093_SB0187

 
                                     LRB093 07519 LRD 07692 b

 1        AN ACT concerning insurance.

 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    adding Section 229.6 as follows:

 6        (215 ILCS 5/229.6 new)
 7        Sec. 229.6.  Small face amount life insurance.
 8        (a)  The  Legislature  finds  that  it  is  in  the  best
 9    interest of the citizens of the State to limit the amount  of
10    premiums  collected  for  small face amount policies. Current
11    practices have often resulted in the collection  of  premiums
12    many  hundreds of percent in excess of the face amount of the
13    policy. This amendatory Act of the 93rd General  Assembly  is
14    intended  to  establish  the  public  policy of this State to
15    prohibit the collection of future insurance premiums at  such
16    levels   for  specified  policies  issued  on  or  after  the
17    effective date of this amendatory Act.
18        This Section applies to  all  individual  life  insurance
19    policies  with  face  amounts  of  $20,000  or less issued or
20    delivered in this State on or after  the  effective  date  of
21    this amendatory Act of the 93rd General Assembly.
22        No  premiums on a specific policy may be collected by the
23    insurer, or any succeeding insurer in the event the policy is
24    assumed by another insurer, when  premiums  collected,  minus
25    dividends  paid  in cash, will exceed 250% of the face amount
26    of the policy.
27        (b)  The purpose of this Section is  to  establish  rules
28    that   ensure  meaningful  information  is  provided  to  the
29    purchasers of small face amount policies.
30        "Small face amount policy" means a life insurance  policy
31    or  certificate  with  an  initial  face amount of $20,000 or
 
                            -2-      LRB093 07519 LRD 07692 b
 1    less.
 2        (c)  This Section applies to  all  group  and  individual
 3    life insurance policies and certificates except:
 4             (1)  variable life insurance;
 5             (2)  individual and group annuity contracts;
 6             (3)  credit life insurance;
 7             (4)  group  or individual policies of life insurance
 8        issued to members of an employer group or other permitted
 9        group where:
10                  (A)  every plan of coverage was selected by the
11             employer or other group representative;
12                  (B)  some portion of the premium is paid by the
13             group or through payroll deduction; and
14                  (C)  group    underwriting    or     simplified
15             underwriting is used.
16        (d)  An  insurer issuing a small face amount policy shall
17    provide full and complete disclosure if, at any point in time
18    over the term of the policy, the cumulative premiums paid may
19    exceed the face amount of the policy at that point  in  time.
20    The required disclosure shall be provided to the policy owner
21    or certificate holder no later than at the time the policy or
22    certificate  is  delivered.  The  required  disclosure  shall
23    include  notice of any applicable 10-day right of full refund
24    as provided by subsection (n) of Section  224  or  subsection
25    (m) of Section 229 of this Code.  The disclosure shall not be
26    attached to the policy, but may be delivered with the policy.
27        If, for a particular policy form, the cumulative premiums
28    may   exceed   the  face  for  some  demographic  or  benefit
29    combination but not for all  combinations,  the  insurer  may
30    choose to either:
31             (1)  give the disclosure only in those circumstances
32        in which the premiums will exceed the face amount; or
33             (2)  give  the  disclosure  for  all demographic and
34        benefit combinations.
 
                            -3-      LRB093 07519 LRD 07692 b
 1        Cumulative  premiums  shall  include  premiums  paid  for
 2    riders. However,  the  face  amount  shall  not  include  the
 3    benefit attributable to the riders.
 4        The  insurer  and  its  producers  have a duty to provide
 5    information to policyholders or certificate holders that  ask
 6    questions about the disclosure statement.
 7        (e)  The   Director   has  the  authority  to  promulgate
 8    reasonable rules to administer and enforce this Section.  The
 9    rules  promulgated  may include, but shall not be limited to,
10    establishing the format for insurer disclosure notices.

11        Section 99.  Effective date. This  Act  takes  effect  on
12    January 1, 2004.