Rep. Laura Fine

Filed: 3/9/2017

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 502

2    AMENDMENT NO. ______. Amend House Bill 502 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Insurance Code is amended by
5changing Section 231.1 and by adding Sections 231.2 as follows:
 
6    (215 ILCS 5/231.1)  (from Ch. 73, par. 843.1)
7    Sec. 231.1. Group Life Insurance Standard Provision. No
8policy of group life insurance shall be delivered in this State
9unless it contains in substance the following provisions, or
10provisions which in the opinion of the Director are more
11favorable to the persons insured, or at least as favorable to
12the persons insured and more favorable to the policyholder,
13provided, however, (a) that provisions (F) to (K) inclusive
14shall not apply to policies insuring the lives of debtors; (b)
15that the standard provisions required for individual life
16insurance policies shall not apply to group life insurance

 

 

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1policies; and (c) that if the group life insurance policy is on
2a plan of insurance other than the term plan, it shall contain
3a nonforfeiture provision which in the opinion of the Director
4is equitable to the insured persons and to the policyholder,
5but nothing herein shall be construed to require that group
6life insurance policies contain the same nonforfeiture
7provisions as are required for individual life insurance
8policies:
9    (A) A provision that the policyholder is entitled to a
10grace period of 31 days for the payment of any premium due
11except the first, during which grace period the death benefit
12coverage shall continue in force, unless the policyholder shall
13have given the insurer written notice of discontinuance in
14advance of the date of discontinuance and in accordance with
15the terms of the policy. The policy may provide that the
16policyholder shall be liable to the insurer for the payment of
17a pro rata premium for the time the policy was in force during
18such grace period.
19    (B) A provision that validity of the policy shall not be
20contested, except for nonpayment of premiums, after it has been
21in force for two years from its date of issue; and that no
22statement made by any person insured under the policy relating
23to his insurability shall be used in contesting the validity of
24the insurance with respect to which such statement was made
25after such insurance has been in force prior to the contest for
26a period of two years during such person's lifetime nor unless

 

 

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1it is contained in a written instrument signed by him;
2provided, however, that no such provision shall preclude the
3assertion at any time of defenses based upon provisions in the
4policy which relate to eligibility for coverage.
5    (C) A provision that a copy of the application, if any, of
6the policyholder shall be attached to the policy when issued,
7and that all statements made by the policyholder shall be
8deemed representations and not warranties, and that no
9statement made by any person insured shall be used in any
10contest unless a copy of the instrument containing the
11statement is or has been furnished to such person or, in the
12event of death or incapacity of the insured person, to his
13beneficiary or personal representative.
14    (D) A provision setting forth the conditions, if any, under
15which the insurer reserves the right to require a person
16eligible for insurance to furnish evidence of individual
17insurability satisfactory to the insurer as a condition to part
18or all of his coverage.
19    (E) A provision specifying an equitable adjustment of
20premiums or of benefits or of both to be made in the event the
21age of a person insured has been misstated, such provision to
22contain a clear statement of the method of adjustment to be
23made.
24    (F) A provision that any sum becoming due by reason of the
25death of the person insured shall be payable to the beneficiary
26designated by the person insured, except that where the policy

 

 

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1contains conditions pertaining to family status the
2beneficiary may be the family member specified by the policy
3terms, subject to the provisions of the policy in the event
4there is no designated beneficiary, as to all or any part of
5such sum, living at the death of the person insured, and
6subject to any right reserved by the insurer in the policy and
7set forth in the certificate to pay at its option a part of
8such sum not exceeding $2,000 to any person appearing to the
9insurer to be equitably entitled thereto by reason of having
10incurred funeral or other expenses incident to the last illness
11or death of the person insured.
12    (G) A provision that the insurer will issue to the
13policyholder for delivery to each person insured a certificate
14setting forth a statement as to the insurance protection to
15which he is entitled, to whom the insurance benefits are
16payable, a statement as to any dependent's coverage included in
17such certificate, and the rights and conditions set forth in
18provisions (H), (I), (J) and (K) following.
19    (H) A provision that if the insurance, or any portion of
20it, on a person covered under the policy or on the dependent of
21a person covered, ceases because of termination of employment
22or of membership in the class or classes eligible for coverage
23under the policy, such person shall be entitled to have issued
24to him by the insurer, without evidence of insurability, an
25individual policy of life insurance without disability or other
26supplementary benefits, unless such right to convert such

 

 

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1coverage was provided for in the group policy and is applied
2for in the application for conversion, provided that an
3application for the individual policy shall be made, and the
4first premium paid to the insurer, within 31 days after such
5termination, and provided further that:
6        (1) the individual policy may, at the option of such
7    person, be on any one of the forms then customarily issued
8    by the insurer at the age and for the amount applied for,
9    except that the group policy may exclude the option to
10    elect term insurance;
11        (2) the individual policy shall be in an amount equal
12    to, unless such person chooses to elect a lesser amount,
13    the amount of life insurance which ceases because of such
14    termination, less the amount of any life insurance for
15    which such person becomes eligible under the same or any
16    other group policy within 31 days after such termination,
17    provided that any amount of insurance which shall have
18    matured on or before the date of such termination as an
19    endowment payable to the person insured, whether in one sum
20    or in installments or in the form of an annuity, shall not,
21    for the purposes of this provision, be included in the
22    amount which is considered to cease because of such
23    termination; and
24        (3) the premium on the individual policy shall be at
25    the insurer's then customary rate applicable to the form
26    and amount of the individual policy, to the class of risk

 

 

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1    to which such person then belongs, and to such person's age
2    attained on the effective date of the individual policy.
3        (4) If any individual insured under a group life
4    insurance policy becomes entitled under the terms of such
5    policy to have an individual policy of life insurance
6    issued and if such individual is not given notice of the
7    existence of such right at least 15 days prior to the
8    expiration date of such period, then in such event the
9    individual shall have an additional period within which to
10    exercise such right, but nothing herein contained shall be
11    construed to continue any insurance beyond the period
12    provided in such policy. This additional period shall
13    expire 15 days next after the individual is given such
14    notice but in no event shall such additional period extend
15    beyond 60 days next after the expiration date of the period
16    provided in such policy. Written notice presented to the
17    individual or mailed by the policyholder to the last known
18    address of the individual or mailed by the insurer to the
19    last known address of the individual as furnished by the
20    policyholder shall constitute notice for the purpose of
21    this Section.
22    Subject to the same conditions set forth above the
23conversion privilege shall be available (i) to a surviving
24dependent, if any, at the death of the employee or member, with
25respect to the coverage under the group policy which terminates
26by reason of such death and (ii) to the dependent of the

 

 

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1employee or member upon termination of coverage of the
2dependent, while the employee or member remains under the group
3policy, by reason of the dependent ceasing to be a qualified
4family member under the group policy.
5    (I) A provision, except in the case of a policy described
6in paragraph (B) of Section 230.1, that the termination of the
7employment of an employee or the membership of a member shall
8not terminate the insurance of such employee or member under
9the group policy until the expiration of such period for which
10the premium for such employee or member has been paid, not
11exceeding 31 days.
12    (J) A provision that from time to time all new employees or
13members eligible for insurance and desiring the same shall be
14added to the group or class thereof originally insured.
15    (K) A provision that if the group policy terminates or is
16amended so as to terminate the insurance of any class of
17insured persons, every person insured thereunder at the date of
18such termination whose insurance terminates, including the
19insured dependent of a covered person, and who has been so
20insured for at least five years prior to such termination date
21shall be entitled to have issued by the insurer an individual
22policy of life insurance, subject to the same conditions and
23limitations as are provided by provision (H) above, except that
24the group policy may provide that the amount of such individual
25policy shall not exceed the smaller of (a) the amount of the
26person's life insurance protection ceasing because of the

 

 

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1termination or amendment of the group policy, less the amount
2of any life insurance for which he is or becomes eligible under
3a group policy issued or reinstated by the same or another
4insurer within 31 days after such termination, or (b) $10,000.
5    (L) A provision that if a person insured under the group
6policy, or the insured dependent of a covered person, dies
7during the period within which the individual would have been
8entitled to have an individual policy issued in accordance with
9provisions (H) or (I) above and before such an individual
10policy shall have become effective, the amount of life
11insurance which he would have been entitled to have issued
12under such individual policy shall be payable as a claim under
13the group policy, whether or not application for the individual
14policy or the payment of the first premium therefor has been
15made.
16    (M) (Blank). If active employment is a condition of
17insurance, a provision that an insured may continue coverage
18during the insured's total disability by timely payment to the
19policyholder of that portion, if any, of the premium that would
20have been required from the insured had total disability not
21occurred. The continuation shall be on a premium paying basis
22for a period of six months from the date on which the total
23disability started, but not beyond the earlier of (a) approval
24by the insurer of continuation of the coverage under any
25disability provision which the group insurance policy may
26contain or (b) the discontinuance of the group insurance

 

 

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1policy.
2    (N) In the case of a policy insuring the lives of debtors,
3a provision that the insurer will furnish to the policyholder
4for delivery to each debtor insured under the policy a
5certificate of insurance describing the coverage and
6specifying that the death benefit shall first be applied to
7reduce or extinguish the indebtedness. Whenever the amount of
8insurance payable exceeds the amount of outstanding
9indebtedness the excess benefit shall be payable to the person
10otherwise contractually or legally entitled thereto; if there
11be no person determined to be so entitled, such excess shall be
12paid to the estate of the insured person.
13(Source: P.A. 83-1465.)
 
14    (215 ILCS 5/231.2 new)
15    Sec. 231.2. Extension of coverage under authorized
16absence; liability.
17    (a) In this Section, "authorized absence" means an absence
18that is administratively approved and does not result in a
19charge to leave of any kind or in loss of basic salary.
20    (b) A group policy shall, if a covered employee or
21dependent is on authorized absence at the date of termination
22of the policy, provide an extension of coverage for the
23individual, beginning at the date of termination of the group
24policy and continuing during the period of authorized absence.
25    (c) Under a group policy of life insurance that contains a

 

 

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1disability benefit extension of any type, such as premium
2waiver extension, extended death benefit in the event of total
3disability, or payment of income for a specified period during
4total disability, the termination of the group policy shall not
5operate to terminate the extension.
6    (d) A provision for extending coverage shall be contained
7in each group policy as well as in corresponding certificates.
8    (e) The benefits payable during any period of extended
9coverage shall be subject to the group policy's regular
10coverage limits. The extended coverage shall terminate at the
11end of a normal benefit period or when the maximum benefit
12amount has been paid.
13    (f) The prior insurer shall be liable only to the extent of
14its extensions of coverage. Its liability shall be the same
15whether the group policyholder secures replacement coverage
16from another insurer, self-insures, or declines to provide the
17group with insurance.
18    (g) The succeeding insurer shall be liable as provided in
19this subsection (g) where its group policy replaces another
20providing similar coverage:
21        (1) Regular coverage shall be provided under the
22    succeeding insurer's group policy to:
23            (A) each employee who is eligible for coverage in
24        accordance with the succeeding insurer's group policy
25        provisions regarding classes eligible and actively at
26        work requirements;

 

 

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1            (B) each dependent who is eligible for coverage in
2        accordance with the succeeding insurer's group policy
3        provisions regarding classes eligible; and
4            (C) a dependent of a disabled employee if the
5        dependent is eligible for coverage in accordance with
6        the succeeding insurer's group policy provisions
7        regarding classes eligible if the disabled employee is
8        covered under the succeeding insurer's group policy.
9        (2) Each employee or dependent not covered under the
10    succeeding insurer's group policy in accordance with
11    paragraph (1) of this subsection (g) shall be provided with
12    temporary coverage by the succeeding insurer, for losses
13    occurring or beginning under the replacement policy,
14    subject to the following:
15            (A) Temporary coverage need be provided only if the
16        individual was validly covered under the prior group
17        policy on the date of its termination and meets the
18        requirements necessary to be a member of an eligible
19        class under the succeeding insurer's group policy,
20        other than requirements for working full time, part
21        time, or a stated number of hours.
22            (B) The coverage to be provided by the succeeding
23        insurer shall be the coverage of the prior group policy
24        reduced by any benefits payable under such policy. The
25        benefits of the succeeding insurer's group policy
26        shall be determined after the benefits of the prior

 

 

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1        group policy have been determined.
2            (C) Temporary coverage shall be provided by the
3        succeeding insurer until the first of:
4                (i) the date the individual becomes eligible
5            under the coverage and under the circumstances
6            described in paragraph (1) of this subsection (g);
7                (ii) the date the individual's coverage would
8            terminate in accordance with the succeeding
9            insurer's group policy provisions regarding
10            individual termination of coverage, such as at
11            termination of employment or when ceasing to be an
12            eligible dependent; or
13                (iii) for an individual who is on authorized
14            absence on the effective date of the succeeding
15            group policy, under a type of coverage for which
16            this Section requires an extension of coverage,
17            the end of any period of extended coverage required
18            of the prior insurer or, if the prior insurer's
19            group policy was not subject to this Section, would
20            have been required of the prior insurer had its
21            group policy been so subject.
 
22    Section 99. Effective date. This Act takes effect upon
23becoming law.".