101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB3721

 

Introduced 2/14/2020, by Sen. Dave Syverson

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/231.1  from Ch. 73, par. 843.1

    Amends the Illinois Insurance Code. Provides that a policy of group life insurance shall contain, if 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 specified conditions are met. Makes other changes.


LRB101 19927 BMS 69450 b

 

 

A BILL FOR

 

SB3721LRB101 19927 BMS 69450 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Insurance Code is amended by
5changing Section 231.1 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
17policies; and (c) that if the group life insurance policy is on
18a plan of insurance other than the term plan, it shall contain
19a nonforfeiture provision which in the opinion of the Director
20is equitable to the insured persons and to the policyholder,
21but nothing herein shall be construed to require that group
22life insurance policies contain the same nonforfeiture
23provisions as are required for individual life insurance

 

 

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1policies:
2    (A) A provision that the policyholder is entitled to a
3grace period of 31 days for the payment of any premium due
4except the first, during which grace period the death benefit
5coverage shall continue in force, unless the policyholder shall
6have given the insurer written notice of discontinuance in
7advance of the date of discontinuance and in accordance with
8the terms of the policy. The policy may provide that the
9policyholder shall be liable to the insurer for the payment of
10a pro rata premium for the time the policy was in force during
11such grace period.
12    (B) A provision that validity of the policy shall not be
13contested, except for nonpayment of premiums, after it has been
14in force for two years from its date of issue; and that no
15statement made by any person insured under the policy relating
16to his insurability shall be used in contesting the validity of
17the insurance with respect to which such statement was made
18after such insurance has been in force prior to the contest for
19a period of two years during such person's lifetime nor unless
20it is contained in a written instrument signed by him;
21provided, however, that no such provision shall preclude the
22assertion at any time of defenses based upon provisions in the
23policy which relate to eligibility for coverage.
24    (C) A provision that a copy of the application, if any, of
25the policyholder shall be attached to the policy when issued,
26and that all statements made by the policyholder shall be

 

 

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1deemed representations and not warranties, and that no
2statement made by any person insured shall be used in any
3contest unless a copy of the instrument containing the
4statement is or has been furnished to such person or, in the
5event of death or incapacity of the insured person, to his
6beneficiary or personal representative.
7    (D) A provision setting forth the conditions, if any, under
8which the insurer reserves the right to require a person
9eligible for insurance to furnish evidence of individual
10insurability satisfactory to the insurer as a condition to part
11or all of his coverage.
12    (E) A provision specifying an equitable adjustment of
13premiums or of benefits or of both to be made in the event the
14age of a person insured has been misstated, such provision to
15contain a clear statement of the method of adjustment to be
16made.
17    (F) A provision that any sum becoming due by reason of the
18death of the person insured shall be payable to the beneficiary
19designated by the person insured, except that where the policy
20contains conditions pertaining to family status the
21beneficiary may be the family member specified by the policy
22terms, subject to the provisions of the policy in the event
23there is no designated beneficiary, as to all or any part of
24such sum, living at the death of the person insured, and
25subject to any right reserved by the insurer in the policy and
26set forth in the certificate to pay at its option a part of

 

 

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1such sum not exceeding $2,000 to any person appearing to the
2insurer to be equitably entitled thereto by reason of having
3incurred funeral or other expenses incident to the last illness
4or death of the person insured.
5    (G) A provision that the insurer will issue to the
6policyholder for delivery to each person insured a certificate
7setting forth a statement as to the insurance protection to
8which he is entitled, to whom the insurance benefits are
9payable, a statement as to any dependent's coverage included in
10such certificate, and the rights and conditions set forth in
11provisions (H), (I), (J) and (K) following.
12    (H) A provision that if the insurance, or any portion of
13it, on a person covered under the policy or on the dependent of
14a person covered, ceases because of termination of employment
15or of membership in the class or classes eligible for coverage
16under the policy, such person shall be entitled to have issued
17to him by the insurer, without evidence of insurability, an
18individual policy of life insurance without disability or other
19supplementary benefits, unless such right to convert such
20coverage was provided for in the group policy and is applied
21for in the application for conversion, provided that an
22application for the individual policy shall be made, and the
23first premium paid to the insurer, within 31 days after such
24termination, and provided further that:
25        (1) the individual policy may, at the option of such
26    person, be on any one of the forms then customarily issued

 

 

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

 

 

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1    expiration date of such period, then in such event the
2    individual shall have an additional period within which to
3    exercise such right, but nothing herein contained shall be
4    construed to continue any insurance beyond the period
5    provided in such policy. This additional period shall
6    expire 15 days next after the individual is given such
7    notice but in no event shall such additional period extend
8    beyond 60 days next after the expiration date of the period
9    provided in such policy. Written notice presented to the
10    individual or mailed by the policyholder to the last known
11    address of the individual or mailed by the insurer to the
12    last known address of the individual as furnished by the
13    policyholder shall constitute notice for the purpose of
14    this Section.
15    Subject to the same conditions set forth above the
16conversion privilege shall be available (i) to a surviving
17dependent, if any, at the death of the employee or member, with
18respect to the coverage under the group policy which terminates
19by reason of such death and (ii) to the dependent of the
20employee or member upon termination of coverage of the
21dependent, while the employee or member remains under the group
22policy, by reason of the dependent ceasing to be a qualified
23family member under the group policy.
24    (I) A provision, except in the case of a policy described
25in paragraph (B) of Section 230.1, that the termination of the
26employment of an employee or the membership of a member shall

 

 

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1not terminate the insurance of such employee or member under
2the group policy until the expiration of such period for which
3the premium for such employee or member has been paid, not
4exceeding 31 days.
5    (J) A provision that from time to time all new employees or
6members eligible for insurance and desiring the same shall be
7added to the group or class thereof originally insured.
8    (K) A provision that if the group policy terminates or is
9amended so as to terminate the insurance of any class of
10insured persons, every person insured thereunder at the date of
11such termination whose insurance terminates, including the
12insured dependent of a covered person, and who has been so
13insured for at least five years prior to such termination date
14shall be entitled to have issued by the insurer an individual
15policy of life insurance, subject to the same conditions and
16limitations as are provided by provision (H) above, except that
17the group policy may provide that the amount of such individual
18policy shall not exceed the smaller of (a) the amount of the
19person's life insurance protection ceasing because of the
20termination or amendment of the group policy, less the amount
21of any life insurance for which he is or becomes eligible under
22a group policy issued or reinstated by the same or another
23insurer within 31 days after such termination, or (b) $10,000.
24    (L) A provision that if a person insured under the group
25policy, or the insured dependent of a covered person, dies
26during the period within which the individual would have been

 

 

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1entitled to have an individual policy issued in accordance with
2provisions (H) or (I) above and before such an individual
3policy shall have become effective, the amount of life
4insurance which he would have been entitled to have issued
5under such individual policy shall be payable as a claim under
6the group policy, whether or not application for the individual
7policy or the payment of the first premium therefor has been
8made.
9    (M) If active employment is a condition of insurance, a
10provision that an insured may continue coverage during the
11insured's total disability by timely payment to the
12policyholder of that portion, if any, of the premium that would
13have been required from the insured had total disability not
14occurred. The continuation shall be on a premium paying basis
15for a period of six months from the date on which the total
16disability started, but not beyond the earlier of (a) approval
17by the insurer of continuation of the coverage under any
18disability provision which the group insurance policy may
19contain or (b) the discontinuance of the group insurance
20policy.
21    (N) In the case of a policy of group life insurance
22replacing another policy of group life insurance in force with
23another insurance carrier immediately prior to the effective
24date of the new policy, a provision preventing loss of
25coverage, subject to premium payments, for those active
26employees who are not actively at work on the effective date of

 

 

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1the new policy if the following conditions are met:
2        (1) the active employee was insured under the prior
3    carrier's group life insurance policy immediately prior to
4    the effective date of the policy;
5        (2) the active employee is not actively at work on the
6    effective date of the new policy;
7        (3) the active employee is a member of an eligible
8    class under the policy; and
9        (4) the active employee is not receiving or eligible to
10    receive benefits under the prior carrier's group life
11    insurance policy.
12    (O) (N) In the case of a policy insuring the lives of
13debtors, a provision that the insurer will furnish to the
14policyholder for delivery to each debtor insured under the
15policy a certificate of insurance describing the coverage and
16specifying that the death benefit shall first be applied to
17reduce or extinguish the indebtedness. Whenever the amount of
18insurance payable exceeds the amount of outstanding
19indebtedness the excess benefit shall be payable to the person
20otherwise contractually or legally entitled thereto; if there
21be no person determined to be so entitled, such excess shall be
22paid to the estate of the insured person.
23(Source: P.A. 83-1465.)