, shall
    not, for the purposes of this provision, be included in
    the amount which is considered to cease because of such
    termination; and
        (3) the premium on the individual policy shall be at
    the insurer's then customary rate applicable to the form
    and amount of the individual policy, to the class of risk
    to which such person then belongs, and to such person's
    age attained on the effective date of the individual
    policy.
        (4) If any individual insured under a group life
    insurance policy becomes entitled under the terms of such
    policy to have an individual policy of life insurance
    issued and if such individual is not given notice of the
    existence of such right at least 15 days prior to the
    expiration date of such period, then in such event the
    individual shall have an additional period within which to
    exercise such right, but nothing herein contained shall be
    construed to continue any insurance beyond the period
    provided in such policy. This additional period shall
    expire 15 days next after the individual is given such
    notice but in no event shall such additional period extend
    beyond 60 days next after the expiration date of the
    period provided in such policy. Written notice presented
    to the individual or mailed by the policyholder to the
    last known address of the individual or mailed by the
    insurer to the last known address of the individual as
    furnished by the policyholder shall constitute notice for
    the purpose of this Section.
    Subject to the same conditions set forth above the
conversion privilege shall be available (i) to a surviving
dependent, if any, at the death of the employee or member, with
respect to the coverage under the group policy which
terminates by reason of such death and (ii) to the dependent of
the employee or member upon termination of coverage of the
dependent, while the employee or member remains under the
group policy, by reason of the dependent ceasing to be a
qualified family member under the group policy.
    (I) A provision, except in the case of a policy described
in paragraph (B) of Section 230.1, that the termination of the
employment of an employee or the membership of a member shall
not terminate the insurance of such employee or member under
the group policy until the expiration of such period for which
the premium for such employee or member has been paid, not
exceeding 31 days.
    (J) A provision that from time to time all new employees or
members eligible for insurance and desiring the same shall be
added to the group or class thereof originally insured.
    (K) A provision that if the group policy terminates or is
amended so as to terminate the insurance of any class of
insured persons, every person insured thereunder at the date
of such termination whose insurance terminates, including the
insured dependent of a covered person, and who has been so
insured for at least five years prior to such termination date
shall be entitled to have issued by the insurer an individual
policy of life insurance, subject to the same conditions and
limitations as are provided by provision (H) above, except
that the group policy may provide that the amount of such
individual policy shall not exceed the smaller of (a) the
amount of the person's life insurance protection ceasing
because of the termination or amendment of the group policy,
less the amount of any life insurance for which he is or
becomes eligible under a group policy issued or reinstated by
the same or another insurer within 31 days after such
termination, or (b) $10,000.
    (L) A provision that if a person insured under the group
policy, or the insured dependent of a covered person, dies
during the period within which the individual would have been
entitled to have an individual policy issued in accordance
with provisions (H) or (I) above and before such an individual
policy shall have become effective, the amount of life
insurance which he would have been entitled to have issued
under such individual policy shall be payable as a claim under
the group policy, whether or not application for the
individual policy or the payment of the first premium therefor
has been made.
    (M) If active employment is a condition of insurance, a
provision that an insured may continue coverage during the
insured's total disability by timely payment to the
policyholder of that portion, if any, of the premium that
would have been required from the insured had total disability
not occurred. The continuation shall be on a premium paying
basis for a period of six months from the date on which the
total disability started, but not beyond the earlier of (a)
approval by the insurer of continuation of the coverage under
any disability provision which the group insurance policy may
contain or (b) the discontinuance of the group insurance
policy.
    (N) If active employment is a condition of insurance, in
In the case of a policy of group life insurance replacing
another policy of group life insurance in force with another
insurance carrier immediately prior to the effective date of
the new policy, a provision preventing loss of coverage,
subject to premium payments, for those active employees who
are not actively at work on the effective date of the new
policy if the following conditions are met:
        (1) the active employee was insured under the prior
    carrier's group life insurance policy immediately prior to
    the effective date of the policy;
        (2) the active employee is not actively at work on the
    effective date of the new policy;
        (3) the active employee is a member of an eligible
    class under the policy; and
        (4) the active employee is not receiving or eligible
    to receive benefits under the prior carrier's group life
    insurance policy.
    (O) If active employment is a condition of insurance, a
provision that for active employees receiving or eligible to
receive benefits under provision (N) the continued coverage
will remain in effect until the earliest of the following:
        (1) the date the employee returns to active work;
        (2) the date that coverage under the prior carrier's
    group life insurance policy would have ended for any
    reason other than the termination of the policy;
        (3) the date that coverage would otherwise end under
    the replacing carrier's policy;
        (4) a date no less than 6 months after the replacement
    coverage begins; or
        (5) the date the employee is covered or is eligible
    for coverage under the prior carrier's group policy.
    (P) If active employment is a condition of insurance, a
provision that the replacing carrier's obligations under
provisions (N) and (O) may be limited to the amount for which
the employee was covered under the prior carrier's group life
insurance policy and may be reduced by any amounts payable
under the prior carrier's group life insurance policy.
    (Q) (O) In the case of a policy insuring the lives of
debtors, a provision that the insurer will furnish to the
policyholder for delivery to each debtor insured under the
policy a certificate of insurance describing the coverage and
specifying that the death benefit shall first be applied to
reduce or extinguish the indebtedness. Whenever the amount of
insurance payable exceeds the amount of outstanding
indebtedness the excess benefit shall be payable to the person
otherwise contractually or legally entitled thereto; if there
be no person determined to be so entitled, such excess shall be
paid to the estate of the insured person.
(Source: P.A. 102-367, eff. 1-1-22.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law.

Effective Date: 5/6/2022