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