State of Illinois
2017 and 2018


Introduced , by Rep. Laura Fine


215 ILCS 5/231.1  from Ch. 73, par. 843.1
215 ILCS 5/231.2 new

    Amends the Legal Reserve Life Insurance Article of the Illinois Insurance Code. Removes a provision concerning continuation of coverage during the insured's total disability. Adds provisions requiring extension of coverage for an individual under a group policy during an authorized absence. Defines "authorized absence" to mean an absence that is administratively approved and does not result in a charge to leave of any kind or in loss of basic salary. Sets forth provisions concerning the conditions of the extension of coverage. Provides that the prior insurer shall be liable only to the extent of its extensions of coverage. Includes provisions related to the liability of the succeeding insurer, including regular coverage, temporary coverage, deductible and waiting periods, and determinations of the prior insurer's coverage. Effective immediately.

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HB0502LRB100 06034 SMS 16065 b

1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Insurance Code is amended by
5changing Section 231.1 and by adding Sections 231.2 as follows:
6    (215 ILCS 5/231.1)  (from Ch. 73, par. 843.1)
7    Sec. 231.1. Group Life Insurance Standard Provision. No
8policy of group life insurance shall be delivered in this State
9unless it contains in substance the following provisions, or
10provisions which in the opinion of the Director are more
11favorable to the persons insured, or at least as favorable to
12the persons insured and more favorable to the policyholder,
13provided, however, (a) that provisions (F) to (K) inclusive
14shall not apply to policies insuring the lives of debtors; (b)
15that the standard provisions required for individual life
16insurance policies shall not apply to group life insurance
17policies; and (c) that if the group life insurance policy is on
18a plan of insurance other than the term plan, it shall contain
19a nonforfeiture provision which in the opinion of the Director
20is equitable to the insured persons and to the policyholder,
21but nothing herein shall be construed to require that group
22life insurance policies contain the same nonforfeiture
23provisions as are required for individual life insurance



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



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



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



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



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



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



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1entitled to have an individual policy issued in accordance with
2provisions (H) or (I) above and before such an individual
3policy shall have become effective, the amount of life
4insurance which he would have been entitled to have issued
5under such individual policy shall be payable as a claim under
6the group policy, whether or not application for the individual
7policy or the payment of the first premium therefor has been
9    (M) (Blank). If active employment is a condition of
10insurance, a provision that an insured may continue coverage
11during the insured's total disability by timely payment to the
12policyholder of that portion, if any, of the premium that would
13have been required from the insured had total disability not
14occurred. The continuation shall be on a premium paying basis
15for a period of six months from the date on which the total
16disability started, but not beyond the earlier of (a) approval
17by the insurer of continuation of the coverage under any
18disability provision which the group insurance policy may
19contain or (b) the discontinuance of the group insurance
21    (N) In the case of a policy insuring the lives of debtors,
22a provision that the insurer will furnish to the policyholder
23for delivery to each debtor insured under the policy a
24certificate of insurance describing the coverage and
25specifying that the death benefit shall first be applied to
26reduce or extinguish the indebtedness. Whenever the amount of



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1insurance payable exceeds the amount of outstanding
2indebtedness the excess benefit shall be payable to the person
3otherwise contractually or legally entitled thereto; if there
4be no person determined to be so entitled, such excess shall be
5paid to the estate of the insured person.
6(Source: P.A. 83-1465.)
7    (215 ILCS 5/231.2 new)
8    Sec. 231.2. Extension of coverage under authorized
9absence; liability.
10    (a) In this Section, "authorized absence" means an absence
11that is administratively approved and does not result in a
12charge to leave of any kind or in loss of basic salary.
13    (b) A group policy shall, if a covered employee or
14dependent is on authorized absence at the date of termination
15of the policy, provide an extension of coverage for the
16individual, beginning at the date of termination of the group
17policy and continuing during the period of authorized absence.
18    (c) Under a group life policy that contains a disability
19benefit extension of any type, such as premium waiver
20extension, extended death benefit in the event of total
21disability, or payment of income for a specified period during
22total disability, the termination of the group policy shall not
23operate to terminate the extension.
24    (d) Under a group policy providing benefits for loss of
25time from work or a specific indemnity during hospital



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1confinement, termination of the group policy during a period of
2authorized absence or confinement shall have no effect on
3benefits payable for the condition or conditions causing
4continuing authorized absence or continuing confinement. The
5extension of coverage provision for loss of time benefits may
6provide for the integration of Social Security disability or
7retirement benefit increases which occur after the date of
8termination of the group policy only if integration of these
9benefit increases is also applicable prior to termination of
10the group policy.
11    (e) Under a group policy providing hospital, surgical, or
12medical expense coverages, the extension of coverage shall be
13at least 12 months under major medical or comprehensive medical
14coverage and at least 90 days under other hospital, surgical,
15or medical expense coverage, subject to the following:
16        (1) Coverage need not be extended beyond the date on
17    which:
18            (A) the authorized absence terminates;
19            (B) the benefit period specified in the policy
20        ends;
21            (C) the maximum benefit is paid; or
22            (D) coverage for the condition or conditions
23        causing the authorized absence is provided under
24        similar coverage, other than temporary coverage under
25        subparagraph (B) of paragraph (2) of subsection (i)
26        under the succeeding insurer's group policy.



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1        (2) Extended coverage need not cover dental or
2    uncomplicated pregnancy expenses or a condition other than
3    the condition or conditions causing the authorized
4    absence.
5        (3) The extension of coverage is not required where the
6    succeeding insurer agrees, or the prior and succeeding
7    insurers agree, to provide coverage for individuals who are
8    on an authorized absence at the date of termination of the
9    group policy that is not less favorable to them than would
10    otherwise be required by this subsection (e).
11        (4) After the termination of extended basic hospital,
12    surgical, or medical expense coverage, extended major
13    medical expense coverage shall cover expenses eligible
14    under the major medical expense coverage that are normally
15    covered under the basic coverage, subject to paragraph (1);
16    and
17        (5) A policy providing hospital, surgical, or medical
18    expense coverage that covers only expenses in excess of
19    those covered by basic hospital-surgical-medical expense
20    coverage and major medical coverage or comprehensive
21    medical coverage issued to the same group policyholder,
22    need not provide extended coverage if the underlying
23    coverage provides extended coverage.
24    (f) A provision for extending coverage shall be contained
25in each group policy as well as in corresponding certificates.
26    (g) The benefits payable during any period of extended



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1coverage shall be subject to the group policy's regular
2coverage limits. The extended coverage shall terminate at the
3end of a normal benefit period or when the maximum benefit
4amount has been paid.
5    (h) The prior insurer shall be liable only to the extent of
6its extensions of coverage. Its liability shall be the same
7whether the group policyholder secures replacement coverage
8from another insurer, self-insures, or declines to provide the
9group with insurance.
10    (i) The succeeding insurer shall be liable as provided in
11this subsection (i) where its group policy replaces another
12providing similar coverage:
13        (1) Regular coverage shall be provided under the
14    succeeding insurer's group policy to:
15            (A) each employee who is eligible for coverage in
16        accordance with the succeeding insurer's group policy
17        provisions regarding classes eligible and actively at
18        work requirements;
19            (B) each dependent who is eligible for coverage in
20        accordance with the succeeding insurer's group policy
21        provisions regarding classes eligible and non-hospital
22        confinement requirements; and
23            (C) a dependent of a disabled employee if the
24        dependent is eligible for coverage in accordance with
25        the succeeding insurer's group policy provisions
26        regarding classes eligible and non-hospital



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1        confinement requirements and if the disabled employee
2        is covered under the succeeding insurer's group
3        policy.
4        (2) Each employee or dependent not covered under the
5    succeeding insurer's group policy in accordance with
6    paragraph (1) of this subsection (i) shall be provided with
7    temporary coverage by the succeeding insurer, for losses
8    occurring or beginning under the replacement policy,
9    subject to the following:
10            (A) Temporary coverage need be provided only if the
11        individual was validly covered under the prior group
12        policy on the date of its termination and meets the
13        requirements necessary to be a member of an eligible
14        class under the succeeding insurer's group policy,
15        other than requirements for working full time, part
16        time, or a stated number of hours.
17            (B) The coverage to be provided by the succeeding
18        insurer shall be the coverage of the prior group policy
19        reduced by any benefits payable under such policy. The
20        benefits of the succeeding insurer's group policy
21        shall be determined after the benefits of the prior
22        group policy have been determined.
23            (C) Temporary coverage shall be provided by the
24        succeeding insurer until the first of:
25                (i) the date the individual becomes eligible
26            under the coverage and under the circumstances



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1            described in paragraph (1) of this subsection (i);
2                (ii) for each type of coverage, the date the
3            individual's coverage would terminate in
4            accordance with the succeeding insurer's group
5            policy provisions regarding individual termination
6            of coverage, such as at termination of employment
7            or when ceasing to be an eligible dependent; or
8                (iii) for an individual who is on authorized
9            absence on the effective date of the succeeding
10            group policy, under a type of coverage for which
11            this Section requires an extension of coverage,
12            the end of any period of extended coverage required
13            of the prior insurer or, if the prior insurer's
14            group policy was not subject to this Section, would
15            have been required of the prior insurer had its
16            group policy been so subject.
17        (3) If the succeeding insurer's group policy contains a
18    pre-existing condition limitation, the coverage for these
19    conditions of persons becoming covered by the succeeding
20    group policy under paragraphs (1) or (2) of this subsection
21    (i), during the period the limitation applies under that
22    group policy, shall be the lesser of:
23            (A) the coverage of the succeeding group policy
24        determined without application of the limitation; and
25            (B) the coverage of the prior group policy
26        determined after application of any such limitation



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1        contained in the policy.
2        (4) The succeeding insurer, in applying any
3    deductibles or waiting periods contained in its group
4    policy, including pre-existing condition waiting periods,
5    shall give credit for the satisfaction or partial
6    satisfaction of the same or similar provisions under the
7    prior group policy to the extent that the prior and
8    succeeding group policies provide similar coverage.
9    Deductible provision credit shall be given for the same or
10    overlapping benefit periods for expenses incurred and
11    applied against the deductible provisions of the prior
12    group policy during the 90 days preceding the effective
13    date of the succeeding group policy, but only to the extent
14    that these expenses are recognized under the succeeding
15    group policy and are subject to a similar deductible
16    provision.
17        (5) Where a determination of the prior insurer's
18    coverage is required by the succeeding insurer, the prior
19    insurer, at the succeeding insurer's request, shall
20    furnish a statement of the coverage available and a copy of
21    pertinent group policy provisions to permit the succeeding
22    insurer to verify the coverage statement or make its own
23    coverage determination. Coverage of the prior group policy
24    shall be determined in accordance with the definitions,
25    conditions, and covered expense provisions of that group
26    policy rather than those of the succeeding group policy.



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1    The coverage determination shall be made as if coverage had
2    not been replaced by the succeeding insurer.
3    Section 99. Effective date. This Act takes effect upon
4becoming law.