Insurance Committee

Filed: 4/20/2010

 

 


 

 


 
09600SB2819ham001 LRB096 18810 RPM 39791 a

1
AMENDMENT TO SENATE BILL 2819

2     AMENDMENT NO. ______. Amend Senate Bill 2819 as follows:
 
3 on page 1, line 5, by replacing "Section" with "Sections 224
4 and"; and
 
5 on page 1, immediately below line 5, by inserting the
6 following:
 
7     "(215 ILCS 5/224)  (from Ch. 73, par. 836)
8     Sec. 224. Standard provisions for life policies.
9     (1) After the first day of July, 1937, no policy of life
10 insurance other than industrial, group or annuities and pure
11 endowments with or without return of premiums or of premiums
12 and interest, may be issued or delivered in this State, unless
13 such policy contains in substance the following provisions:
14         (a) A provision that all premiums after the first shall
15     be payable in advance either at the home office of the

 

 

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1     company or to an agent of the company, upon delivery of a
2     receipt signed by one or more of the officers who shall be
3     designated in the policy, when such receipt is requested by
4     the policyholder.
5         (b) A provision that the insured is entitled to a grace
6     period either of 30 days or of one month within which the
7     payment of any premium after the first may be made, subject
8     at the option of the company to an interest charge not in
9     excess of 6% per annum for the number of days of grace
10     elapsing before the payment of the premium, during which
11     period of grace the policy shall continue in force, but in
12     case the policy becomes a claim during the grace period
13     before the overdue premium is paid, or the deferred
14     premiums of the current policy year, if any, are paid, the
15     amount of such premium or premiums with interest thereon
16     may be deducted in any settlement under the policy.
17         (c) A provision that the policy, together with the
18     application therefor, a copy of which shall be endorsed
19     upon or attached to the policy and made a part thereof,
20     shall constitute the entire contract between the parties
21     and that after it has been in force during the lifetime of
22     the insured a specified time, not later than 2 years from
23     its date, it shall be incontestable except for nonpayment
24     of premiums and except at the option of the company, with
25     respect to provisions relative to benefits in the event of
26     total and permanent disability, and provisions which grant

 

 

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1     additional insurance specifically against death by
2     accident and except for violations of the conditions of the
3     policy relating to naval or military service in time of war
4     or for violation of an express condition, if any, relating
5     to aviation, (except riding as a fare-paying passenger of a
6     commercial air line flying on regularly scheduled routes
7     between definitely established airports) in which case the
8     liability of the company shall be fixed at a definitely
9     determined amount not less than the full reserve for the
10     policy and any dividend additions; provided that the
11     application therefor need not be attached to or made a part
12     of any policy containing a clause making the policy
13     incontestable from date of issue.
14         (d) A provision that if it is found at any time before
15     final settlement under the policy that the age of the
16     insured (or the age of the beneficiary, if considered in
17     determining the premium) has been misstated, the amount
18     payable under the policy shall be such as the premium would
19     have purchased at the correct age or ages, according to the
20     company's published rate at date of issue.
21         (e) A provision that the policy shall participate
22     annually in the surplus of the company beginning not later
23     than the end of the third policy year; and any policy
24     containing provision for annual participation beginning at
25     the end of the first policy year, may also provide that
26     each dividend be paid subject to the payment of the

 

 

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1     premiums for the next ensuing year; and the insured under
2     any annual dividend policy shall have the right each year
3     to have the dividend arising from such participation either
4     paid in cash, or applied in reduction of premiums, or
5     applied to the purchase of paid-up additional insurance, or
6     be left to accumulate to the credit of the policy, with
7     interest at such rate as may be determined from time to
8     time by the company, but not less than a guaranteed minimum
9     rate specified in the policy, and payable at the maturity
10     of the policy, but withdrawable on any anniversary date,
11     subject to such further provisions as the policy may
12     provide regarding the application of dividends toward the
13     payment of any premiums unpaid at the end of the grace
14     period; and if the insured fails to notify the company in
15     writing of his election within the period of grace allowed
16     for the payment of premium, the policy shall further
17     provide which of such options are effective.
18         (f) A provision that after the policy has been in force
19     3 full years the company at any time, while the policy is
20     in force, will advance, on proper assignment or pledge of
21     the policy and on the sole security thereof, at a specified
22     maximum fixed or adjusted rate of interest in accordance
23     with Section 229.5, a sum equal to, or at the option of the
24     insured less than the amount required by Section 229.3
25     under the conditions specified thereby and with
26     notification as required by Section 229.5; and that the

 

 

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1     company will deduct from such loan value any indebtedness
2     not already deducted in determining such value and any
3     unpaid balance of the premium for the current policy year,
4     and may collect interest in advance on the loan to the end
5     of the current policy year; and any policy may also provide
6     that if the interest on the loan is not paid when due it
7     shall be added to the existing loan and shall bear interest
8     at the same rate. No condition other than as provided
9     herein or in Sections 229.3 and 229.5 shall be exacted as a
10     prerequisite to any such loan. This clause shall not apply
11     to term insurance.
12         (g) A provision for nonforfeiture benefits and cash
13     surrender values in accordance with the requirements of
14     paragraph (1) of Section 229.1 or, Section 229.2.
15         (h) A table showing in figures the loan values and the
16     options available under the policy each year, upon default
17     in premium payments, during at least the first 20 years of
18     the policy; the policy to contain a provision that the
19     company will furnish upon request an extension of such
20     table beyond the years shown in the policy.
21         (i) A provision that in event of default in premium
22     payments the value of the policy is applied to the purchase
23     of other insurance as provided in this Section, and if such
24     insurance is in force and the original policy is not
25     surrendered to the company and cancelled, the policy may be
26     reinstated within 3 years from such default, upon evidence

 

 

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1     of insurability satisfactory to the company and payment of
2     arrears of premiums and the payment or reinstatement of any
3     other indebtedness to the company upon the policy, with
4     interest on the premiums at a rate not exceeding 6% per
5     annum payable annually and with interest on the
6     indebtedness at a rate not exceeding the rate prescribed by
7     Section 229.5.
8         (j) A provision that when a policy is a claim by the
9     death of the insured settlement shall be made upon receipt
10     of due proof of death.
11         An insurer may require a beneficiary to provide (1) a
12     certified copy of the insured's final death certificate and
13     the death certificate of any beneficiary who predeceased
14     the insured; (2) a statement signed by the beneficiary,
15     stating the name, address, and date of birth of the
16     beneficiary, stating the beneficiary's relationship to the
17     insured, and stating the method of payment; (3) a statement
18     signed by the beneficiary identifying co-beneficiaries, if
19     any; (4) government-issued photographic identification;
20     (5) an authorization signed by the beneficiary to permit
21     the insurer to investigate the claim; and (6) any tax
22     reporting information necessary to allow the insurer to
23     comply with any tax law or regulation.
24         If an individual is acting on behalf of the
25     beneficiary, then the insurer may require the individual to
26     provide documentation showing the legal authority of that

 

 

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1     individual to so act.
2         The insurer may obtain any additional information or
3     documents necessary to determine the extent of its
4     liability, to identify the proper beneficiary, or to comply
5     with the law; but the insurer may not require a beneficiary
6     to provide information or documents otherwise available to
7     the insurer. Settlement shall be made and not later than 2
8     months after the receipt of such proof.
9         (k) If the policy provides for payment of its proceeds
10     in installments, a table showing the amount and period of
11     such installments shall be included in the policy.
12         (l) Interest shall accrue on the proceeds payable
13     because of the death of the insured, from date of death, at
14     the rate of 9% on the total amount payable or the face
15     amount if payments are to be made in installments until the
16     total payment or first installment is paid, unless payment
17     is made within fifteen (15) days from the date of receipt
18     by the company of due proof of loss. This provision need
19     not appear in the policy, however, the company shall notify
20     the beneficiary at the time of claim of this provision. The
21     payment of interest shall apply to all policies now in
22     force, as well as those written after the effective date of
23     this amendment.
24         Due proof of loss shall consist of information and
25     documents necessary for the insurer to determine its
26     liability, pay the proceeds, and be discharged from

 

 

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1     liability. An insurer may include a provision in the policy
2     describing proof of loss, provided that such provision is
3     not inconsistent with this subsection.
4         (m) Title on the face and on the back of the policy
5     briefly describing its form.
6         (n) A provision, or a notice attached to the policy, to
7     the effect that during a period of ten days from the date
8     the policy is delivered to the policy owner, it may be
9     surrendered to the insurer together with a written request
10     for cancellation of the policy and in such event, the
11     insurer will refund any premium paid therefor, including
12     any policy fees or other charges. The Director may by rule
13     exempt specific types of policies from the requirements of
14     this subsection.
15     (2) In the case of the replacement of life insurance, as
16 defined in the rule promulgated by the Director, the replacing
17 insurer shall either (1) delay the issuance of its policy for
18 not less than 20 days from the date it has transmitted a policy
19 summary to the existing insurer, or (2) provide in a form
20 titled "Notice Regarding Replacement of Life Insurance", as
21 well as in its policy, or in a separate notice delivered with
22 the policy, that the insured has the right to an unconditional
23 refund of all premiums paid, and that such right may be
24 exercised within a period of 20 days commencing from the date
25 of delivery of such policy. Where option (2) is exercised, the
26 replacing insurer shall also transmit a policy summary to the

 

 

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1 existing insurer within 3 working days after the date the
2 replacement policy is issued.
3     (3) Any of the foregoing provisions or portions thereof not
4 applicable to single premium or nonparticipating or term
5 policies shall to that extent not be incorporated therein. This
6 Section shall not apply to policies of reinsurance nor to
7 policies issued or granted pursuant to the nonforfeiture
8 provisions prescribed in subparagraph (g) of paragraph (1) of
9 this Section.
10 (Source: P.A. 92-139, eff. 7-24-01.)".