215 ILCS 5/ Illinois Insurance Code.

(215 ILCS 5/230.3) (from Ch. 73, par. 842.3)

Sec. 230.3. Dependent Group Life Insurance. Except for a policy issued under subsection (B) of Section 230.1, a group life insurance policy may be extended to insure the employees or members against loss due to the death of their spouses and dependent children, or any class or classes thereof, subject to the following:

(A) The premium for the insurance shall be paid either from funds contributed by the employer, union, association, or other person to whom the policy has been issued, or from funds contributed by the covered persons, or from both. Except as provided in subsection (B) of this Section, a policy on which no part of the premium for the spouse's and dependent child's coverage is to be derived from funds contributed by the covered persons must insure all eligible employees or members with respect to their spouses and dependent children, or any class or classes thereof.

(B) An insurer may exclude or limit the coverage on any spouse or dependent child as to whom evidence of individual insurability is not satisfactory to the insurer.

(C) The amount of insurance for any covered spouse or dependent child under the policy may not exceed 100% of the amount of insurance for which the employee or member is insured.

(Source: P.A. 88-400.)

(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.)

(215 ILCS 5/238.1)

Sec. 238.1. Data exchanges; administrative liens.

(a) Any insurance company doing business in the State and governed by this Code shall enter into an agreement for data exchanges with the Department of Healthcare and Family Services for the purpose of locating accounts as defined in Section 10-24 of the Illinois Public Aid Code of responsible relatives to satisfy past-due child support owed by responsible relatives under an order for support entered by a court or administrative body of this or any other State on behalf of resident or non-resident persons.

(b) Notwithstanding any provisions in this Code to the contrary, an insurance company shall not be liable to any person:

(1) for any disclosure of information to the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid) under subsection (a);

(2) for encumbering or surrendering any accounts as defined in Section 10-24 of the Illinois Public Aid Code held by such insurance company in response to a notice of lien or levy issued by the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid), or by any other state's child support enforcement agency, as provided for in Section 238 of this Code; or

(3) for any other action taken in good faith to comply with the requirements of subsection (a).

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

(215 ILCS 5/239) (from Ch. 73, par. 851)

Sec. 239. Misrepresentations-Penalty.

No agent, examining physician, or other person shall knowingly or wilfully make any false or fraudulent statement or representation in, or with reference, to any application for life insurance, or shall make any such statement or representation for the purpose of obtaining any fees, commission, money or benefit from or in any life company. Any person who violates any of the provisions of this section shall be guilty of a Class A misdemeanor.

(Source: P.A. 77-2699.)

(215 ILCS 5/240) (from Ch. 73, par. 852)

Sec. 240. Premium deposit reserve.

A life company may contract for or accept premium deposits, other than premiums stated in the policy. The unused accumulation from such shall be held and accounted for as a premium deposit reserve, and in such case the policy or an endorsement thereon shall provide for the manner of application of the premium deposit reserve to the payment of premiums in default and for the disposition of such reserve if it is not sufficient to pay the next premium. Such premium deposit reserve shall be available as an addition to the loan and cash surrender values, shall be paid with other benefits upon death or maturity of the policy, and shall be paid to the insured whenever the cash surrender value with the premium deposit reserve shall equal or exceed the original amount of insurance, but no part of the premium deposit reserve may be paid to the insured during the continuance of the policy except at such times or in such amounts as specified in the policy or in endorsements thereon.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/241) (from Ch. 73, par. 853)

Sec. 241. Trust settlements.

Any domestic life company shall have the power to hold the proceeds of any policy issued by it under a trust or other agreement upon such terms and restrictions as to revocation by the policyholder and control by beneficiaries, and with such exemptions from the claims of creditors of beneficiaries other than the policyholder as shall have been agreed to in writing by such company and the policyholder. Upon maturity of a policy in the event the policyholder has made no such agreement, the company shall have power to hold the proceeds of the policy under an agreement with the beneficiaries. Such company shall not be required to segregate funds so held but may hold them as part of its general company assets. A foreign or alien company, when authorized by its charter or the laws of its domicile, may exercise any such powers in this State.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/242) (from Ch. 73, par. 854)

Sec. 242. Rights of minors.

Any minor of the age of fifteen years or more may, notwithstanding such minority, contract for life, health and accident insurance on his own life for his own benefit or for the benefit of his father, mother, husband, wife, child, brother or sister, and may exercise all such contractual rights and powers with respect to any such contract of insurance as might be exercised by a person of full legal age, and may exercise with like effect all rights and privileges under such contract, including the surrender of his interest therein and the giving of a valid discharge for any benefit accruing or money payable thereunder. Such minor shall not, by reason of his minority, be entitled to rescind, avoid, or repudiate such contract, or any exercise of a right or privilege thereunder.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/243) (from Ch. 73, par. 855)

Sec. 243. Contingency reserves.

(1) Any domestic life company may accumulate and maintain in addition to an amount equal to the net value of its participating policies computed according to the standard adopted by it under section 223, a contingency reserve not exceeding the following respective percentages of said net values, to-wit:

(a) When said net values are less than one hundred thousand dollars, twenty per centum thereof or the sum of ten thousand dollars, whichever is the greater.

(b) When said net values are greater than one hundred thousand dollars the percentage thereof measuring the contingency reserve shall decrease one-half of one per centum for each one hundred thousand dollars of said net values up to one million dollars; one-half of one per centum for each additional one million dollars up to ten million dollars; one-half of one per centum for each additional two million, five hundred thousand dollars up to fifteen million dollars; and, if said net values equal or exceed the last mentioned amount, the contingency reserve shall not exceed ten per centum thereof.

(2) As the net values of said policies increase and the maximum percentage measuring the contingency reserve decreases the company may maintain any contingency reserve accumulated under this section, although it may exceed the maximum percentage herein prescribed, but may not add to the contingency reserve when the addition will bring it beyond the maximum percentage.

(3) Nothing herein contained shall be construed to affect any existing surplus or contingency reserves held by any such company except that whenever the existing surplus and contingency reserves, exclusive of said net values and of all accumulations held on account of existing deferred dividend policies or groups of such policies, shall exceed the limit above mentioned it shall not be entitled to maintain any additional contingency reserve. However, for cause shown the Director may at any time and from time to time permit any company to accumulate and maintain a contingency reserve in excess of the limit above mentioned for a prescribed period not exceeding one year under any one permission, by filing in his office a decision stating his reasons therefor and causing the same to be published in his next annual report.

(4) This section shall not be construed as preventing the accumulation from the non-participating business of a contingency reserve for the benefit of non-participating policies.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/244) (from Ch. 73, par. 856)

Sec. 244. Limitation of expenses for life companies.

(1) No life company authorized to do business in this State shall make or incur acquisition expenses in any calendar year after the calendar year during which this Code becomes effective amounting to more than the first year's gross premiums nor shall such company make or incur renewal expenses on policies issued after such year in any of the nine succeeding renewal years following each year's new business in excess of 10% of the gross renewal premiums, unless the company collects renewal premiums in person in which case such renewal expense applicable to such policies for as long as such premiums are collected in person shall not exceed 20%, except that renewal expenses in excess of such 10% limitation relative to the 9 succeeding renewal years may be made or incurred if such excess in any year be included with acquisition expenses made or incurred during that calendar year. After the tenth policy year the annual maximum renewal expenses shall not exceed 3% of such gross annual renewal premiums, unless the company collects renewal premiums in person in which case such renewal expense applicable to such policies for as long as such premiums are collected in person shall not exceed 13%, but a company may pay renewal expenses after the tenth policy year in excess of 3% if such excess is charged to the renewal expense of that calendar year within the limitation provided herein.

(2) In computing such acquisition expenses there shall be included all commissions and other valuable considerations paid or payable to or for agents, and other expenses made or incurred in acquiring new business, except medical examination and inspection fees and the normal overhead expenses of operation at the home office. In computing such renewal expenses there shall be included commissions and other valuable considerations paid or payable to or for agents, and all other expenses made or incurred for the collection of such renewal premiums, except the normal overhead expenses of operation at the home office.

(3) This Section shall not apply to accident and health or industrial business written by any companies.

(Source: Laws 1967, p. 3359.)

(215 ILCS 5/244.1) (from Ch. 73, par. 856.1)

Sec. 244.1. Whenever the financial condition of any company transacting the kinds of business authorized in Class 1 of Section 4, when reviewed in conjunction with the kinds and nature of risks insured, the loss experience and ownership of the company and the ratio of annual premium volume to the incurred acquisition expenses, indicates a condition such that the continued operation of the company might be hazardous to its policyholders, creditors or the general public, then the Director may, after notice and hearing, order the company to take such action as may be reasonably necessary to rectify the existing condition, including but not necessarily limited to one or more of the following steps:

(a) to reduce the loss exposure by reinsurance;

(b) to reduce the volume of new business being accepted;

(c) to reduce general or acquisition expenses by specified methods;

(d) to suspend the writing of new business for a period not to exceed 3 months; or

(e) to increase the company's surplus by a contribution to surplus.

(Source: P.A. 77-1514.)

(215 ILCS 5/245) (from Ch. 73, par. 857)

Sec. 245. Salaries; pensions.

(1) No domestic life company shall directly or indirectly pay any salary, compensation or emolument to any officer, trustee or director thereof, or any salary, compensation or emolument amounting in any year to more than $200,000 to any person, firm or corporation, unless such payment be first authorized by a vote of the board of directors of such company, which vote shall be duly recorded in the records of the company. No such domestic life company shall make any agreement with any of its officers, trustees or salaried employees whereby it agrees that for any services rendered or to be rendered he shall receive any salary, compensation or emolument, directly or indirectly, that will extend beyond a period of three years from the date of such agreement except that payment of an amount not in excess of 20% of the salary of any of its officers, trustees, or salaried employees may by written agreement be deferred beyond such period of three years, which agreement may include conditions to be met by such officer, trustee, or salaried employee before payment will be made. The limitation as to time contained herein shall not apply to a contract for renewal commissions with any such officer, trustee or salaried employee who is also an agent of the company nor shall such limitation be construed as preventing a domestic company from entering into contracts with its agents for the payment of renewal commissions.

(2) No such life company shall grant any pension to any officer, director or trustee thereof or to any member of his family after his death except that it may provide a pension pursuant to the terms of the uniform retirement plan adopted by the board of directors and for any person who is or has been a salaried officer or employee of such company and who may retire by reason of age or disability.

(3) No such company shall hereafter create or establish any account or fund for the purpose of promoting the health or welfare of its employees except from annual accretions to earned surplus computed in the manner provided by this Code. Contributions to such fund by any company in any calendar year shall not exceed 15% of the accretion to earned surplus in such calendar year. Before such account or fund shall be established, maintained or operated, the plan for such account or fund and its method of operation shall be approved by the board of directors of the company, and submitted to the shareholders in the case of a stock company, or members in the case of a mutual company, at a special meeting called for the purpose of considering such plan. Contributions to the fund from sources other than the company may be provided for in the operation of the plan. No amount held in such fund or account whether contributed by the company or from any other source shall be considered an admitted asset as defined in this Code, nor considered in determining the solvency of such company, nor be subject to the provisions of this Code.

(Source: P.A. 91-549, eff. 8-14-99.)

(215 ILCS 5/245.1) (from Ch. 73, par. 857.1)

Sec. 245.1. Assignability of life insurance. No provision of the Illinois Insurance Code, or any other law prohibits an insured under any policy of life insurance, or any other person who may be the owner of any rights under such policy, from making an assignment of all or any part of his rights and privileges under the policy including but not limited to the right to designate a beneficiary thereunder and to have an individual policy issued in accordance with paragraphs (G), (H), and (K) of Section 231.1 of the Illinois Insurance Code. Subject to the terms of the policy or any contract relating thereto, an assignment by an insured or by any other owner of rights under the policy, made before or after the effective date of this amendatory Act of 1969 is valid for the purpose of vesting in the assignee, in accordance with any provisions included therein as to the time at which it is effective, all rights and privileges so assigned. However, such assignment is without prejudice to the company on account of any payment it makes or individual policy it issues in accordance with paragraphs (d) and (g) of Section 231 before receipt of notice of the assignment. This amendatory Act of 1969 acknowledges, declares and codifies the existing right of assignment of interests under life insurance policies.

(Source: P.A. 98-969, eff. 1-1-15.)

(215 ILCS 5/245.2) (from Ch. 73, par. 857.2)

Sec. 245.2. Not-for-profit organizations; beneficiary of insurance on member's life. Members of not-for-profit organizations that are exempt from taxation as described in paragraph (3), (4), (5), (9), or (10) of subsection (c) of Section 501 of the Internal Revenue Code or either past or present individual or family donors to a not-for-profit organization may obtain life insurance policies naming the not-for-profit organization as the irrevocable sole beneficiary of the policy. The not-for-profit organization, as the sole beneficiary of the policy, may continue to pay the premiums to the issuing insurance company where the donor discontinues the premium payments and continuance of the policy is a prudent investment.

(Source: P.A. 87-770.)

(215 ILCS 5/245.3)

Sec. 245.3. Irrevocable assignment of life insurance to a funeral home. An insured or any other person who may be the owner of rights under a policy of life insurance may make an irrevocable assignment of all or a part of his or her rights under the policy to a funeral home in accordance with Section 2b of the Illinois Funeral or Burial Funds Act. Subject to the terms of the policy or a contract relating to the policy, including, but not limited to, a prepaid funeral or burial contract, an irrevocable assignment by an insured or other owner of rights under a policy made before or after the effective date of this amendatory Act of the 102nd General Assembly is valid for the purpose of vesting in the assignee, in accordance with the policy or contract as to the time at which it is effective, all rights assigned. That irrevocable assignment is, however, without prejudice to the company on account of any payment it makes. The insurance company shall within 15 business days notify the funeral home and owner of the policy of its receipt of the form. A policy owner who executes a designation of beneficiary form pursuant to Section 2b of the Illinois Funeral or Burial Funds Act also irrevocably waives and cannot exercise the following rights:

(1) The right to collect from the insurance company the net proceeds of the policy when it becomes a claim by death.

(2) The right to surrender the policy and receive the cash surrender value of the policy.

(3) The right to obtain a policy loan.

(4) The right to designate as primary beneficiary of the policy anyone other than as provided in that Act.

(5) The right to collect or receive income, distributions, or shares of surplus, dividend deposits, refunds of premium, or additions to the policy.

This amendatory Act of the 102nd General Assembly acknowledges, declares, and codifies the existing right of assignment of interests under life insurance policies.

(Source: P.A. 102-959, eff. 5-27-22.)

(215 ILCS 5/Art. XIV.5 heading) ARTICLE XIV 1/2. SEPARATE ACCOUNTS

(215 ILCS 5/245.21) (from Ch. 73, par. 857.21)

Sec. 245.21. Establishment of separate accounts by domestic companies organized to do a life, annuity, or accident and health insurance business. A domestic company, including for the purposes of this Article all domestic fraternal benefit societies, may, for authorized classes of insurance, establish one or more separate accounts, and may allocate thereto amounts (including without limitation proceeds applied under optional modes of settlement or under dividend options) to provide for life, annuity, or accident and health insurance (and benefits incidental thereto), payable in fixed or variable amounts or both, subject to the following:

(1) The income, gains and losses, realized or unrealized, from assets allocated to a separate account must be credited to or charged against the account, without regard to other income, gains or losses of the company.

(2) Except as may be provided with respect to reserves for guaranteed benefits and funds referred to in paragraph (3) of this Section (i) amounts allocated to any separate account and accumulations thereon may be invested and reinvested without regard to any requirements or limitations of Part 2 or Part 3 of Article VIII of this Code and (ii) the investments in any separate account or accounts may not be taken into account in applying the investment limitations otherwise applicable to the investments of the company.

(3) Except with the approval of the Director and under the conditions as to investments and other matters as the Director may prescribe, that must recognize the guaranteed nature of the benefits provided, reserves for (i) benefits guaranteed as to dollar amount and duration and (ii) funds guaranteed as to principal amount or stated rate of interest may not be maintained in a separate account.

(4) Unless otherwise approved by the Director, assets allocated to a separate account must be valued at their market value on the date of valuation, or if there is no readily available market, then as provided in the contract or the rules or other written agreement applicable to the separate account. Unless otherwise approved by the Director, the portion, if any, of the assets of the separate account equal to the company's reserve liability with regard to the guaranteed benefits and funds referred to in paragraph (3) of this Section must be valued in accordance with the rules otherwise applicable to the company's assets.

(5) Amounts allocated to a separate account under this Article are owned by the company, and the company may not be, nor hold itself out to be, a trustee with respect to those amounts. The assets of any separate account equal to the reserves and other contract liabilities with respect to the account may not be charged with liabilities arising out of any other business the company may conduct, unless the separate account is subject to guarantees, in which case the assets shall be charged with liabilities arising out of other business of the company, unless the contract specifies that the assets are insulated.

(6) No sale, exchange or other transfer of assets may be made by a company between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, in case of a transfer into a separate account, the transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made, and unless the transfer, whether into or from a separate account, is made (i) by a transfer of cash, or (ii) by a transfer of securities having a readily determinable market value, if the transfer of securities is approved by the Director. The Director may approve other transfers among those accounts if, in his or her opinion, the transfers would not be inequitable.

(7) To the extent a company considers it necessary to comply with any applicable federal or state laws, the company, with respect to any separate account, including without limitation any separate account which is a management investment company or a unit investment trust, may provide for persons having an interest therein appropriate voting and other rights and special procedures for the conduct of the business of the account, including without limitation special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with the company, to manage the business of the account.

(Source: P.A. 98-39, eff. 6-28-13.)

(215 ILCS 5/245.22) (from Ch. 73, par. 857.22)

Sec. 245.22. Any contract providing benefits payable in variable amounts delivered or issued for delivery in this State must contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of the variable benefits. Any such contract under which the benefits vary to reflect investment experience, including a group contract and any certificate in evidence of variable benefits issued thereunder, must state that such dollar amount will so vary and must contain on its first page a statement to the effect that the benefits thereunder are on a variable basis.

(Source: P.A. 77-1572.)

(215 ILCS 5/245.23) (from Ch. 73, par. 857.23)

Sec. 245.23. No company may deliver or issue for delivery within this State variable contracts unless it is authorized or organized to do a life, annuity, or accident and health insurance business in this State, and the Director is satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this State. In this connection, the Director may consider among other things:

(a) The history and financial condition of the company;

(b) The character, responsibility and fitness of the officers and directors of the company; and

(c) The law and regulation under which the company is authorized in its state of domicile to issue variable contracts. If the company is a subsidiary of an authorized insurance company, or affiliated with such a company through common management or ownership, it may be deemed by the Director to have met the requirements of this Section if either it or the parent or the affiliated company meets the requirements of this Section.

(Source: P.A. 90-381, eff. 8-14-97.)

(215 ILCS 5/245.24) (from Ch. 73, par. 857.24)

Sec. 245.24. Notwithstanding any other provision of law, the Director has sole authority to regulate the issuance and sale of variable contracts, and to promulgate such reasonable rules and regulations as may be appropriate to carry out the purposes and provisions of this Article.

(Source: P.A. 77-1572.)

(215 ILCS 5/245.25) (from Ch. 73, par. 857.25)

Sec. 245.25. Except for subparagraphs (1)(a), (1)(f), (1)(g) and (3) of Section 226 of the Illinois Insurance Code, in the case of a variable annuity contract and subparagraphs (1)(b), (1)(f), (1)(g), (1)(h), (1)(i), and (1)(k) of Section 224, subparagraph (1)(c) of Section 225, and subparagraph (h) of Section 231 in the case of a variable life insurance policy, except for Sections 357.4, 357.5, 367e, and 367e.1 in the case of a variable health insurance policy, and except as otherwise provided in this Article, all pertinent provisions of the Illinois Insurance Code which are appropriate to those contracts apply to separate accounts and contracts relating thereto. Any individual variable life insurance contract, delivered or issued for delivery in this State, must contain grace, reinstatement and non-forfeiture provisions appropriate to such a contract. Any individual variable annuity contract, delivered or issued for delivery in this State, must contain grace and reinstatement provisions appropriate to such a contract. Any group variable life insurance contract, delivered or issued for delivery in this State, must contain a grace provision appropriate to such a contract. A group variable health insurance contract delivered or issued for delivery in this State must contain a continuation of group coverage provision appropriate to the contract. The reserve liability for variable contracts must be established in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.

(Source: P.A. 93-477, eff. 1-1-04.)