215 ILCS 5/ Illinois Insurance Code.

(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 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) 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; 102-743, eff. 5-6-22.)

(215 ILCS 5/232) (from Ch. 73, par. 844)

Sec. 232. Extension of time and modification of standard provisions.

(1) Any company authorized to transact business in this State on the effective date of this Code may continue to issue policies and contracts of the kind or kinds it was permitted to issue immediately prior to such effective date, until December 31, 1937.

(2) Policies and contracts may be issued and delivered in this State which contain provisions more favorable to the holders of such policies or contracts than the standard provisions required by this article. No domestic company and holder of a policy or contract shall after the effective date of this Code enter into any agreement to waive or modify in whole or in part a standard provision required by this Code or any prior law of this State, for the benefit of such holder, unless the agreement be approved by a court in a proceeding under Article XIII.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/233) (from Ch. 73, par. 845)

Sec. 233. Participating and non-participating policies.

After the calendar year during which this Code becomes effective, no life company authorized to do business in this State shall issue both participating and non-participating policies unless at least ninety per centum of the profits on its participating policies shall inure to the benefit of the participating policyholders. Any company having in force both participating and non-participating policies shall keep a separate accounting for each class of business and shall make and include in the annual statement to be filed with the Director each year a separate statement showing the gains, losses and expenses properly attributable to each of such classes and also showing the manner in which any general outlay of expense of the company has been apportioned to each except that this provision shall not apply to any company in which ninety per centum or more of the business in force is either participating or non-participating. This section shall not apply to business done by such life company outside this state, nor to paid-up, or temporary insurance or pure endowment benefits issued or granted pursuant to the non-forfeiture provision prescribed in clause (g) of sub-section (1) of Section 224 nor to annuities or policies of reinsurance.

(Source: Laws 1957, p. 607.)

(215 ILCS 5/234) (from Ch. 73, par. 846)

Sec. 234. Notice of premium required.

(1) No life company doing business in this State shall declare any policy forfeited or lapsed within six months after default in payment of any premium installment or interest or any portion thereof, nor shall any such policy be forfeited or lapsed by reason of nonpayment when due of any premium, installment or interest, or any portion thereof, required by the terms of the policy to be paid, within six months from the default in payment of such premium, installment or interest, unless a written or printed notice stating the amount of such premium, installment, interest or portion thereof due on such policy, the place where it shall be paid and the person to whom the same is payable, shall have been duly addressed and mailed with the required postage affixed, to the person whose life is insured, or the assignee of the policy, (if notice of the assignment has been given to the company) at his last known post office address, at least fifteen days and not more than forty-five days prior to the day when the same is due and payable, before the beginning of the period of grace, except that in any case in which a parent insures the life of his minor child, the company may send notice of premium due to the parent. Such notice shall also state that unless such premium or other sums due shall be paid to the company or its agents the policy and all payments thereon will become forfeited and void, except as to the right to a surrender value or paid-up policy as provided for by the policy. The affidavit of any officer, clerk or agent of the company or of any one authorized to mail such notice that the notice required by this section bearing the required postage has been duly addressed and mailed shall be presumptive evidence that such notice has been duly given.

(2) This section shall not apply to cancellable accident and health policies which are renewable at the option of the company nor shall it apply to group policies, industrial life policies, or to any policies upon which premiums are payable monthly or at shorter intervals.

(Source: Laws 1961, p. 3852.)

(215 ILCS 5/234.1) (from Ch. 73, par. 846.1)

Sec. 234.1. (Notice of the Enactment of a Non-Forfeiture Option.) No life company doing business in this State may enact a non-forfeiture option, unless a notice is given to the policyowner which explains this action and refers the policyowner to the other available options, if any, under the provisions of the policy. Evidence of this notice shall be maintained by the insurer.

(Source: P.A. 80-566.)

(215 ILCS 5/235) (from Ch. 73, par. 847)

Sec. 235. Extension of time for payment of life premium.

A life company may enter into subsequent agreements in writing with the insured, which need not be attached to the policy, to extend the time for the payment of any premium or part thereof, upon condition that failure to comply with the terms of such agreement shall cause the policy to lapse as provided in said agreement or in the policy. Subject to such lien as may be created to secure any indebtedness contracted by the insured in consideration of the extension, such agreement shall not impair any right existing under the policy.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/235.1)

Sec. 235.1. Notice of cancellation; secondary addressee.

(a) A life company issuing an individual life insurance contract on or after January 1, 2022 shall notify an applicant, in writing on a form prescribed by the company at the time of application for the policy, of the applicant's right to designate a secondary addressee to receive notice of cancellation of the policy based on nonpayment of premium. The applicant may make such designation at the time of application for such policy or at any time such policy is in force by submitting a written notice to the insurer containing the name and address of the secondary addressee.

(b) The insurer's transmission to a secondary addressee of a copy of a notice of cancellation based on nonpayment of premium shall be in addition to the transmission of the original document to the policyholder. The copy of the notice of cancellation transmitted to the secondary addressee shall be made in the same manner and form required for the transmission of the notice to the policyholder.

(c) The designation of a secondary addressee shall not constitute acceptance of any liability on the part of the secondary addressee or insurer for services provided to the policyholder.

(d) This Section does not apply to any individual life insurance contract under which premiums are payable monthly or more frequently and are regularly collected by a licensed agent or are paid by credit card or any preauthorized check processing or automatic debit service of a financial institution.

(e) Nothing in this Section shall prohibit an applicant or policyholder from designating a life insurance agent of record as his or her secondary addressee.

(Source: P.A. 102-542, eff. 1-1-22.)

(215 ILCS 5/236) (from Ch. 73, par. 848)

Sec. 236. Discrimination prohibited.

(a) No life company doing business in this State shall make or permit any distinction or discrimination in favor of individuals among insured persons of the same class and equal expectation of life in the issuance of its policies, in the amount of payment of premiums or rates charged for policies of insurance, in the amount of any dividends or other benefits payable thereon, or in any other of the terms and conditions of the contracts it makes.

(b) No life company shall make or permit any distinction or discrimination against individuals with disabilities in the amount of payment of premiums or rates charged for policies of life insurance, in the amount of any dividends or death benefits payable thereon, or in any other terms and conditions of the contract it makes unless the rate differential is based on sound actuarial principles and a reasonable system of classification and is related to actual or reasonably anticipated experience directly associated with the disability.

(c) No life company shall refuse to insure, or refuse to continue to insure, or limit the amount or extent or kind of coverage available to an individual, or charge an individual a different rate for the same coverage solely because of blindness or partial blindness. With respect to all other conditions, including the underlying cause of the blindness or partial blindness, persons who are blind or partially blind shall be subject to the same standards of sound actuarial principles or actual or reasonably anticipated experience as are sighted persons. Refusal to insure includes denial by an insurer of disability insurance coverage on the grounds that the policy defines "disability" as being presumed in the event that the insured loses his or her eyesight. However, an insurer may exclude from coverage disabilities consisting solely of blindness or partial blindness when such condition existed at the time the policy was issued.

(d) No life company shall refuse to insure or to continue to insure an individual solely because of the individual's status as a member of the United States Air Force, Army, Coast Guard, Marines, or Navy or solely because of the individual's status as a member of the National Guard or Armed Forces Reserve.

(e) An insurer or producer authorized to issue policies of insurance in this State may not make a distinction or otherwise discriminate between persons, reject an applicant, cancel a policy, or demand or require a higher rate of premium for reasons based solely upon an applicant's or insured's past lawful travel experiences or future lawful travel plans. This subsection (e) does not prohibit an insurer or producer from excluding or limiting coverage under a policy or refusing to offer the policy based upon past lawful travel or future lawful travel plans or from charging a different rate for that coverage when that action is based upon sound actuarial principles or is related to actual or reasonably expected experience and is not based solely on the destination's inclusion on the United States Department of State's travel warning list.

(Source: P.A. 99-143, eff. 7-27-15.)

(215 ILCS 5/237) (from Ch. 73, par. 849)

Sec. 237. Illegal inducements - Penalty. No life company authorized to do business in this State shall issue or deliver in this State or permit its agents, officers or employees to issue or deliver in this State as an inducement to insurance or in connection therewith, any agency company shares or other capital shares, benefit certificates or shares in any common law corporation, securities of any special or advisory board, or other contracts of any kind promising returns and profits as an inducement to insurance; and no life company shall be authorized to do business in this State which issues or permits its agents, officers or employees to issue in this State or in any other state, agency company shares or other capital shares or benefit certificates or shares in any common law corporation or securities of any special advisory board or other contracts of any kind promising returns and profits as an inducement to insurance; and no corporation acting as an agent of a life company, or any of its agents, officers or employees shall be permitted to sell, agree or offer to sell, or give or offer to give directly or indirectly, in any manner whatsoever, as an inducement to insurance or in connection therewith, any shares, securities, bonds or agreements of any form or nature promising returns and profits as an inducement to insurance or in connection therewith. It shall be the duty of the Director upon due proof after notice and hearing to revoke the certificate of authority of any company or the license of any agent so offending, or suspend such license or certificate of authority for any period of time up to, but not to exceed, two years; or may by order require such insurance company or agent to pay to the people of the State of Illinois a penalty in a sum not exceeding five hundred dollars, and upon the failure of such insurance company or agent to pay such penalty within twenty days after the mailing of such order, postage prepaid, registered, and addressed to the last known place of business of such insurance company or agent, unless such order is stayed by an order of a court of competent jurisdiction, the Director of Insurance may revoke or suspend the license or certificate of authority of such insurance company or agent for any period of time up to, but not exceeding a period of, two years if he finds that any such company or agent thereof has violated any of the provisions of this section.

(Source: Laws 1957, p. 1530.)

(215 ILCS 5/238) (from Ch. 73, par. 850)

Sec. 238. Exemption.

(a) All proceeds payable because of the death of the insured and the aggregate net cash value of any or all life and endowment policies and annuity contracts payable to a wife or husband of the insured, or to a child, parent or other person dependent upon the insured, whether the power to change the beneficiary is reserved to the insured or not, and whether the insured or his estate is a contingent beneficiary or not, shall be exempt from execution, attachment, garnishment or other process, for the debts or liabilities of the insured incurred subsequent to the effective date of this Code, except as to premiums paid in fraud of creditors within the period limited by law for the recovery thereof.

(b) Any insurance company doing business in this State and governed by this Code shall encumber or surrender accounts as defined in Section 10-24 of the Illinois Public Aid Code held by the insurance company owned by any responsible relative who is subject to a child support lien, upon notice of the lien or levy by the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid) or its successor agency pursuant to Section 10-25.5 of the Illinois Public Aid Code, or upon notice of interstate lien from any other state's agency responsible for implementing the child support enforcement program set forth in Title IV, Part D of the Social Security Act.

This Section does not prohibit the furnishing of information in accordance with the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Any insurance company governed by this Code shall enter into an agreement for data exchanges with the Department of Healthcare and Family Services provided the Department of Healthcare and Family Services pays to the insurance company a reasonable fee not to exceed its actual cost incurred. An insurance company providing information in accordance with this item shall not be liable to any owner of an account as defined in Section 10-24 of the Illinois Public Aid Code or other person for any disclosure of information to the Department of Healthcare and Family Services (formerly Department of Public Aid), for encumbering or surrendering any accounts as defined in Section 10-24 of the Illinois Public Aid Code held by the insurance company in response to a lien or order to withhold and deliver issued by a State agency, or for any other action taken pursuant to this item, including individual or mechanical errors, provided the action does not constitute gross negligence or willful misconduct. An insurance company shall have no obligation to hold, encumber, or surrender any accounts as defined in Section 10-24 of the Illinois Public Aid Code until it has been served with a subpoena, summons, warrant, court or administrative order, lien, or levy requiring that action.

(Source: P.A. 95-331, eff. 8-21-07.)