(215 ILCS 5/284.1) (from Ch. 73, par. 896.1)
(Section scheduled to be repealed on January 1, 2027)
Sec. 284.1.
Representative form of government.
A society has a
representative form of government when:
(a) It has a supreme governing body constituted in |
| one of the following ways:
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(1) Assembly. The supreme governing body is an
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| assembly composed of delegates elected directly by the members or at intermediate assemblies of members or their representatives, together with other delegates as may be prescribed in the society's laws. A society may provide for election of delegates by mail. The elected delegates shall constitute a majority in number and shall not have less than 2/3 of the votes and not less than the number of votes required to amend the society's laws. The assembly shall be elected and shall meet at least once every 4 years and shall elect a board of directors to conduct the business of the society between meetings of the assembly. Vacancies on the board of directors between elections may be filled in the manner prescribed by the society's laws; or
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(2) Direct Election. The supreme governing body
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| is a board composed of persons elected by the members, either directly or by their representatives in intermediate assemblies, and any other persons prescribed in the society's laws. A society may provide for election of the board by mail. Each term of a board member may be filled in the manner prescribed by the society's laws. However, those persons elected to the board shall constitute a majority in number and not less than the number of votes required to amend the society's laws. A person filling the unexpired term of an elected board member shall be considered to be an elected member. The board shall meet at least quarterly to conduct the business of the society;
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(b) The officers of the society are elected either by
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| the supreme governing body or by the board of directors;
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(c) Only benefit members are eligible for election to
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| the supreme governing body, the board of directors or any intermediate assembly; and
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(d) Each voting member has one vote; no vote may be
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(Source: P.A. 84-303 .)
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(215 ILCS 5/286.1) (from Ch. 73, par. 898.1)
(Section scheduled to be repealed on January 1, 2027)
Sec. 286.1. Purposes and powers. (a) A society shall operate for the
benefit of members and their beneficiaries by:
(1) Providing benefits as specified in Section 297.1 |
| of this amendatory Act; and
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(2) Operating for one or more social, intellectual,
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| educational, charitable, benevolent, moral, fraternal, patriotic or religious purposes for the benefit of its members, which may also be extended to others. Such purposes may be carried out directly by the society or indirectly through subsidiary corporations or affiliated organizations.
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(b) Every society shall have the power to adopt laws and rules for the
government of the society, the admission of its members and the management
of its affairs. It shall have the power to change, alter, add to or amend
such laws and rules and shall have such other powers as are necessary and
incidental to carrying into effect the objects and purposes of the society.
(c) A domestic society that provides any of the benefits specified in Section 297.1 of this Code must be governed by a board of directors and managed by qualified officers subject to the following requirements:
(1) The laws of a society must provide that:
(i) the board of directors shall have the powers
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| and perform the duties ordinarily possessed and exercised by a board of directors under this Code, including, but not limited to, the authority and responsibility for the hiring and the discharge of a president, chief executive officer, or an equivalent position, except that a society that elects its president, chief executive officer, or equivalent position pursuant to its by-laws, as of the effective date of this amendatory Act of the 98th General Assembly, may continue to do so if it elects a president, chief executive officer, or equivalent position that meets qualifications set forth in a rule adopted by the Director; and
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(ii) the board of directors may remove a director
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| for cause and replace the director with another qualified director.
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After the effective date of this amendatory Act of
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| the 98th General Assembly, a domestic society shall amend its laws, as necessary, to comply with this paragraph (1) as soon as reasonably practicable, but in no event later than January 1, 2019.
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(2) A person convicted of a felony may not be a
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| director or an officer of a domestic society.
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(3) A society shall provide information regarding
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| qualifications of board candidates to voting members prior to the time of election.
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(4) Each newly elected director of a domestic society
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| shall participate in a board training or orientation program within 6 months after their election to the board that includes information regarding board duties and responsibilities.
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(5) At least annually, the board of directors shall
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| conduct a self-assessment.
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(6) Each domestic society shall establish an audit
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| committee. The composition and responsibilities of the audit committee shall comply with the Illinois Administrative Code provisions relating to annual financial reporting.
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(Source: P.A. 98-814, eff. 1-1-15 .)
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(215 ILCS 5/289.1) (from Ch. 73, par. 901.1)
(Section scheduled to be repealed on January 1, 2027)
Sec. 289.1.
Personal liability.
(a) The officers and members of the
supreme governing body or any subordinate body of a society shall not be
personally liable for any benefits provided by a society.
(b) Any person may be indemnified and reimbursed by any society for
expenses reasonably incurred by, and liabilities imposed upon, such person
in connection with or arising out of any action, suit or proceeding,
whether civil, criminal, administrative or investigative, or threat
thereof, in which the person may be involved by reason of the fact that he
or she is or was a director, officer, employee or agent of the society or
of any firm, corporation or organization which he or she served in any
capacity at the request of the society. A person shall not be so
indemnified or reimbursed (1) in relation to any matter in such action,
suit or proceedings as to which he or she shall finally be adjudged to be
or have been guilty of breach of a duty as a director, officer, employee or
agent of the society; or (2) in relation to any matter in such action, suit
or proceeding, or threat thereof, which has been made the subject of a
compromise settlement; unless in either such case the person acted in good
faith for a purpose the person reasonably believed to be in or not opposed
to the best interests of the society and, in a criminal action or
proceeding, in addition, had no reasonable cause to believe that his or her
conduct was unlawful. The determination whether the conduct of such person
met the standard required in order to justify indemnification and
reimbursement in relation to any matter described in subpoints (1) or (2)
of the preceding sentence may only be made by the supreme governing body or
board of directors by a majority vote of a quorum consisting of persons who
were not parties to such action, suit or proceeding or by a court of
competent jurisdiction. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction or upon a plea of no contest
as to such person shall not in itself create a conclusive presumption that
the person did not meet the standard of conduct required in order to
justify indemnification and reimbursement. The foregoing right of
indemnification and reimbursement shall not be exclusive of other rights to
which such person may be entitled as a matter of law and shall inure to the
benefit of his or her heirs, executors and administrators.
(c) A society shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent
of the society, or who is or was serving at the request of the society as a
director, officer, employee or agent of any other firm, corporation or
organization against any liability asserted against such person and
incurred by him or her in any such capacity or arising out of his or her
status as such, whether or not the society would have the power to
indemnify the person against such liability under this Section.
(Source: P.A. 84-303 .)
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(215 ILCS 5/291.1) (from Ch. 73, par. 903.1)
(Section scheduled to be repealed on January 1, 2027)
Sec. 291.1. Organization. A domestic society organized on or after
January 1, 1986 (the effective date of Public Act 84-303) shall be formed as follows:
(a) Seven or more citizens of the United States, a |
| majority of whom are citizens of this State, who desire to form a fraternal benefit society may make, sign and acknowledge, before some officer competent to take acknowledgement of deeds, articles of incorporation, in which shall be stated:
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(1) The proposed corporate name of the society,
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| which shall not so closely resemble the name of any society or insurance company already authorized to transact business in this State as to be misleading or confusing;
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(2) The place where its principal office shall be
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| located within this State;
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(3) The purposes for which it is being formed and
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| the mode in which its corporate powers are to be exercised. Such purposes shall not include more liberal powers than are granted by this amendatory Act; and
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(4) The names and residences of the incorporators
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| and the names, residences and official titles of all the officers, trustees, directors or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election, at which all such officers shall be elected by the supreme governing body, which election shall be held not later than one year from the date of issuance of the permanent certificate of authority;
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(b) Duplicate originals of the articles of
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| incorporation, certified copies of the society's bylaws and rules, copies of all proposed forms of certificates, applicants and rates therefor, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year shall be filed with the Director, who may require such further information as the Director deems necessary. The bond with sureties approved by the Director shall be in such amount, not less than $300,000 nor more than $1,500,000, as required by the Director. All documents filed are to be in the English language. If the Director finds that the purposes of the society conform to the requirements of this amendatory Act and all provisions of the law have been complied with, the Director shall approve the articles of incorporation and issue the incorporators a preliminary certificate of authority authorizing the society to solicit members as hereinafter provided;
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(c) No preliminary certificate of authority issued
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| under the provisions of this Section shall be valid after one year from its date of issue or after such further period, not exceeding one year, as may be authorized by the Director, upon cause shown, unless the 500 applicants hereinafter required have been secured and the organization has been completed as herein provided. The articles of incorporation and all other proceedings thereunder shall become null and void in one year from the date of the preliminary certificate of authority or at the expiration of the extended period, unless the society shall have completed its organization and received a certificate of authority to do business as hereinafter provided;
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(d) Upon receipt of a preliminary certificate of
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| authority from the Director, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates and shall issue to each such applicant a receipt for the amount so collected. No society shall incur any liability other than for the return of such advance premium nor issue any certificate nor pay, allow or offer or promise to pay or allow any benefit to any person until:
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(1) Actual bona fide applications for benefits
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| have been secured on not less than 500 applicants and any necessary evidence of insurability has been furnished to and approved by the society;
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(2) At least 10 subordinate lodges have been
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| established into which the 500 applicants have been admitted;
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(3) There has been submitted to the Director,
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| under oath of the president or secretary, or corresponding officer of the society, a list of such applicants, giving their names, addresses, date each was admitted, name and number of the subordinate lodge of which each applicant is a member, amount of benefits to be granted and premiums therefor;
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(4) It shall have been shown to the Director, by
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| sworn statement of the treasurer or corresponding officer of such society, that at least 500 applicants have each paid in cash at least one regular monthly premium as herein provided, which premiums in the aggregate shall amount to at least $150,000. Said advance premiums shall be held in trust during the period of organization, and, if the society has not qualified for a certificate of authority within one year unless extended by the Director, as herein provided, such premiums shall be returned to said applicants; and
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(5) In the case of a domestic society that is
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| organized after January 1, 2015 (the effective date of Public Act 98-814), the society meets the following requirements:
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(i) maintains a minimum surplus of
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| $2,000,000, or such higher amount as the Director may deem necessary; and
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(ii) meets any other requirements as
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| determined by the Director.
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(e) The Director may make such examination and
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| require such further information as the Director deems necessary. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, the Director shall issue to the society a certificate of authority to that effect and that the society is authorized to transact business pursuant to the provisions of this amendatory Act; and
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(f) Any incorporated society authorized to transact
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| business in this State at the time Public Act 84-303 becomes effective (January 1, 1986) shall not be required to reincorporate.
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(Source: P.A. 102-558, eff. 8-20-21.)
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(215 ILCS 5/296.1) (from Ch. 73, par. 908.1)
(Section scheduled to be repealed on January 1, 2027)
Sec. 296.1.
Conversion of fraternal benefit society to mutual life
insurance company. (a) Any society subject to the provisions of this
amendatory Act possessed of admitted assets in excess of all liabilities at least
equal to the minimum surplus required of a new mutual legal reserve life
company under Section 43 of this Code transacting the same kind or kinds of
business may, at its option, without reincorporation, adopt and become
subject to the provisions of Article III of this Code, in lieu of this amendatory Act.
(b) The board of directors of the society shall approve such proposed
amendments to the articles of incorporation, the constitution and bylaws
of the society as may be necessary or desirable to make the same conform to
the articles of incorporation and bylaws of a mutual legal reserve life
company, in accordance with the requirements of Article III of this Code.
(c) The board of directors of the society shall then submit such
proposed amendments to the Director together with: (1) a copy of the notice
to be given to members and lodges as herein provided; (2) a current
financial statement of the society showing assets, liabilities and surplus
valued in accordance with the requirements of Article III; and (3) the
proposed plan for transition from a fraternal society to a mutual legal
reserve company, including, if pertinent, the following: dissolution of the
lodge system; disposition of property held for the benefit of lodges;
changes in the amount, calculation and collection of future premiums on
policies; the method of selection of officers and board of directors or
trustees to manage and control the mutual company until the regular annual
meeting of its members; and such other changes as may be necessary to an
orderly transition. If the Director finds that: (a) the amendments, notice
and plan are in accordance with the provisions of this amendatory Act and not
inconsistent with the laws and the Constitutions of this State and the
United States; (b) the society has a surplus which, when calculated in
accordance with the requirements of Article III of this Code, is at least
equal to the original surplus required under Article III of a mutual legal
reserve life company transacting the same kind or kinds of business; and (c)
no reasonable objection exists to such conversion, the Director shall,
within a reasonable time, authorize the sending of notices and further
proceedings hereunder.
(d) After the Director has given such authority, the board of directors
of the society shall then submit the proposed amendments and plan of
transition, as so approved, to the supreme governing body of such society at
any regular or special meeting thereof, provided a copy of such amendments
and plan have been included in or enclosed with the notice of such meeting,
which notice shall be given as provided in the laws of the society for the
convening of such supreme governing body in regular or special session as
the case may be. At least 90 days prior to the date of such regular or
special meeting, as the case may be, a notice describing the purpose of
the proposed amendments, and including therein or enclosing therewith a
copy of such amendments and plan of transition, all as approved by the
Director, shall be mailed to each lodge or local body of the society
qualified to choose a delegate or delegates to said meeting and also to
each member of the society; for the purpose of this notice the lodges or
local bodies and the members and the addresses of same shall be taken as
those shown by the records of the society as of a date not earlier than 120
days prior to the date set for such meeting. The affidavit of
any officer, clerk or agent of the company, or of anyone authorized to mail
such notices, that the notices required by this Section bearing the required
postage have been duly addressed and mailed shall, upon final approval by
the Director of the proceedings hereunder, constitute conclusive evidence
that such notice has been duly given in accordance herewith.
(e) The affirmative votes of 2/3 of the members of such supreme
governing body present at such meeting shall be necessary for the adoption
of amendments and the plan of transition under this Section, provided,
however, that 2/3 of the elective members present shall vote in
favor thereof; the amendments and plan adopted shall be submitted to the
Director for his final approval. If the Director shall find that the
amendments and plan and the adoption thereof are in accordance with this
Section he shall approve the same, and, not less than 30 days nor more
than 60 days after such approval, he shall issue a certificate of
authority authorizing the company to do business subject to and entitled to
the benefits of Article III of this Code. Upon issuance of such
certificate, any right in the society to assess its members shall expire and
any provision for an assessment contained in the policies issued by the
society shall become thenceforth unenforceable, null and void.
(Source: P.A. 84-303 .)
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(215 ILCS 5/297.1) (from Ch. 73, par. 909.1)
(Section scheduled to be repealed on January 1, 2027)
Sec. 297.1. Benefits. (a) A society may provide the following contractual
benefits in any form:
(1) Death benefits;
(2) Endowment benefits;
(3) Annuity benefits;
(4) Temporary or permanent disability benefits;
(5) Hospital, medical or nursing benefits;
(6) Monument or tombstone benefits to the memory of |
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(7) Such other benefits as authorized for life
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| insurers and which are not inconsistent with this amendatory Act.
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(b) A society shall specify in its rules those persons who may be
issued, or covered by, the contractual benefits in subsection (a),
consistent with providing benefits to members and their dependents.
A society may provide benefits on the lives of children under the minimum age
for adult membership upon application of an adult person.
(c) After the effective date of this amendatory Act of the 98th General Assembly, a society shall provide an applicant for contractual benefits a disclosure statement that reads substantially as follows:
". . . . . . .(name of the society) is licensed to do
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| business in the State of Illinois as a fraternal benefit society. As such, it is not included in the Illinois Life and Health Guaranty Association (otherwise known as the Guaranty Association). This means that fraternal benefit societies cannot be assessed for the insolvency of other life insurers or other fraternal benefit societies. By law, a fraternal benefit society is responsible for its own solvency. If there is an impairment of reserves, a certificate holder may be assessed a proportionate share of the impairment. This process is described in the certificate issued by the society.".
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The statement must appear immediately above the applicant's signature on the society's membership application or certificate or policy application, in uppercase and bold type or boxed.
(Source: P.A. 98-814, eff. 1-1-15 .)
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(215 ILCS 5/300.1) (from Ch. 73, par. 912.1)
(Section scheduled to be repealed on January 1, 2027)
Sec. 300.1. The benefit contract. (a) Every society authorized to do
business in this State shall issue to each owner of a benefit contract a
certificate specifying the amount of benefits provided thereby. The
certificate, together with any riders or endorsements attached thereto,
the laws of the society, the application for membership, the application
for insurance and declaration of insurability, if any, signed by the
applicant and all amendments to each thereof shall constitute the benefit
contract, as of the date of issuance, between the society and the owner,
and the certificate shall so state. A copy of the application for insurance
and declaration of insurability, if any, shall be endorsed upon or attached
to the certificate. All statements on the application shall be
representations and not warranties. Any waiver of this provision shall be void.
(b) Any changes, additions or amendments to the laws of the society duly
made or enacted subsequent to the issuance of the certificate shall bind
the owner and the beneficiaries and shall govern and control the benefit
contract in all respects the same as though such changes, additions or
amendments had been made prior to and were in force at the time of the
application for insurance, except that no change, addition or amendment
shall destroy or diminish benefits which the society contracted to give the
owner as of the date of issuance.
(c) Any person upon whose life a benefit contract is issued prior to
attaining the age of majority shall be bound by the terms of the
application and certificate and by all the laws and rules of the society to
the same extent as though the age of majority had been attained at the
time of application.
(d) A society shall provide in its laws and its certificates that, if its
reserves as to all or any class of certificates become impaired, its board of
directors or corresponding body may require that there shall be paid by
the owner to the society an assessment in the amount of the owner's equitable proportion of
such deficiency as ascertained by its board, and that, if the payment is not
made, either (1) it shall stand as an indebtedness against the certificate
and draw interest not to exceed the rate specified for certificate loans
under the certificates; or (2) in lieu of or in combination with (1), the
owner may accept a proportionate reduction in benefits under the
certificate. However, in no event may an assessment obligation be forgiven, credited, or repaid by whatever means or however labeled by the society in lieu of collection or reduction in benefits, unless provided to all society members and approved in writing by the Director, except that the forgiveness or repayment of any assessments issued by a society that remain outstanding as of January 1, 2015 (the effective date of Public Act 98-814) may be forgiven or repaid by any manner or plan certified by an independent actuary and filed with the Director to make reasonable and adequate provision for the forgiveness or repayment of the assessment to all society members. Notwithstanding the foregoing, a society may fully repay, credit, or forgive an assessment from the date of death of any life insured under a certificate so long as the plan to forgive or repay the assessment is certified by an independent actuary and filed with the Director to make reasonable and adequate provision for the forgiveness or repayment of the assessment to all assessed society members as a result of the death. The society may specify the manner of the election and which
alternative is to be presumed if no election is made. No such assessment shall take effect unless a 30-day notification has been provided to the Director, who shall have the ability to disapprove the assessment only if the Director finds that such assessment is not in the best interests of the benefit members of the domestic society. Disapproval by the Director shall be made within 30 days after receipt of notice and shall be in writing and mailed to the domestic society. If the Director disapproves the assessment, the reasons therefor shall be stated in the written notice.
(e) Copies of any of the documents mentioned in this Section, certified
by the secretary or corresponding officer of the society, shall be received
in evidence of the terms and conditions thereof.
(f) No certificate shall be delivered or issued for delivery in this
State unless a copy of the form has been filed with the Director in the
manner provided for like policies issued by life insurers in this State.
Every life, accident, health or disability insurance certificate and every
annuity certificate issued on or after one year from January 1, 1986 (the effective date of Public Act 84-303)
shall meet the standard contract provision requirements not
inconsistent with Public Act 84-303 for like policies issued by life insurers in
this State except that a society may provide for a grace period for payment
of premiums of one full month in its certificates. The certificate shall
also contain a provision stating the amount of premiums which are payable
under the certificate and a provision reciting or setting forth the
substance of any sections of the society's laws or rules in force at the
time of issuance of the certificate which, if violated, will result in the
termination or reduction of benefits payable under the certificate. If the
laws of the society provide for expulsion or suspension of a member, the
certificate shall also contain a provision that any member so expelled or
suspended, except for nonpayment of a premium or within the contestable
period for material misrepresentation in the application for membership or
insurance, shall have the privilege of maintaining the certificate in force
by continuing payment of the required premium.
(g) Benefit contracts issued on the lives of persons below the society's
minimum age for adult membership may provide for transfer of control or
ownership to the insured at an age specified in the certificate. A society
may require approval of an application for membership in order to effect
this transfer and may provide in all other respect for the regulation,
government and control of such certificates and all rights, obligations and
liabilities incident thereto and connected therewith. Ownership rights
prior to such transfer shall be specified in the certificate.
(h) A society may specify the terms and conditions on which benefit
contracts may be assigned.
(Source: P.A. 101-81, eff. 7-12-19.)
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