(215 ILCS 5/Art. XIV heading)
(215 ILCS 5/222) (from Ch. 73, par. 834)
Sec. 222.
Scope of
article.
This article shall apply to all stock and mutual legal reserve life
companies, and to the extent provided in section 281 to assessment legal
reserve life companies, authorized to transact in this State the kind or
kinds of business described in Class 1 of section 4.
(Source: Laws 1937, p. 696.)
(215 ILCS 5/223) (from Ch. 73, par. 835)
Sec. 223. Director to value policies - Legal standard of valuation.
(1) For policies and contracts issued prior to the operative date of the Valuation Manual, the Director shall annually value, or cause to be valued, the
reserve liabilities (hereinafter called reserves) for all outstanding
life insurance policies and annuity and pure endowment contracts of
every life insurance company doing business in this State, except that
in the case of an alien company, such valuation shall be limited to its
United States business. In calculating such reserves, he may use group methods
and approximate averages for fractions of a year or otherwise. In lieu
of the valuation of the reserves herein required of any foreign or alien
company, he may accept any valuation made, or caused to be made, by the
insurance supervisory official of any state or other jurisdiction when
such valuation complies with the minimum standard provided in this Section.
The provisions set forth in this subsection (1) and in subsections (2), (3), (4), (5), (6), and (7) of this Section shall apply to all policies and contracts, as appropriate, subject to this Section issued prior to the operative date of the Valuation Manual. The provisions set forth in subsections (8) and (9) of this Section shall not apply to any such policies and contracts.
For policies and contracts issued on or after the operative date of the Valuation Manual, the Director shall annually value, or cause to be valued, the reserve liabilities (reserves) for all outstanding life insurance contracts, annuity and pure endowment contracts, accident and health contracts, and deposit-type contracts of every company issued on or after the operative date of the Valuation Manual. In lieu of the valuation of the reserves required of a foreign or alien company, the Director may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this Section.
The provisions set forth in subsections (8) and (9) of this Section shall apply to all policies and contracts issued on or after the operative date of the Valuation Manual.
Any such company which adopts at any time a standard of
valuation producing greater aggregate reserves than those calculated
according to the minimum standard provided under this Section may adopt a lower standard of valuation, with the approval
of the Director, but not lower
than the minimum herein provided, however, that, for the purposes of this
subsection, the holding of additional reserves previously determined by the appointed actuary to be necessary to render the opinion required by
subsection (1a) shall not be deemed to be the adoption of a higher standard
of valuation. In the valuation of policies the
Director shall give no consideration to, nor make any deduction because
of, the existence or the possession by the company of
(1a) This subsection shall become operative at the end of the first
full calendar year following the effective date of this amendatory Act of 1991.
(1b) Actuarial Opinion of Reserves after the Operative Date of the Valuation Manual.
(2) This subsection shall apply to only those policies and contracts
issued prior to the operative date of Section 229.2 (the Standard
Non-forfeiture Law).
(3) This subsection shall apply to only those policies and contracts
issued on or after January 1, 1948 or such earlier operative date of
Section 229.2 (the Standard Non-forfeiture Law) as shall have been
elected by the insurance company issuing such policies or contracts.
(4) Except as provided in subsection (6), the minimum standard of valuation for individual annuity and pure endowment contracts issued
on or after the operative date of this subsection, as defined herein, and
for all annuities and pure endowments purchased on or after such operative
date under group annuity and pure endowment contracts shall be the
Commissioners Reserve valuation methods defined in paragraph (b) of
subsection (3) and subsection (5) and the following tables and interest rates:
After September 8, 1977, any company may file with the Director a written
notice of its election to comply with the provisions of this subsection
after a specified date before January 1, 1979, which shall be the operative
date of this subsection for such company; provided, a company may elect a
different operative date for individual annuity and pure endowment
contracts from that elected for group annuity and pure endowment contracts.
If a company makes no election, the operative date of this subsection for
such company shall be January 1, 1979.
(5) This subsection shall apply to all annuity and pure endowment contracts
other than group annuity and pure endowment contracts purchased under a
retirement plan or plan of deferred compensation, established or maintained
by an employer (including a partnership or sole proprietorship) or by an
employee organization, or by both, other than a plan providing individual
retirement accounts or individual retirement annuities under Section 408
of the Internal Revenue Code, as now or hereafter amended.
Reserves according to the Commissioners annuity reserve method for
benefits under annuity or pure endowment contracts, excluding any
disability and accidental death benefits in such contracts, shall be the
greatest of the respective excesses of the present values, at the date of
valuation, of the future guaranteed benefits, including guaranteed
nonforfeiture benefits, provided for by such contracts at the end of each
respective contract year, over the present value, at the date of valuation,
of any future valuation considerations derived from future gross
considerations, required by the terms of such contract, that become payable
prior to the end of such respective contract year. The future guaranteed
benefits shall be determined by using the mortality table, if any, and the
interest rate, or rates, specified in such contracts for determining
guaranteed benefits. The valuation considerations are the portions of the
respective gross considerations applied under the terms of such contracts
to determine nonforfeiture values.
(6)(a) Applicability of this subsection. The interest rates used
in determining the minimum standard for the valuation of
(7) Minimum Standards for Accident and Health (Disability, Accident and Sickness) Insurance Contracts. The Director shall promulgate a regulation containing the minimum
standards applicable to the valuation of health (disability, sickness and
accident) plans which are issued prior to the operative date of the Valuation Manual. For accident and health (disability, accident and sickness) insurance contracts issued on or after the operative date of the Valuation Manual, the standard prescribed in the Valuation Manual is the minimum standard of valuation required under subsection (1).
(8) Valuation Manual for Policies Issued On or After the Operative Date of the Valuation Manual.
(9) Requirements of a Principle-Based Valuation.
(10) Experience Reporting for Policies In Force On or After the Operative Date of the Valuation Manual. A company shall submit mortality, morbidity, policyholder behavior, or expense experience and other data as prescribed in the Valuation Manual.
(11) Confidentiality.
(12) Exemptions.
(13) Definitions.
For the purposes of this Section, the following definitions shall apply beginning on the operative date of the Valuation Manual:
"Accident and health insurance" means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness, or medical conditions and as may be specified in the Valuation Manual.
"Appointed actuary" means a qualified actuary who is appointed in accordance with the Valuation Manual to prepare the actuarial opinion required in paragraph (b) of subsection (1) of this Section.
"Company" means an entity that (a) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this State and has at least one such policy in force or on claim or (b) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this State.
"Deposit-type contract" means contracts that do not incorporate mortality or morbidity risks and as may be specified in the Valuation Manual.
"Life insurance" means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the Valuation Manual.
"NAIC" means the National Association of Insurance Commissioners.
"Policyholder behavior" means any action a policyholder, contract holder, or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to this Section including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract, but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract.
"Principle-based valuation" means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer and is required to comply with subsection (9) of this Section as specified in the Valuation Manual.
"Qualified actuary" means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the Valuation Manual.
"Tail risk" means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability distribution or where there are observed events of very significant size or magnitude.
"Valuation Manual" means the manual of valuation instructions adopted by the NAIC as specified in this Section or as subsequently amended.
(Source: P.A. 99-162, eff. 1-1-16.)
(215 ILCS 5/224) (from Ch. 73, par. 836)
Sec. 224. Standard provisions for life policies.
(1) After the
first day of July, 1937, no policy of life insurance other than
industrial, group or annuities and pure endowments with or without
return of premiums or of premiums and interest, may be issued or
delivered in this State, unless such policy contains in substance the
following provisions:
This provision need not appear in the policy, however, the company shall notify the beneficiary at the time of claim of this provision. The payment of interest shall apply to all policies now in force, as well as those written after the effective date of this amendment.
(2) In the case of the replacement of life insurance, as defined in the
rule promulgated by the Director, the replacing insurer shall either (1)
delay the issuance of its policy for not less than 20 days from the date
it has transmitted a policy summary to the existing insurer, or (2) provide
in a form titled "Notice Regarding Replacement of Life Insurance", as well
as in its policy, or in a separate notice delivered with the policy, that
the insured has the right to an unconditional refund of all premiums paid,
and that such right may be exercised within a period of 20 days commencing
from the date of delivery of such policy. Where option (2) is exercised,
the replacing insurer shall also transmit a policy summary to the existing
insurer within 3 working days after the date the replacement policy is issued.
(3) Any of the foregoing provisions or portions thereof not
applicable to single premium or nonparticipating or term policies shall
to that extent not be incorporated therein. This Section shall not
apply to policies of reinsurance nor to policies issued or granted
pursuant to the nonforfeiture provisions prescribed in subparagraph (g)
of paragraph (1) of this Section.
(Source: P.A. 97-527, eff. 8-23-11.)
(215 ILCS 5/224.05)
Sec. 224.05. Military personnel in military service; no lapse of life insurance policy.
(a) Except as provided in subsection (b), this Section shall apply to any individual life insurance policy insuring the life of a resident of Illinois who is a member of any component of the U.S. Armed Forces or the National Guard of any state, the District of Columbia, a commonwealth, or a territory of the United States who has entered any full-time training or duty which the service member was ordered to report by the President, Governor of a state, commonwealth, or territory of the United States, or other appropriate military authority, if the life insurance policy meets both of the following conditions:
(b) This Section does not apply to any policy that was cancelled or that had lapsed for the nonpayment of premiums prior to the commencement of the insured's period of military service.
(c) An individual life insurance policy described in this Section shall not lapse or be forfeited for the nonpayment of premiums during the military service of a service member in excess of 29 consecutive days during the 2-year period subsequent to the end of the member's period of military service.
(d) In order to be eligible for the benefits granted to service members under this Section, a service member must provide the life insurance company with a copy of the orders calling the service member to military service and of any orders further extending the service member's period of service.
(e) This Section does not limit a life insurance company's enforcement of provisions in the insured's policy relating to naval or military service in time of war.
(f) A violation of this Section constitutes a civil rights violation under the Illinois Human Rights Act.
All proceeds from the collection of any civil penalty imposed under this subsection shall be deposited into the Illinois Military Family Relief Fund.
(Source: P.A. 97-913, eff. 1-1-13.)
(215 ILCS 5/224.1) (from Ch. 73, par. 836.1)
Sec. 224.1.
Employer insurable interest.
Notwithstanding any other
Section of this Code, an employer or an employer sponsored trust for the
benefit of its employees has an insurable interest in the lives of the
employer's directors, officers, managers, nonmanagement employees, and
retired employees and may insure those lives on an individual or group
basis with the consent of the insured. The consent requirement will be
satisfied if the insured is provided written notice of the coverage and
does not reject such coverage within 30 days of receipt of such notice. The
extent of the employer's or the trust's insurable interest for nonmanagement
and retired employees shall be limited to an amount commensurate with the
employer's projected unfunded liabilities to nonmanagement and retired
employees for welfare benefit plans, as defined by the Employee Retirement
Income Security Act of 1974, Public Law 93-406, 88 Stat. 829, calculated
according to accepted actuarial principles. An insurable interest must exist
at the time the contract of life or disability insurance becomes effective, but
need not exist at the time the loss occurs. An employer shall not retaliate in
any manner against an employee or a retired employee for refusing consent to be
insured. The proceeds of any policy or certificate issued pursuant to this
Section are exempt from the claims of any creditor or dependent of the insured.
As used herein, "employer" means an individual, sole proprietorship,
partnership, firm, corporation, association, or any other legal entity that has
one or more employees and is legally doing business in this State.
(Source: P.A. 87-936.)
(215 ILCS 5/225) (from Ch. 73, par. 837)
Sec. 225.
Prohibited
Provisions for Life Policies.
(1) After the effective date of this Code no policy of life insurance
may be issued or delivered in this State if it includes any of the
following provisions:
(a) A provision limiting the time within which any action may be commenced
to less than 3 years after the cause of action
accrues.
(b) A provision by which the policy purports to be issued or take effect
more than 6 months before the original application for the insurance was
made, but this provision does not apply in any case of a transfer from one
form of policy to another in connection with which the policy owner
receives credit for any reserve accumulation under the form of policy from
which the transfer was made.
(c) A provision for any mode of settlement at maturity after the
expiration of the contestable period of the policy of less value than the
amount insured plus dividend additions, if any,
less any indebtedness to the company on or secured by the policy, and less
any premium that may by the terms of the policy be deducted, except as
permitted by clause (c) of subsection (1) of Section 224.
(d) A provision for forfeiture of the policy for failure to repay any
loan on the policy, or to pay interest on such loan, while the total
indebtedness on the policy, including interest, is less than the loan value
thereof.
(e) A provision to the effect that the agent soliciting the insurance is
the agent of the person insured under the policy, or making the acts or
representations of such agent binding upon the person so insured under the
policy.
(f) A provision limiting the amount payable under a policy by reason of
death occurring after the expiration of the contestable period to less than
the face amount thereof on account of the kind or character of disease
causing the insured's death.
(2) The provisions of this section do not apply to policies of
reinsurance, nor to policies issued or granted under the nonforfeiture
provisions prescribed in clause (g) of subsection (1) of Section 224.
(Source: P.A. 83-345.)
(215 ILCS 5/226) (from Ch. 73, par. 838)
Sec. 226.
Standard
provisions for annuities and pure endowment contracts. (1) After the effective
date of this Section and any amendments thereto no annuity
or pure endowment
contract, except in case of reversionary annuities, survivorship annuities
or annuities contracted by an employer on behalf of his employees, shall be
issued or delivered in this State unless it contains in substance the
following provisions:
(a) A provision that there shall be a period of grace, either of thirty
days or of one month, within which any stipulated payment to the company
falling due after the first year may be made, subject at the option of the
company, to an interest charge thereon at a rate to be specified in the
contract but not exceeding six per centum per annum for the number of days
of grace elapsing before such payment, during which period of grace, the
contract shall continue in full force; but in case a claim arises under the
contract on account of death during the said period of grace before the
overdue payment to the company or the deferred payments of the current
contract year, if any, are made, the amount of such payments, with interest
on any overdue payments, may be deducted from any amount payable under the
contract in settlement.
(b) If statements, other than those relating to age and identity, are
required as a condition to issuing the contract, a provision that the
contract shall be incontestable after it has been in force during the
lifetime of the person or each of the persons as to whom such statements
are required, for a period of two years from its date of issue, except
where stipulated payments to the company have not been made and except for
violations of the conditions of the contract relating to military or naval
service in time of war and except, at the option of the company, with
respect to provisions relative to benefits in the event of total and
permanent disability and provisions which grant insurance specifically
against death by accident.
(c) A provision that such a contract shall constitute the entire
contract between the parties, but if the company desires to make the
application a part of the contract it may do so, provided a copy of such
application shall be endorsed upon or attached to such contract when
issued, and in such case such contract shall contain a provision that it,
together with the application therefor, shall constitute the entire
contract between the parties.
(d) A provision that if the age or ages of the person or persons upon
whose life or lives the contract is based, or any of them, have been
misstated, the amount payable under the contract shall be such as the
stipulated payments to the company would have purchased at the correct age
or ages.
(e) If the contract is participating, a provision that the divisible
surplus shall be apportioned annually and dividends shall be payable in
cash or shall be applicable to any stipulated payment or payments to the
company under the contract.
(f) A provision that after the contract has been in force for three
years, if it shall, by its terms, lapse because any stipulated payment to
the company shall not have been made, the reserve on such contract,
exclusive of the reserve on account of total and permanent disability and
additional accidental death benefits, computed according to the standard
adopted by the company and in accordance with section 223, shall after
deducting not more than one-fifth of the said entire reserve and any
indebtedness to the company under the contract, be applied as a net single
payment according to said standard, for the purchase of a paid-up annuity
or a pure endowment contract, which may be nonparticipating and which
shall be payable by the company under the same terms and conditions as the
original contract, except as to amount.
(g) A provision that the contract may be reinstated at any time within
one year from the date of default in making stipulated payments to the company,
but all overdue stipulated payments and any indebtedness to the company
on the contract shall be paid or reinstated, with interest thereon at a
rate to be specified in the contract but not exceeding six per centum per
annum payable annually, and in cases where applicable, a company may also
include a requirement of evidence of insurability satisfactory to the company.
(h) A provision, or a notice attached to the contract, to the effect
that during a period of 10 days from the date the contract is delivered
to the contract-owner
it may be surrendered to the insurer together with a written request for
cancellation of the contract, and that in such event, with the exception
of a variable annuity contract, the insurer will refund any premium paid
for the contract, including any contract fees or other charges. Cancellation
under a variable annuity contract shall entitle a person to an amount equal
to the sum of (i) the difference between the premiums paid including any
contract fees or other services and the amounts allocated to any separate
accounts under the contract and (ii) the cash value of the contract or,
if the contract does not have a cash value, the reserve for the contract,
on the date the return contract is received by the insurer or its agent. The Director
may by rule exempt specific types of contracts from this paragraph.
(2) Any overpayment by the company on account of misstatement of age,
shall be charged against the current or next succeeding payment or payments
to be made by the company under the contract, with interest thereon at a
rate to be specified in the contract but not exceeding six per centum per annum.
(3) A company may provide, in lieu of the paid-up values provided in
clause (f) of subsection (1), for a paid-up annuity or pure endowment
contract in an amount bearing the same proportion to the original annuity
or pure endowment contract as the number of stipulated payments which shall
have been made to the company shall bear to the total number of stipulated
payments required to be made to the company under contract, and if there be
any indebtedness to the company under the contract the amount of such
paid-up annuity or pure endowment shall be reduced by an amount bearing the
same proportion to such paid-up annuity or pure endowment as such
indebtedness bears to the cash value on such paid-up annuity or pure
endowment, computed according to the standard adopted by the company in
accordance with section 223.
(Source: P.A. 82-594.)
(215 ILCS 5/226.1) (from Ch. 73, par. 838.1)
Sec. 226.1.
Entitled annuity payment options.
Annuity contracts and
funding agreements may be
issued without a life contingency annuity payment option in the following
circumstances: (1) to fund benefits under an employee benefit plan as
defined in the Employee Retirement Income Security Act of 1974, as now or
hereafter amended; (2) to fund the activities of an organization exempt
from taxation under Internal Revenue Code Section 501(c), as now or
hereafter amended; (3) to fund a program of a governmental entity or of an
agency or instrumentality thereof; (4) to fund an agreement providing for
periodic payments entered into in satisfaction of a claim; or (5) to fund a
program of an institution having assets in excess of $25,000,000.
(Source: P.A. 92-875, eff. 1-3-03.)
(215 ILCS 5/227) (from Ch. 73, par. 839)
Sec. 227.
Standard
provisions for reversionary or survivorship annuity contracts.
(1) After the effective date of this Code no contract for a reversionary
annuity or survivorship annuity shall be issued or delivered in this State
unless it contains in substance the following provisions:
(a) The provisions of clauses (a), (b), (c), (d) and (e) of subsection
(1) of section 226, except that under said clause (a) the company may at
its option provide for an equitable reduction of the amount of the annuity
payments in settlement of an overdue or deferred payment in lieu of
providing for a deduction of such payments from an amount payable upon a
settlement under the contract.
(b) A provision that the contract may be reinstated at any time within
three years from the date of default in making stipulated payments to the
company, upon production of evidence of insurability satisfactory to the
company, provided that all overdue payments and any indebtedness to the
company on account of the contract shall be paid or reinstated with
interest thereon at a rate to be specified in the contract but not
exceeding six per centum per annum payable annually.
(2) Any of the foregoing provisions or portions thereof contained in
this section and in section 226 not applicable to non-participating
contracts nor to contracts for which a single stipulated payment to the
company is made, shall, to that extent, not be incorporated therein.
(3) The provisions of this section and section 226 shall not apply to
contracts of re-insurance nor to contracts for deferred annuities or
reversionary annuities included in life insurance policies.
(Source: Laws 1937, p. 696.)
(215 ILCS 5/228) (from Ch. 73, par. 840)
Sec. 228.
Industrial
Life Insurance Defined.
As used in this Code "industrial life insurance" means either that form
of life insurance under which the premiums are payable monthly or more often if the face
amount of insurance provided in the policy does not exceed $2,500 and the
words "industrial policy" are printed in prominent type on the face of the
policy. Any life company authorized to do business in this State may issue
industrial policies.
(Source: P.A. 82-498.)
(215 ILCS 5/229) (from Ch. 73, par. 841)
Sec. 229.
Standard
Provisions for Industrial Life Insurance. (1) After the effective date
of this Section and any amendments thereto, no policy of industrial life
insurance shall be issued or delivered in this State, unless the same shall
contain in substance the following provisions, and shall be subject to the
other provisions of this section:
(a) A provision that the insured is entitled to a grace period of four
weeks within which the payment of any premium after the first, may be made,
during which period of grace the policy shall continue in full force but in
case the policy becomes a claim during said grace period before the overdue
premiums are paid, the amount of overdue premiums may be deducted in any
settlement under the policy.
(b) A provision that the policy shall contain the entire contract
between the parties, nothing to be incorporated therein by reference to any
constitution, bylaws, rules, application or other writing unless endorsed
upon or attached to the policy.
(c) A provision that the policy shall be incontestable after it shall
have been in force during the lifetime of the insured for a specified
period, not more than two years from its date, except for nonpayment of
premiums and except for violation of the conditions of the policy relating
to naval or military service in time of war and except as to provisions
relating to benefits in the event of total and permanent disability and
those granting additional insurance specifically against death by accident.
(d) A provision that if it shall be found at any time before final
settlement on the policy that the age of the insured (or the age of any
other person considered in determining the premium) has been misstated, the
amount payable under the policy shall be such as the premium would have
purchased at the correct age or ages at the time the policy was issued.
(e) If a participating policy a provision indicating the conditions
under which the company shall annually ascertain and apportion any
divisible surplus accruing on the policy.
(f) A provision for nonforfeiture benefits in accordance with the
requirements of section 229.1 (2) or section 229.2.
(g) If more than one option is provided, a provision as to which of such
options shall apply in the event of the insured's failure to notify the
company of his selection of an option.
(h) A provision for cash surrender values in accordance with the
requirements of section 229.1 (2) or section 229.2.
(i) A provision that the policy may be reinstated, if not surrendered
for its cash value or if the period of extended term insurance has not
expired, within one year from the date of default in payment of premiums
upon presentation of evidence satisfactory to the company of the
insurability of the insured and the payment of arrears of premiums and the
payment or reinstatement of any other indebtedness to the company upon said
policy, with interest on said premiums and indebtedness at a rate not
exceeding six per centum per annum payable annually.
(j) A table showing in figures the nonforfeiture options available
under the policy every year upon default in payment of premiums during at
least the first twenty years of the policy, and a provision that the
company will furnish upon request an extension of such table beyond the
years shown in the policy.
(k) A provision that when a policy shall become a claim by the death of
the insured, settlement shall be made upon receipt of due proof of death
and not later than two months after the receipt of such proof.
(l) Title on the face of the policy clearly and correctly describing its
form.
(m) A provision, or a notice attached to the policy, to the effect that
during a period of 10 days from the date the policy is delivered to the
policy owner it may be surrendered to the insurer together with a written
request for cancellation of the policy, and that in such event the insurer
will refund any premium paid for the policy, including any policy fees or
other charges. The Director
may by rule exempt specific types of policies from this paragraph.
(2) Any of the provisions of subsection (1) or portions thereof not
applicable to nonparticipating or term policies shall to that extent not
be incorporated therein. The provisions of this section shall not apply to
policies issued or granted pursuant to the nonforfeiture provisions
prescribed in clauses (f), (g) and (h) of subsection (1).
(3) Upon proper written request, a named beneficiary shall be designated
in, or be endorsed on, the policy, to receive the benefits thereof on the
death of the insured, and there shall be reserved the power to change the
beneficiary at any time upon proper written request to the company at its
home office, accompanied by the policy for endorsement of the change
thereon by the company. The company shall have the right to refuse to
designate a beneficiary if evidence satisfactory to the company of such
beneficiary's insurable interest in the life of the insured is not
furnished on request. The policy may provide in substance that any payment
thereunder may be made or any nonforfeiture benefit may be granted to the
insured or to the insured's estate or to any relative by blood or
connection by marriage of the insured, or, to the extent of such portion of
any payment under the policy as may reasonably appear to the company to be
due to such person, to any other person equitably entitled thereto by
reason of having incurred expense occasioned by the maintenance or illness
or burial of the insured. If the policy shall be in force at the death of
the insured, the proceeds thereof shall be payable to the named beneficiary
if living, but unless proof of claim in the manner and form required by the
policy, accompanied by delivery of the policy for surrender, has been made
by such beneficiary within fifteen days after the death of the insured,
then upon the expiration of said fifteen days, or if the beneficiary is the
estate of the insured, or is a minor, or is not legally qualified to give a
valid release or dies before the insured, the company may pay to any person
permitted by the policy.
(Source: P.A. 82-594.)
(215 ILCS 5/229.1) (from Ch. 73, par. 841.1)
Sec. 229.1.
Non-forfeiture benefits and cash surrender values in policies issued prior
to the operative date of section 229.2.
(1) This subsection shall apply only to policies of life insurance
(other than Industrial life insurance) issued prior to the operative date
of section 229.2 (the Standard Non-forfeiture Law.)
The non-forfeiture benefit referred to in clause (g) of section 224
shall be available to the insured in event of default in premium payments,
after premiums shall have been paid for three years, and shall be a
stipulated form of insurance, effective from the due date of the defaulted
premium, the net value of which shall not be less than the reserve at the
date of default on the policy and on dividend additions thereto, if any,
exclusive of the reserve on account of total and permanent disability and
additional accidental death benefits (the policy to specify the mortality
table, rate of interest and method of valuation adopted for computing such
reserve), less a specified maximum percentage (not more than two and
one-half) of the amount insured by the policy and of existing dividend
additions thereto, if any, and less any existing indebtedness to the
company on or secured by the policy, the exact percentage to be specified
for each year for which required values are not included in the policy; if
more than one option is provided, the policy to specify which of such
options shall apply in the event of the insured's failure to notify the
company of his selection of an option. The policy shall provide that it may
be surrendered to the company at its home office within the period of grace
after the due date of the defaulted premium for a specified cash value not
less than the above prescribed minimum value of the stipulated form of
insurance; and any policy may also provide that the company may defer
payment for not more than six months after the application therefor is
made. Provided that any policy may also contain a provision that in event
of default in a premium payment before such options become available the
reserve on any dividend additions then in force may at the option of the
company be paid in cash or applied as a net premium to the purchase of
paid-up term insurance for any amount not in excess of the face of the
original policy. This subsection shall not apply to term insurance of
twenty years or less, but such term policy shall specify the mortality
table, rate of interest and method of valuation adopted for computing
reserves.
(2) This subsection shall apply only to policies of Industrial life
insurance issued prior to the operative date of section 229.2 (the Standard
Non-forfeiture Law).
The non-forfeiture benefit referred to in clause (f) of section 229,
shall be available in event of default in premium payments after premiums
shall have been paid for five full years, and shall be a stipulated form of
insurance effective from the due date of the defaulted premium, the net
value of which shall not be less than the reserve on the policy at the end
of the last completed quarter of the policy year for which premiums have
been paid, and all dividend additions thereto, if any, exclusive of any
reserve on total and permanent disability and additional accidental death
benefits, (the policy to specify the mortality table, rate of interest and
method of valuation adopted for computing such reserve), less a maximum
percentage (not more than two and one-half per centum) of the amount
insured by the policy and of existing dividend additions thereto, if any,
and less any existing indebtedness to the company on or secured by the
policy. The policy shall also specify said percentage, or other rule of
calculation so as to permit determination of the values, to be specified
for each year for which required values are not included in the policy. The
cash surrender value referred to in clause (h) of section 229, shall be
available upon surrender of the policy to the company at its home office
within the period of grace after the due date of the defaulted premium and
shall be not less than the above prescribed minimum value of the stipulated
form of insurance; provided that the company may defer payment for not more
than six months after the application therefor is made. This subsection
shall not apply to term insurance of twenty years or less but such term
policy shall specify the mortality table, rate of interest and method of
valuation adopted for computing reserves.
(Source: Laws 1943, Vol. 1, p. 824.)
(215 ILCS 5/229.2) (from Ch. 73, par. 841.2)
Sec. 229.2. Standard Non-forfeiture Law for Life Insurance.
(1) No policy
of life insurance, except as stated in subsection (8),
shall be delivered or issued for delivery in this
State unless it contains in
substance the following provisions or corresponding provisions which in
the opinion of the Director are at least as favorable to the defaulting
or surrendering policyholder and are essentially in compliance with subsection
(7) of this law:
(i) That, in the event of default in any premium payment, the
company will grant, upon proper request not later than 60 days after the
due date of the premium in default, a paid-up nonforfeiture
benefit on
a plan stipulated in the policy, effective as of such due date, of such
amount as may be hereinafter specified. In lieu of such
stipulated paid-up nonforfeiture benefit, the company may substitute, upon
proper request not later than 60 days after the due date of the premium
in default, an actuarially equivalent alternative paid-up nonforfeiture
benefit which provides a greater amount or longer period of death benefits
or, if applicable, a greater amount or earlier payment of endowment benefits.
(ii) That, upon surrender of the policy within 60 days after the due
date of any premium payment in default after premiums have been paid for
at least 3 full years in the case of Ordinary insurance or 5 full years
in the case of Industrial insurance, the company will pay, in lieu of
any paid-up nonforfeiture benefit, a cash surrender value of such
amount as may be hereinafter specified.
(iii) That a specified paid-up nonforfeiture benefit
shall become
effective as specified in the policy unless the person entitled to make
such election elects another available option not later than 60 days
after the due date of the premium in default.
(iv) That, if the policy shall have become paid-up by completion of
all premium payments or if it is continued under any paid-up
nonforfeiture benefit which became effective on or
after the third
policy anniversary in the case of Ordinary insurance or the fifth policy
anniversary in the case of Industrial insurance, the company will pay,
upon surrender of the policy within 30 days after any policy
anniversary, a cash surrender value of such amount as may be hereinafter
specified.
(v) In the case of policies which cause on a basis guaranteed in the
policy unscheduled changes in benefits or premiums, or which provide an
option for changes in benefits or premiums other than a change to a new
policy, a statement of the mortality table, interest rate, and method used
in calculating cash surrender values and the paid-up nonforfeiture benefits
available under the policy. In the case of all other policies,
a statement of the mortality table and interest rate used in
calculating the cash surrender values and the paid-up nonforfeiture
benefits available under the policy, together with a table showing the
cash surrender value, if any, and paid-up nonforfeiture
benefit, if
any, available under the policy on each policy anniversary either during
the first 20 policy years or during the term of the policy, whichever is
shorter, such values and benefits to be calculated upon the assumption
that there are no dividends or paid-up additions credited to the policy
and that there is no indebtedness to the company on the policy.
(vi) A statement that the cash surrender values and the paid-up
nonforfeiture benefits available under the policy
are not less than the
minimum values and benefits required by or pursuant to the insurance law
of the state in which the policy is delivered; an explanation of the
manner in which the cash surrender values and the paid-up nonforfeiture
benefits are altered by the existence of any paid-up additions credited
to the policy or any indebtedness to the company on the policy; if a
detailed statement of the method of computation of the values and
benefits shown in the policy is not stated therein, a statement that
such method of computation has been filed with the insurance supervisory
official of the state in which the policy is delivered; and a statement
of the method to be used in calculating the cash surrender value and
paid-up nonforfeiture benefit available under the
policy on any policy
anniversary beyond the last anniversary for which such values and
benefits are consecutively shown in the policy.
Any of the foregoing provisions or portions thereof not applicable by
reason of the plan of insurance may, to the extent inapplicable, be
omitted from the policy.
The company shall reserve the right to defer the payment of any cash
surrender value for a period of 6 months after demand therefor with
surrender of the policy.
(2) (i) Any cash surrender value available under the policy in the event
of default in a premium payment due on any policy anniversary, whether
or not required by subsection (1), shall be an amount not less than the
excess, if any, of the present value, on such anniversary, of the future
guaranteed benefits which would have been provided for by the policy,
including any existing paid-up additions, if there had been no default,
over the sum of (i) the then present value of the adjusted premiums as
defined in subsections 4, 4(a), 4(b) and 4(c), corresponding
to premiums which
would have fallen due on and after such anniversary, and (ii) the amount
of any indebtedness to the company on the policy.
(ii) For any policy issued on or after the operative date of subsection
4(c), which provides supplemental life insurance or annuity benefits at
the option of the insured for an identifiable additional premium by rider
or supplemental policy provision,
the cash surrender value shall be an amount not less than the sum of the
cash surrender value as determined in paragraph (i) for an otherwise similar
policy issued at the same age without such rider or supplemental policy
provision and the cash surrender value as determined in such paragraph for
a policy which provides only the benefits otherwise provided by such rider
or supplemental policy provision.
(iii) For any family policy issued on or after the operative date of subsection
4(c), which defines a primary insured and provides term insurance on the
life of the spouse of the primary insured expiring before the spouse attains
age 71, the cash surrender value shall be an amount not less than the sum
of the cash surrender value as determined in paragraph (i) for an otherwise
similar policy issued at the same age without such term insurance on the
life of the spouse and the cash surrender value as determined in such paragraph
for a policy which provides only the benefits otherwise provided by such
term insurance on the life of the spouse.
(iv) Any cash surrender
value available within 30 days after any policy anniversary under any
policy paid up by completion of all premium payments or any policy
continued under any paid-up nonforfeiture benefit, whether or not
required by subsection (1), shall be an amount not less than the present
value, on such anniversary, of the future guaranteed benefits provided
for by the policy, including any existing paid-up additions, decreased
by any indebtedness to the company on the policy.
(3) Any paid-up nonforfeiture benefit available
under the policy in
the event of default in a premium payment due on any policy anniversary
shall be such that its present value as of such anniversary shall be at
least equal to the cash surrender value then provided for by the policy,
or if none is provided for, that cash surrender value which would have
been required by this section in the absence of the condition that
premiums shall have been paid for at least a specified period.
(4) This subsection (4) shall not apply to policies issued on or after
the operative date of subsection (4c). Except as provided in the third
paragraph of this subsection,
the adjusted premiums for any policy shall be calculated on an annual
basis and shall be such uniform percentage of the respective premium
specified in the policy for each policy year, excluding any extra
premiums charged because of impairments or special hazards, that the
present value, at the date of issue of the policy, of all such adjusted
premiums shall be equal to the sum of (i) the then present value of the
future guaranteed benefits provided for by the policy; (ii) 2% of the
amount of insurance, if the insurance be uniform in amount, or of the
equivalent uniform amount, as hereinafter defined, if the amount of
insurance varies with duration of the policy; (iii) 40% of the adjusted
premium for the first policy year; (iv) 25% of either the adjusted
premium for the first policy year or the adjusted premium for a whole
life policy of the same uniform or equivalent uniform amount with
uniform premiums for the whole of life issued at the same age for the
same amount of insurance, whichever is less. Provided, however, that in
applying the percentages specified in (iii) and (iv) above, no adjusted
premium shall be deemed to exceed 4% of the amount of insurance or
uniform amount equivalent thereto. The date of issue of a policy for the
purpose of this subsection shall be the date as of which the rated age
of the insured is determined.
In the case of a policy providing an amount of insurance varying with
duration of the policy, the equivalent uniform amount thereof for the
purpose of this subsection shall be deemed to be the level amount of
insurance, provided by an otherwise similar policy, containing the same
endowment benefit or benefits, if any, issued at the same age and for
the same term, the amount of which does not vary with duration and the
benefits under which have the same present value at the inception of the
insurance as
the benefits under the policy; provided, however, that in the case of a
policy providing a varying amount of insurance issued on the life of a
child under age 10, the equivalent uniform amount may be computed as
though the amount of insurance provided by the policy prior to the
attainment of age 10 were the amount provided by such policy at age 10.
The adjusted premiums for any policy providing term insurance
benefits by rider or supplemental policy provision shall be equal to (a)
the adjusted premiums for an otherwise similar policy issued at the same
age without such term insurance benefits, increased, during the period
for which premiums for such term insurance benefits are payable, by (b)
the adjusted premiums for such term insurance, the foregoing items (a)
and (b) being calculated separately and as specified in the first 2
paragraphs of this subsection except that, for the purposes of (ii),
(iii) and (iv) of the first such paragraph, the amount of insurance or
equivalent uniform amount of insurance used in the calculation of the
adjusted premiums referred to in (b) shall be equal to the excess of the
corresponding amount determined for the entire policy over the amount
used in the calculation of the adjusted premiums in (a).
Except as otherwise provided in subsections (4a) and (4b), all
adjusted premiums and present values referred to in this section shall
for all policies of Ordinary insurance be calculated on the basis of the
Commissioners 1941 Standard Ordinary Mortality Table, provided that for
any category of Ordinary insurance issued on female risks adjusted
premiums and present values may be calculated according to an age not
more than 3 years younger than the actual age of the insured, and such
calculations for all policies of Industrial insurance shall be made on
the basis of the 1941 Standard Industrial Mortality Table. All
calculations shall be made on the basis of the rate of interest, not
exceeding 3 1/2% per annum, specified in the policy for calculating cash
surrender values and paid-up nonforfeiture benefits.
Provided, however,
that in calculating the present value of any paid-up term insurance with
accompanying pure endowment, if any, offered as a nonforfeiture
benefit, the rates of mortality assumed may be not more than 130% of the
rates of mortality according to such applicable table. Provided,
further, that for insurance issued on a substandard basis, the
calculation of any such adjusted premiums and present values may be
based on such other table of mortality as may be specified by the
company and approved by the Director.
(4a) This subsection (4a) shall not apply to Ordinary policies issued
on or after the operative date of subsection (4c). In the case of Ordinary
policies issued on or after the
operative date of this subsection (4a) as defined herein, all adjusted
premiums and present values referred to in this Section shall be
calculated on the basis of the Commissioners 1958 Standard Ordinary
Mortality Table and the rate of interest specified in the policy for calculating
cash surrender values and
paid-up nonforfeiture benefits, provided that such
rate of interest shall not exceed 3 1/2% per annum except that a rate of
interest not exceeding 5 1/2% per annum may be used for policies issued
on or after September 8, 1977, except that for any single premium
whole life or endowment insurance policy a rate of interest not exceeding
6 1/2% per annum may be used and provided that for any category of
Ordinary insurance issued on female risks, adjusted premiums and present
values may be calculated according to an age not more than 6 years
younger than the actual age of the insured. Provided, however, that in
calculating the present value of any paid-up term insurance with
accompanying pure endowment, if any, offered as a nonforfeiture
benefit, the rates of mortality assumed may be not more than those shown
in the Commissioners 1958 Extended Term Insurance Table. Provided,
however, that for insurance issued on a substandard basis, the
calculation for any such adjusted premiums and present values may be
based on such other table of mortality as may be specified by the
company and approved by the Director. After the effective date of this
subsection (4a), any company may file with the Director written notice
of its election to comply with the provisions of this subsection after a
specified date before January 1, 1966. After the filing of such notice,
then upon such specified date (which shall be the operative date of this
subsection for such company), this subsection shall become operative
with respect to the Ordinary policies thereafter issued by such company.
If a company makes no such election, the operative date of this
subsection for such company shall be January 1, 1966.
(4b) This subsection (4b) shall not apply to Industrial policies issued
on or after the operative date of subsection (4c). In the case of Industrial
policies issued on or after the
operative date of this subsection (4b) as defined herein, all adjusted
premiums and present values referred to in this Section shall be
calculated on the basis of the Commissioners 1961 Standard Industrial
Mortality Table and the rate of interest specified in the policy for calculating
cash surrender values and
paid-up nonforfeiture benefits, provided that such
rate of interest shall not exceed 3 1/2% per annum except that a rate of
interest not exceeding
5 1/2% per annum may be used for policies issued on or after September
8, 1977, except
that for any single premium whole life or endowment insurance policy a rate
of interest not exceeding 6 1/2% per annum may be used. Provided, however,
that in calculating
the present value of any paid-up term insurance with accompanying pure
endowment, if any, offered as a nonforfeiture benefit,
the rates of
mortality assumed may be not more than those shown in the Commissioners
1961 Industrial Extended Term Insurance Table. Provided, further, that
for insurance issued on a substandard basis, the calculations of any
such adjusted premiums and present values may be based on such other
table of mortality as may be specified by the company and approved by
the Director. After the effective date of this subsection (4b), any
company may file with the Director a written notice of its election to
comply with the provisions of this subsection after a specified date
before January 1, 1968. After the filing of such notice, then upon such
specified date (which shall be the operative date of this subsection for
such company), this subsection shall become operative with respect to
the Industrial policies thereafter issued by such company. If a company
makes no such election, the operative date of this subsection for such
company shall be January 1, 1968.
(4c)(a) This subsection shall apply to all policies issued on or after
its operative date. Except as provided in paragraph (g), the adjusted premiums
for any policy shall be calculated on an annual basis and shall be such
uniform percentage of the respective premiums specified in the policy for
each policy year, excluding amounts payable as extra premiums to cover impairments
or special hazards and any uniform annual contract charge or policy fee
specified in the policy in a statement of the method to be used in calculating
the cash surrender value and paid-up nonforfeiture benefits of the policy,
that the present value, at the date of issue of the policy, of all adjusted
premiums shall be equal to the sum of (i) the then present value of the
future guaranteed benefits provided for by the policy; (ii) 1% of either
the amount of insurance, if the insurance is uniform in amount, or the average
amount of insurance at the beginning of each of the first 10 policy years;
and (iii) 125% of the nonforfeiture net level premium as hereinafter defined.
In applying the percentage specified in (iii), however,
no nonforfeiture net level premium shall exceed 4% of either the amount
of insurance, if the insurance is uniform in amount, or the average amount
of insurance at the beginning of each of the first 10 policy years. The
date of issue of a policy for the purpose of this subsection is the date
as of which the rated age of the insured is determined.
(b) The nonforfeiture net level premium equals the present value, at the
date of issue of the policy, of the guaranteed benefits provided for by
the policy divided by the present value, at the date of issue of the policy,
of an annuity of one per annum payable on the date of issue of the policy
and on each anniversary of such policy on which a premium falls due.
(c) In the case of a policy which causes, on a basis guaranteed in such
policy, unscheduled changes in benefits or premiums, or which provides an
option for changes in benefits or premiums other than a change to a new
policy, adjusted premiums and present values shall initially be calculated
on the assumption that future benefits and premiums do not change from those
stipulated at the date of issue of such policy. At the time of any such
change in the benefits or premiums, the future adjusted premiums, nonforfeiture
net level premiums and present values shall be recalculated on the assumption
that future benefits and premiums do not change from those stipulated by
such policy immediately after the change.
(d) Except as otherwise provided in paragraph (g), the recalculated future
adjusted premiums for any policy shall be such uniform percentage of the
respective future premiums specified in the policy for each policy year,
excluding amounts payable as extra premiums to cover impairments and special
hazards and any uniform annual contract charge or policy fee specified in
the policy in a statement of the method to be used in calculating the cash
surrender values and paid-up nonforfeiture benefits, that the present value,
at the time of change to the newly defined benefits or premiums, of all
such future adjusted premiums shall be equal to the excess of (A) the sum
of (i) the then present value of the then future guaranteed benefits provided
for by the policy and (ii) the additional expense allowance, if any, over
(B) the then cash surrender value, if any, or present value of any paid-up
nonforfeiture benefit under the policy.
(e) The additional expense allowance at the time of the change to the
newly defined benefits or premiums shall be the sum of
(i) 1% of the excess, if positive, of the average amount of insurance at
the beginning of each of the first 10 policy years subsequent to the change
over the average amount of insurance prior to the change at the beginning
of each of the first 10 policy years subsequent to the time of the most
recent previous change, or, if there has been no previous change, the date
of issue of the policy; and (ii) 125% of the increase, if positive, in
the nonforfeiture net level premium.
(f) The recalculated nonforfeiture net level premium equals the result
obtained by dividing X by Y, where
(i) X equals the sum of
(A) the nonforfeiture net level premium applicable prior to the change
times the present value of an annuity of one per annum payable on each anniversary
of the policy on or subsequent to the date of the change on which a premium
would have fallen due had the change not occurred, and
(B) the present value of the increase in future guaranteed benefits provided
for by the policy; and
(ii) Y equals the present value of an annuity of one per annum payable
on each anniversary of the policy on or subsequent to the date of change
on which a premium falls due.
(g) Notwithstanding any other provisions of this subsection to the contrary,
in the case of a policy issued on a substandard basis which provides reduced
graded amounts of insurance so that, in each policy year, such policy has
the same tabular mortality cost as an otherwise similar policy issued on
the standard basis which provides higher uniform amounts of insurance, adjusted
premiums and present values for such substandard policy may be calculated
as if it were issued to provide such higher uniform amounts of insurance
on the standard basis.
(h) All adjusted premiums and present values referred to in this Section
shall for all policies of ordinary insurance be calculated on the basis
of the Commissioners 1980 Standard Ordinary Mortality Table or, at the election
of the company for any one or more specified plans of life
insurance, the Commissioners 1980 Standard Ordinary Mortality Table with
Ten-Year Select Mortality Factors. All adjusted premiums and present values
referred to in this Section shall for all policies of Industrial insurance
be calculated on the basis of the Commissioners 1961 Standard Industrial
Mortality Table. All adjusted premiums and present values referred to in
this Section for all policies issued in a particular calendar year shall
be calculated on the basis of a rate of interest not exceeding
the nonforfeiture interest rate as defined in this subsection for policies
issued in that calendar year. The provisions of this paragraph are subject
to the provisions set forth in subparagraphs (i) through (vii).
(i) At the option of the company, calculations for all policies issued
in a particular calendar year may be made on the basis of a rate of interest
not exceeding the nonforfeiture interest rate, as defined in this subsection,
for policies issued in the immediately preceding calendar year.
(ii) Under any paid-up nonforfeiture benefit, including any paid-up dividend
additions, any cash surrender value available, whether or not required by
subsection (1), shall be calculated on the basis of the mortality table
and rate of interest used in determining the amount of such paid-up nonforfeiture
benefit and paid-up dividend additions, if any.
(iii) A company may calculate the amount of any guaranteed paid-up nonforfeiture
benefit, including any paid-up additions under the policy, on the basis
of an interest rate no lower than that specified in the policy for calculating
cash surrender values.
(iv) In calculating the present value of any paid-up term insurance with
an accompanying pure endowment, if any, offered as a nonforfeiture benefit,
the rates of mortality assumed may be not more than those shown in the Commissioners
1980 Extended Term Insurance Table for policies of ordinary insurance and
not more than the Commissioner 1961 Industrial Extended Term Insurance Table
for policies of industrial insurance.
(v) For insurance issued on a substandard basis, the calculation of any
such adjusted premiums and present values may be based on appropriated modifications
of the aforementioned tables.
(vi) For policies issued prior to the operative date of the Valuation Manual, any Commissioners Standard Mortality Table adopted after 1980 by the National Association
of Insurance Commissioners and approved by regulations promulgated
by the Director for use in determining the minimum nonforfeiture standard
may be substituted for the Commissioners 1980 Standard Ordinary Mortality
Table with or without Ten-Year Select Mortality Factors or for the Commissioners
1980 Extended Term Insurance Table.
For policies issued on or after the operative date of the Valuation Manual, the Valuation Manual shall provide the Commissioners Standard Ordinary Mortality Table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table. If the Director approves by regulation any Commissioners Standard Ordinary Mortality Table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the Valuation Manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the Valuation Manual.
(vii) For policies issued prior to the operative date of the Valuation Manual, any Commissioners Standard Industrial Mortality Table adopted after 1980 by the National
Association of Insurance Commissioners and approved by regulations promulgated
by the Director for use in determining the minimum nonforfeiture standard
may be substituted for the Commissioners 1961 Standard Industrial Mortality
Table or the Commissioners 1961 Industrial Extended Term Insurance Table.
For policies issued on or after the operative date of the Valuation Manual, the Valuation Manual shall provide the Commissioners Standard Industrial Mortality Table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table. If the Director approves by regulation any Commissioners Standard Industrial Mortality Table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the Valuation Manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the Valuation Manual.
(i) The nonforfeiture interest rate is defined as follows:
(j) Notwithstanding any other provision in this Code to the contrary,
any refiling of nonforfeiture values or their methods of computation for
any previously approved policy form which involves only a change in the
interest rate or mortality table used to compute nonforfeiture values shall
not require refiling of any other provisions of that policy form.
(k) After the effective date of this subsection, any company may, with
respect to any category of insurance, file with the Director a written notice
of its election to comply with the provisions of this subsection after a
specified date before January 1, 1989. That date
shall be the operative date of this subsection for that category of insurance
for such company. If
a company makes no such election, the operative date of this subsection
for that category of insurance issued by such company shall be January 1, 1989.
(5) In the case of any plan of life insurance which provides for future
premium determination, the amounts of which are to be determined by the
insurance company based on then estimates of future experience, or in the
case of any plan of life insurance which is of such a nature that minimum
values cannot be determined by the methods described in subsections (1),
(2), (3), (4), (4a), (4b) or (4c), then
(a) the Director shall satisfy himself that the benefits provided under
such plan are substantially as favorable to policyholders and insured parties
as the minimum benefits otherwise required by subsections (1), (2), (3),
(4), (4a), (4b) or (4c);
(b) the Director shall satisfy himself that the benefits and the pattern
of premiums of that plan are not such as to mislead prospective policyholders
or insured parties; and
(c) the cash surrender values and paid-up nonforfeiture benefits provided
by such plan shall not be less than the minimum values and benefits computed
by a method consistent with the principles of this Standard Nonforfeiture
Law for Life Insurance, as determined by regulations promulgated by the Director.
(6) Any cash surrender value and any paid-up nonforfeiture benefit,
available under the policy in the event of default in a premium payment
due at any time other than on the policy anniversary, shall be
calculated with allowance for the lapse of time and the payment of
fractional premiums beyond the last preceding policy anniversary. All
values referred to in subsections (2), (3), (4), (4a), (4b)
and (4c) may be
calculated upon the assumption that any death benefit is payable at the
end of the policy year of death. The net value of any paid-up additions,
other than paid-up term additions, shall be not less than the amounts
used to provide such additions. Notwithstanding the provisions of
subsection (2), additional benefits payable (i) in the event of death or
dismemberment by accident or accidental means, (ii) in the event of
total and permanent disability, (iii) as reversionary annuity or
deferred reversionary annuity benefits, (iv) as term insurance benefits
provided by a rider or supplemental policy provision to which, if issued
as a separate policy, this section would not apply, (v) as term
insurance on the life of a child or on the lives of children provided in
a policy on the life of a parent of the child, if such term insurance
expires before the child's age is 26, is uniform in amount after the
child's age is one, and has not become paid-up by reason of the death of
a parent of the child, and (vi) as other policy benefits additional to
life insurance and endowment benefits, and premiums for all such
additional benefits, shall be disregarded in ascertaining cash surrender
values and nonforfeiture benefits required by this section, and no such
additional benefits shall be required to be included in any paid-up
nonforfeiture benefits.
(7) This subsection shall apply to all policies issued on or after January
1, 1987. Any cash surrender value available under the policy in the event
of default in a premium payment due on any policy anniversary shall be in
an amount which does not differ by more than .2% of either the amount of
insurance if the insurance is uniform in amount, or the average amount of
insurance at the beginning of each of the first 10 policy years, from the
sum of (a) the greater of zero and the basic cash value hereinafter specified
and (b) the present value of any existing paid-up additions less the amount
of any indebtedness to the company under the policy.
The basic cash value equals the present value, on such anniversary, of
the future guaranteed benefits which would have been provided for by the
policy, excluding any existing paid-up additions and before deduction of
any indebtedness to the company, if there had been no default, less the
then present value of the nonforfeiture factors, as hereinafter defined,
corresponding to premiums which would have fallen due on and after such
anniversary. The effects on the basic cash value of supplemental life insurance
or annuity benefits or of family coverage, as described in subsection (2)
or (4), whichever is applicable, shall, however, be the same as are the
effects specified in subsection (2) or (4), whichever is applicable, on
the cash surrender values defined in that subsection.
The nonforfeiture factor for each policy year equals a percentage of the
adjusted premium for the policy year, as defined in subsection (4) or (4c),
whichever is applicable. Except as is required by the next succeeding sentence
of this paragraph, such percentage
(a) shall be the same percentage for each policy year between the second
policy anniversary and the later of (i) the fifth policy anniversary and
(ii) the first policy anniversary at which there is available under the
policy a cash surrender value in an amount, before including any paid-up
additions and before deducting any indebtedness, of at least .2% of either
the amount of insurance, if the insurance is uniform in amount, or the average
amount of insurance at the beginning of each of the first 10 policy years; and
(b) shall be such that no percentage after the later of the 2 policy anniversaries
specified in the preceding item (a) may apply to fewer than 5 consecutive policy years.
No basic cash value may be less than the value which would be obtained
if the adjusted premiums for the policy, as defined in subsection (4) or
(4c), whichever is applicable, were substituted for the nonforfeiture factors
in the calculation of the basic cash value.
All adjusted premiums and present values referred to in this subsection
shall for a particular policy be calculated on the same mortality and interest
bases as those used in accordance with the other
subsections of this law. The cash surrender values referred to in this
subsection shall include any endowment benefits provided for by the policy.
Any cash surrender value available other than in the event of default in
a premium payment due on a policy anniversary, and the amount of any paid-up
nonforfeiture benefit available under the policy in the event of default
in a premium payment shall be determined in manners consistent with the
manners specified for determining the analogous minimum amounts in subsections
1, 2, 3, 4c, and 6. The amounts of any cash surrender values and of any
paid-up nonforfeiture benefits granted in connection with additional benefits
such as those listed as items (i) through (vi) in subsection (6) shall conform
with the principles of this subsection (7).
(8) This Section shall not apply to any of the following:
(a) reinsurance,
(b) group insurance,
(c) a pure endowment,
(d) an annuity or reversionary annuity contract,
(e) a term policy of uniform amount, which provides no guaranteed nonforfeiture
or endowment benefits, or renewal thereof, of 20 years or
less expiring before age 71, for which uniform premiums are payable
during the entire term of the policy,
(f) a term policy of
decreasing amount, which provides no guaranteed nonforfeiture or endowment
benefits, on which each adjusted premium, calculated as
specified in subsections (4), (4a), (4b) and (4c), is less
than the adjusted
premium so calculated, on a term policy of uniform
amount, or renewal thereof, which provides no guaranteed nonforfeiture or
endowment benefits, issued at the same
age and for the same initial amount of insurance and for a term of 20
years or less expiring before age 71, for which uniform premiums are payable
during the entire term of the policy,
(g) a policy, which provides no guaranteed nonforfeiture or endowment
benefits, for which no cash surrender value, if any, or present value of
any paid-up nonforfeiture benefit, at the beginning of any policy year,
calculated as specified in subsections (2), (3), (4), (4a), (4b) and (4c),
exceeds 2.5% of the amount of insurance at the beginning of the same policy year,
(h) any policy
which shall be delivered outside this State through an agent or other
representative of the company issuing the policy.
For purposes of determining the applicability of this Section, the age
of expiry for a joint term life insurance policy shall be the age of expiry
of the oldest life.
(9) For the purposes of this Section:
"Operative date of the Valuation Manual" means the January 1 of the first calendar year that the Valuation Manual is effective.
"Valuation Manual" has the same meaning as set forth in Section 223 of this Code.
(Source: P.A. 99-162, eff. 1-1-16.)
(215 ILCS 5/229.3) (from Ch. 73, par. 841.3)
Sec. 229.3.
Loan provisions in policies.
In the case of those policies issued prior to the operative date of
Section 229.2 (the Standard Non-forfeiture Law) the loan value referred
to in clause (f) of section 224 shall be the reserve at the end of the
current policy year on the policy and on the dividend additions thereto, if
any, exclusive of the reserve on account of total and permanent disability
and additional accidental death benefits, less a specified maximum
percentage (not more than two and one-half) of the amount insured by the
policy and of any dividend additions thereto (the policy to specify the
mortality table, rate of interest and method of valuation adopted for
computing such reserve), the exact percentage to be specified for each year
for which required values are not included in the policy. The policy may
also provide that such loan may be deferred for not exceeding six months
after the application therefor is made.
(2) In the case of policies issued on or after the operative date of
Section 229.2 (the Standard Non-forfeiture Law) the loan value referred to
in clause (f) of section 224 shall be the cash surrender value at the end
of the current policy year as required by section 229.2. The company shall
reserve the right to defer such loan, except when made to pay premiums, for
six months after application therefor is made.
(Source: Laws 1943, vol. 1, p. 824.)
(215 ILCS 5/229.4) (from Ch. 73, par. 841.4)
Sec. 229.4. (Repealed).
(Source: P.A. 93-873, eff. 8-6-04. Repealed internally, eff. 7-1-06.)
(215 ILCS 5/229.4a)
Sec. 229.4a. Standard Non-forfeiture Law for Individual Deferred
Annuities.
(1)
Title.
This Section shall be known as the Standard Nonforfeiture Law for Individual Deferred Annuities.
(2) Applicability.
This Section shall not apply to any reinsurance, group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter amended, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which shall be delivered outside this State through an agent or other representative of the company issuing the contract.
(3) Nonforfeiture Requirements.
(4) Minimum values. The minimum values as specified in subsections (5), (6), (7), (8) and (10) of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this subsection.
(5) Computation of Present Value.
Any paid-up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. Present value shall be computed using the mortality table, if any, and the interest rates specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract.
(6) Calculation of Cash Surrender Value.
For contracts that provide cash surrender benefits, the cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit that would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, such present value being calculated on the basis of an interest rate not more than 1% higher than the interest rate specified in the contract for accumulating the net considerations to determine maturity value, decreased by the amount of any indebtedness to the company on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the company to the contract. In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under such contracts shall be at least equal to the cash surrender benefit.
(7) Calculation of Paid-up Annuity Benefits.
For contracts that do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid prior to the time the contract is
surrendered in exchange for, or changed to, a deferred paid-up annuity, such present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine maturity value, and increased by any additional amounts credited by the company to the contract. For contracts that do not provide any death benefits prior to the commencement of any annuity payments, present values shall be calculated on the basis of such interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. However, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time.
(8) Maturity Date.
For the purpose of determining the benefits calculated under subsections (6) and (7), in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever is later.
(9) Disclosure of Limited Death Benefits.
A contract that does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that such benefits are not
provided.
(10) Inclusion of Lapse of Time Considerations.
Any paid-up annuity, cash surrender or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs.
(11) Proration of Values; Additional Benefits.
For a contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of subsections (5), (6), (7), (8) and (10), additional benefits payable in the event of total and permanent disability, as reversionary annuity or deferred reversionary annuity benefits, or as other policy benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits, shall be disregarded in ascertaining the minimum nonforfeiture amounts,
paid-up annuity, cash surrender and death benefits that may be required under this Section. The inclusion of such benefits shall not be required in any paid-up benefits, unless the additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits.
(12) Rules. The Director may adopt rules to implement the provisions of this Section.
(13) Effective Date. After the effective date of this amendatory Act of the 93rd General Assembly, a company may elect to apply its provisions to annuity
contracts on a contract form-by-contract form basis before July 1, 2006. In all other instances, this Section shall become operative with respect to annuity contracts issued by the company on or after July 1, 2006.
(14) (Blank).
(Source: P.A. 102-775, eff. 5-13-22.)
(215 ILCS 5/229.5) (from Ch. 73, par. 841.5)
Sec. 229.5.
Policy loan interest rates.
(a) As used in this Section,
unless the context requires otherwise:
(1) "Policy" includes certificates issued by a fraternal benefit society
and annuity contracts which provide for policy loans.
(2) "Policy loan" includes any premium loan made under a policy to pay
one or more premiums that were not paid to the life insurer as they became due.
(3) "Policyholder" includes the owner of the policy or the person designated
to pay premiums as shown on the records of the life insurer.
(4) "Published Monthly Average" means:
(i) Moody's Corporate Bond Yield Average - Monthly Average Corporates
as published by Moody's Investors Service, Inc., or any successor thereto; or
(ii) In the event that Moody's Corporate Bond Yield Average - Monthly Average
Corporates is no longer published, a substantially similar average, established
by regulation issued by the Director.
(b) Maximum rate of interest on policy loans.
(1) Policies issued on or after the effective date of this amendatory
Act of 1981 shall provide for policy loan interest rates as follows:
(i) A provision permitting a maximum interest rate of not more than 8% per annum; or
(ii) A provision permitting an adjustable maximum interest rate established
from time to time by the life insurer as permitted by law.
(2) The rate of interest charged on a policy loan made under subsection
(1)(ii) shall not exceed the higher of the following:
(i) The Published Monthly Average for the calendar month ending 2 months
before the date on which the rate is determined; or
(ii) The rate used to compute the cash surrender values under the policy
during the applicable period plus 1% per annum.
(3) If the maximum rate of interest is determined pursuant to clause
(ii) of paragraph (1) of this subsection (b), the policy shall contain a
provision setting forth the frequency at which the rate is to be determined
for that policy.
(4) The maximum rate for each policy must be determined at regular intervals
at least once every 12 months, but not more frequently than once in any
3 month period. At the intervals specified in the policy:
(i) The rate being charged may be increased whenever such change as determined
under paragraph (2) of this subsection (b) would increase that rate by 1/2%
or more per annum.
(ii) The rate being charged must be reduced whenever such reduction as
determined under paragraph (2) of this subsection (b) would decrease that
rate by 1/2% or more per annum.
(5) The life insurer shall:
(i) notify the policyholder at the time a cash loan is made of the initial
rate of interest on the loan;
(ii) notify the policyholder with respect to premium loans of the initial
rate of interest on the loan as soon as it is reasonably practical to do
so after making the initial loan. Notice need not be given to the policyholder
when a further premium loan is added, except as provided in (iii) below;
(iii) send to policyholders with loans a reasonable advance notice of
any increase in the rate; and
(iv) include in the notices required above the substance of the pertinent
provisions of paragraph (1) and (3) of this subsection (b).
(6) The loan value of the policy shall be determined in accordance with
Section 229.3, but no policy shall terminate in a policy year as the sole
result of change in the interest rate during that policy year, and the
life insurer shall maintain coverage during that policy year until such
time as it would otherwise have terminated if there had been no change in
the interest rate during that policy year.
(7) The substance of the pertinent provisions of paragraphs (1) and (3)
of this subsection (b) shall be set forth in the policies to which they apply.
(8) For purposes of this Section, the rate of interest on policy loans
permitted under this Section includes the interest rate charged on
reinstatement
of policy loans for the period during and after any lapse of a policy.
(9) No other provisions of law shall apply to policy loan interest rates
unless made specifically applicable to such rates.
(c) The provisions of this Section shall not apply to any insurance contract
issued before the effective date of this amendatory Act of 1981, unless the
policyholder agrees in writing to the applicability of such provisions.
(Source: P.A. 83-1362.)
(215 ILCS 5/230.1) (from Ch. 73, par. 842.1)
Sec. 230.1.
Group Insurance Definition.
Except as provided in Section
230.2, no policy of group life insurance shall be delivered in this State
unless it conforms to one of the following descriptions:
(A) A policy issued to an employer, or to the trustees of a fund established
by an employer, which employer or trustees shall be deemed the policyholder,
to insure employees of the employer for the benefit of persons other than the
employer, subject to the following requirements:
(1) The employees eligible for insurance under the policy shall be all
of the employees of the employer, or all of any class or classes thereof.
The policy may provide that the term "employees" shall include the employees
of one or more subsidiary corporations, and the employees, individual proprietors,
and partners of one or more affiliated corporations, proprietorships or
partnerships if the business of the employer and of such affiliated corporations,
proprietorships, or partnerships is under common control. The policy may
provide that the term "employees" shall include the individual proprietor
or partners if the employer is an individual proprietorship or partnership.
The policy may provide that the term "employees" shall include retired employees
and directors of a corporate employer. A policy issued to insure the employees
of a public body may provide that the term "employees" shall include elected
or appointed officials.
(2) The premium for the policy shall be paid either from the employer's
funds or from funds contributed by the insured employees, or from both.
Except as provided in paragraph (3) of this subsection (A), a policy on
which no part of the premium is to be derived from funds contributed by
the insured employees must insure all eligible employees, except those who
reject such coverage in writing.
(3) An insurer may exclude or limit the coverage on any person as to whom
evidence of individual insurability is not satisfactory to the insurer.
(B) A policy issued to a creditor or its parent holding company or to
a trustee or trustees or agent designated by two or more creditors, which
creditor, holding company, affiliate, trustee, trustees, or agent shall
be deemed the policyholder, to insure debtors of the creditor, or creditors,
subject to the following requirements:
(1) The debtors eligible for insurance under the policy shall be all of
the debtors of the creditor or creditors, or all of any class or classes
thereof. The policy may provide that the term "debtors" shall include (i)
borrowers of money or purchasers or lessees of goods, services, or property
for which payment is arranged through a credit transaction; (ii) the debtors
of one or more subsidiary corporations; and (iii) the debtors of one or
more affiliated corporations, proprietorships, or partnerships if the business
of the policyholder and of such affiliated corporations, proprietorships,
or partnerships is under common control.
(2) The premium for the policy shall be paid either from the creditor's
funds, or from charges collected from the insured debtors, or from both. Except
as provided in paragraph (3) of this subsection (B), a policy on which no
part of the premium is to be derived from the funds contributed by insured
debtors specifically for their insurance must insure all eligible debtors.
(3) An insurer may exclude any debtors as to whom evidence of individual
insurability is not satisfactory to the insurer.
(4) The amount of the insurance on the life of any debtor shall at no
time exceed the greater of the scheduled or actual amount of unpaid indebtedness
to the creditor.
(5) The insurance may be payable to the creditor or any successor to the
right, title, and interest of the creditor. Such payment shall reduce or
extinguish the unpaid indebtedness of the debtor to the extent of such payment.
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.
(6) Notwithstanding the provisions of the above paragraphs, insurance
on agricultural credit transaction commitments may be written up to the
amount of the loan commitment on a non-decreasing or level term plan. Insurance
on educational credit transaction commitments may be written up to the amount
of the loan commitment less the amount of any repayments made on the loan.
(C) A policy issued to a labor union, or similar employee organization,
which shall be deemed to be the policyholder, to insure members of such
union or organization for the benefit of persons other than the union or
organization or any of its officials, representatives, or agents, subject
to the following requirements:
(1) The members eligible for insurance under the policy shall be all of
the members of the union or organization, or all of any class or classes thereof.
(2) The premium for the policy shall be paid either from funds of the
union or organization, or from the funds contributed by the insured members
specifically for their insurance, or from both. Except as provided in paragraph
(3) of this subsection (C), a policy on which no part of the premium is
to be derived from funds contributed by the insured members specifically
for their insurance must insure all eligible members, except those who reject
such coverage in writing.
(3) An insurer may exclude or limit the coverage on any person as to whom
evidence of individual insurability is not satisfactory to the insurer.
(D) A policy issued to a trust or to the trustees of a fund established
by two or more employers, or by one or more labor unions or similar employee
organizations, or by one or more employers and one or more labor unions
or similar employee organizations, which trust or trustees shall be deemed
the policyholder, to insure employees of the employers or members of the
unions or organizations for the benefit of persons other than the employers
or the unions or organizations, subject to the following requirements:
(1) The persons eligible for insurance shall be all employees of the employers
or all of the members of the unions or organizations, or all of any class
or classes thereof. The policy may provide that the term "employees" shall
include retired employees, the individual proprietor or partners if an employer
is an individual proprietorship or a partnership, and directors of a corporate
employer. The policy may provide that the term "employees" shall include
the trustees or their employees, or both, if their duties are principally
connected with such trusteeship.
(2) The premium for the policy shall be paid from funds contributed by
the employer or employers of the insured persons, or by the union or unions
or similar employee organizations, or by both, or from funds contributed
by the insured persons or from both the insured persons and the employer
or union or similar employee organizations. Except as provided in paragraph
(3) of this subsection
(D), a policy on which no part of the premium is to be derived from funds
contributed by the insured persons
specifically for their insurance must insure all eligible persons, except
those who reject such coverage in writing.
(3) An insurer may exclude or limit the coverage on any person as to whom
evidence of individual insurability is not satisfactory to the insurer.
(E) A policy issued to an association or to a trust or to the trustees
of a fund established, created, or maintained for the benefit of members
of one or more associations. The association or associations shall have
at the outset a minimum of 100 persons; shall have been organized and maintained
in good faith for purposes other than that of obtaining insurance; shall
have been in active existence for at least two years; and shall have a constitution
and by-laws which provides that (i) the association or associations hold
regular meetings not less than annually to further purposes of the members,
(ii) except for credit unions, the association or associations collect dues
or solicit contributions from members, and (iii) the members have voting
privileges and representation on the governing board and committees. The
policy shall be subject to the following requirements:
(1) The policy may insure members of such association or associations,
employees thereof or employees of members, or one or more of the preceding
or all of any class or classes thereof for the benefit of persons other
than the employee's employer.
(2) The premium for the policy shall be paid from funds contributed by
the association or associations, or by employer members, or by both, or
from funds contributed by the covered persons or from both the covered persons
and the association, associations, or employer members.
(3) Except as provided in paragraph (4) of this subsection (E), a policy
on which no part of the premium is to be derived from funds contributed
by the covered persons specifically for the insurance must insure all eligible
persons, except those who reject such coverage in writing.
(4) An insurer may exclude or limit the coverage of any person as to whom
evidence of individual insurability is not satisfactory to the insurer.
(Source: P.A. 83-1465.)
(215 ILCS 5/230.2) (from Ch. 73, par. 842.2)
Sec. 230.2.
Limits of Group Life Insurance.
Group life insurance offered
to a resident of this State under a group life insurance policy issued to
a group other than one described in Section 230.1 shall be subject to the
following requirements:
(A) No such group life insurance policy shall be delivered in this State
unless the Director finds that:
(1) The issuance of such group policy is not contrary to the best interest
of the public;
(2) The issuance of the group policy would be actuarially sound;
(3) The issuance of the group policy would result in economies of acquisition
or administration; and
(4) The benefits are reasonable in relation to the premiums charged.
(B) No such group life insurance coverage may be offered in this State
by an insurer under a policy issued in another State unless this State or
another State having requirements substantially similar to those contained
in subsection (A) of this Section has made a determination that such requirements
have been met.
(C) The premium for the policy shall be paid either from the policyholder's
funds or from funds contributed by the covered persons, or from both.
(D) An insurer may exclude or limit coverage on any person as to whom
evidence of individual insurability is not satisfactory to the insurer.
(Source: P.A. 83-598.)
(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:
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:
(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:
(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:
(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:
(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:
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.)
Structure Illinois Compiled Statutes
215 ILCS 5/ - Illinois Insurance Code.
Article I - Short Title, Definitions And Classifications
Article II - Domestic Stock Companies
Article IIA - Risk-Based Capital
Article IIB - Domestic Stock Company Division
Article III - Domestic Mutual Companies
Article III 1/2 - Alien Companies
Article V 3/4 - Group Workers' Compensation; Pools; Pooling; Insolvency Fund
Article VI - Foreign Or Alien Companies
Article VII - Unauthorized Companies
Article VIIA - Advisory Organizations
Article VIIB - Risk Retention Companies
Article VIIC - Domestic Captive Insurance Companies
Article VIID - Nonprofit Risk Organizations
Article VIII - Investments Of Domestic Companies
Article VIII 1/4 - Risk Management And Own Risk And Solvency Assessment
Article VIII 1/3 - Corporate Governance Annual Disclosure Law
Article VIII 1/2 - Insurance Holding Company Systems
Article IX - Provisions Applicable To All Companies
Article IX 1/2 - Credit Life and Credit Accident and Health Insurance
Article X - Merger, Consolidation Or Plans Of Exchange
Article XI 1/2 - Protected Cell Companies
Article XIE - Special Purpose Reinsurance Vehicle Law
Article XII - Domestication Of Foreign And Alien Companies
Article XII 1/2 - Corrective Orders
Article XIII - Rehabilitation, Liquidation, Conservation And Dissolution Of Companies
Article XIII 1/2 - Uniform Provisions For Liquidation
Article XIV - Legal Reserve Life Insurance
Article XIV 1/2 - Separate Accounts
Article XV - Registration Of Policies And Deposit Of Reserves
Article XVII - Fraternal Benefit Societies
Article XIX - Burial Societies
Article XIXA - Long-Term Care Insurance
Article XX - Accident And Health Insurance
Article XX-1/2 - Health Care Reimbursement
Article XXII - Casualty Insurance, Fidelity Bonds And Surety Contracts
Article XXIII - Fire And Marine Insurance
Article XXIV - Director Of Insurance, Hearings And Review
Article XXV - Fees, Charges And Taxes
Article XXVI - Unfair Methods Of Competition And Unfair And Deceptive Acts And Practices
Article XXVIII - Final Provisions
Article XXIX - Workers' Compensation And Employer's Liability Rates
Article XXXI - Insurance Producers, Limited Insurance Representatives And Registered Firms
Article XXXI 1/4 - Third Party Administrators
Article XXXI 1/2 - Third Party Prescription Programs
Article XXXIIA - Premium Finance Regulation
Article XXXIIB - Pharmacy Benefit Managers
Article XXXIII - Urban Property Insurance
Article XXXIII 1/2 - Life and Health Insurance Guaranty Association
Article XXXIV - Illinois Insurance Guaranty Fund
Article XXXVIIIA - Mine Subsidence Insurance
Article XXXIX - Group Legal Expense Insurance
Article XL - Insurance Information And Privacy Protection
Article XLI - Risk Retention Arrangements For Banking Associations
Article XLII - Insurance Cost Containment
Article XLIII - Mortgage Insurance Consolidation
Article XLIV - Financial Institutions Insurance Sales Law