SB2963 EngrossedLRB102 21801 BMS 30921 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 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
9State unless it contains in substance the following
10provisions, or provisions which in the opinion of the Director
11are more favorable to the persons insured, or at least as
12favorable to the persons insured and more favorable to the
13policyholder, provided, however, (a) that provisions (F) to
14(K) inclusive shall not apply to policies insuring the lives
15of debtors; (b) that the standard provisions required for
16individual life insurance policies shall not apply to group
17life insurance policies; and (c) that if the group life
18insurance policy is on a plan of insurance other than the term
19plan, it shall contain a nonforfeiture provision which in the
20opinion of the Director is equitable to the insured persons
21and to the policyholder, but nothing herein shall be construed
22to require that group life insurance policies contain the same
23nonforfeiture provisions as are required for individual life



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1insurance policies:
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
6shall have given the insurer written notice of discontinuance
7in advance of the date of discontinuance and in accordance
8with the 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
14been in 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
17of the 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,
8under which 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
11part or 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
19beneficiary designated by the person insured, except that
20where the policy contains conditions pertaining to family
21status the beneficiary may be the family member specified by
22the policy terms, subject to the provisions of the policy in
23the event there is no designated beneficiary, as to all or any
24part of such sum, living at the death of the person insured,
25and subject to any right reserved by the insurer in the policy
26and set 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
4illness or 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
10in such certificate, and the rights and conditions set forth
11in provisions (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
19other supplementary benefits, unless such right to convert
20such coverage was provided for in the group policy and is
21applied for in the application for conversion, provided that
22an application for the individual policy shall be made, and
23the first premium paid to the insurer, within 31 days after
24such termination, 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
13    sum or in installments or in the form of an annuity, shall
14    not, for the purposes of this provision, be included in
15    the 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
21    age attained on the effective date of the individual
22    policy.
23        (4) If any individual insured under a group life
24    insurance policy becomes entitled under the terms of such
25    policy to have an individual policy of life insurance
26    issued and if such individual is not given notice of the



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



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



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1policy, or the insured dependent of a covered person, dies
2during the period within which the individual would have been
3entitled to have an individual policy issued in accordance
4with provisions (H) or (I) above and before such an individual
5policy shall have become effective, the amount of life
6insurance which he would have been entitled to have issued
7under such individual policy shall be payable as a claim under
8the group policy, whether or not application for the
9individual policy or the payment of the first premium therefor
10has been made.
11    (M) If active employment is a condition of insurance, a
12provision that an insured may continue coverage during the
13insured's total disability by timely payment to the
14policyholder of that portion, if any, of the premium that
15would have been required from the insured had total disability
16not occurred. The continuation shall be on a premium paying
17basis for a period of six months from the date on which the
18total disability started, but not beyond the earlier of (a)
19approval by the insurer of continuation of the coverage under
20any disability provision which the group insurance policy may
21contain or (b) the discontinuance of the group insurance
23    (N) If active employment is a condition of insurance, in
24In the case of a policy of group life insurance replacing
25another policy of group life insurance in force with another
26insurance carrier immediately prior to the effective date of



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1the new policy, a provision preventing loss of coverage,
2subject to premium payments, for those active employees who
3are not actively at work on the effective date of the new
4policy if the following conditions are met:
5        (1) the active employee was insured under the prior
6    carrier's group life insurance policy immediately prior to
7    the effective date of the policy;
8        (2) the active employee is not actively at work on the
9    effective date of the new policy;
10        (3) the active employee is a member of an eligible
11    class under the policy; and
12        (4) the active employee is not receiving or eligible
13    to receive benefits under the prior carrier's group life
14    insurance policy.
15    (O) If active employment is a condition of insurance, a
16provision that for active employees receiving or eligible to
17receive benefits under provision (N) the continued coverage
18will remain in effect until the earliest of the following:
19        (1) the date the employee returns to active work;
20        (2) the date that coverage under the prior carrier's
21    group life insurance policy would have ended for any
22    reason other than the termination of the policy;
23        (3) the date that coverage would otherwise end under
24    the replacing carrier's policy;
25        (4) a date no less than 6 months after the replacement
26    coverage begins; or



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1        (5) the date the employee is covered or is eligible
2    for coverage under the prior carrier's group policy.
3    (P) If active employment is a condition of insurance, a
4provision that the replacing carrier's obligations under
5provisions (N) and (O) may be limited to the amount for which
6the employee was covered under the prior carrier's group life
7insurance policy and may be reduced by any amounts payable
8under the prior carrier's group life insurance policy.
9    (Q) (O) In the case of a policy insuring the lives of
10debtors, a provision that the insurer will furnish to the
11policyholder for delivery to each debtor insured under the
12policy a certificate of insurance describing the coverage and
13specifying that the death benefit shall first be applied to
14reduce or extinguish the indebtedness. Whenever the amount of
15insurance payable exceeds the amount of outstanding
16indebtedness the excess benefit shall be payable to the person
17otherwise contractually or legally entitled thereto; if there
18be no person determined to be so entitled, such excess shall be
19paid to the estate of the insured person.
20(Source: P.A. 102-367, eff. 1-1-22.)
21    Section 99. Effective date. This Act takes effect upon
22becoming law.