Bill Text: IL SB2819 | 2009-2010 | 96th General Assembly | Enrolled

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Bill Title: Amends the Illinois Insurance Code. Deletes language that provides that moneys in the Insurance Financial Regulation Fund may be transferred to the Professions Indirect Cost Fund, as authorized under the Department of Professional Regulation Law of the Civil Administrative Code of Illinois.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Vetoed) 2010-11-19 - Bill Dead - Amendatory Veto [SB2819 Detail]

Download: Illinois-2009-SB2819-Enrolled.html

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AN ACT concerning insurance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Insurance Code is amended by
changing Sections 224 and 408.3 as follows:
(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:
(a) A provision that all premiums after the first shall
be payable in advance either at the home office of the
company or to an agent of the company, upon delivery of a
receipt signed by one or more of the officers who shall be
designated in the policy, when such receipt is requested by
the policyholder.
(b) A provision that the insured is entitled to a grace
period either of 30 days or of one month within which the
payment of any premium after the first may be made, subject
at the option of the company to an interest charge not in
excess of 6% per annum for the number of days of grace

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elapsing before the payment of the premium, during which
period of grace the policy shall continue in force, but in
case the policy becomes a claim during the grace period
before the overdue premium is paid, or the deferred
premiums of the current policy year, if any, are paid, the
amount of such premium or premiums with interest thereon
may be deducted in any settlement under the policy.
(c) A provision that the policy, together with the
application therefor, a copy of which shall be endorsed
upon or attached to the policy and made a part thereof,
shall constitute the entire contract between the parties
and that after it has been in force during the lifetime of
the insured a specified time, not later than 2 years from
its date, it shall be incontestable except for nonpayment
of premiums 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
additional insurance specifically against death by
accident and except for violations of the conditions of the
policy relating to naval or military service in time of war
or for violation of an express condition, if any, relating
to aviation, (except riding as a fare-paying passenger of a
commercial air line flying on regularly scheduled routes
between definitely established airports) in which case the
liability of the company shall be fixed at a definitely
determined amount not less than the full reserve for the

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policy and any dividend additions; provided that the
application therefor need not be attached to or made a part
of any policy containing a clause making the policy
incontestable from date of issue.
(d) A provision that if it is found at any time before
final settlement under the policy that the age of the
insured (or the age of the beneficiary, if 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, according to the
company's published rate at date of issue.
(e) A provision that the policy shall participate
annually in the surplus of the company beginning not later
than the end of the third policy year; and any policy
containing provision for annual participation beginning at
the end of the first policy year, may also provide that
each dividend be paid subject to the payment of the
premiums for the next ensuing year; and the insured under
any annual dividend policy shall have the right each year
to have the dividend arising from such participation either
paid in cash, or applied in reduction of premiums, or
applied to the purchase of paid-up additional insurance, or
be left to accumulate to the credit of the policy, with
interest at such rate as may be determined from time to
time by the company, but not less than a guaranteed minimum
rate specified in the policy, and payable at the maturity

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of the policy, but withdrawable on any anniversary date,
subject to such further provisions as the policy may
provide regarding the application of dividends toward the
payment of any premiums unpaid at the end of the grace
period; and if the insured fails to notify the company in
writing of his election within the period of grace allowed
for the payment of premium, the policy shall further
provide which of such options are effective.
(f) A provision that after the policy has been in force
3 full years the company at any time, while the policy is
in force, will advance, on proper assignment or pledge of
the policy and on the sole security thereof, at a specified
maximum fixed or adjusted rate of interest in accordance
with Section 229.5, a sum equal to, or at the option of the
insured less than the amount required by Section 229.3
under the conditions specified thereby and with
notification as required by Section 229.5; and that the
company will deduct from such loan value any indebtedness
not already deducted in determining such value and any
unpaid balance of the premium for the current policy year,
and may collect interest in advance on the loan to the end
of the current policy year; and any policy may also provide
that if the interest on the loan is not paid when due it
shall be added to the existing loan and shall bear interest
at the same rate. No condition other than as provided
herein or in Sections 229.3 and 229.5 shall be exacted as a

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prerequisite to any such loan. This clause shall not apply
to term insurance.
(g) A provision for nonforfeiture benefits and cash
surrender values in accordance with the requirements of
paragraph (1) of Section 229.1 or, Section 229.2.
(h) A table showing in figures the loan values and the
options available under the policy each year, upon default
in premium payments, during at least the first 20 years of
the policy; the policy to contain a provision that the
company will furnish upon request an extension of such
table beyond the years shown in the policy.
(i) A provision that in event of default in premium
payments the value of the policy is applied to the purchase
of other insurance as provided in this Section, and if such
insurance is in force and the original policy is not
surrendered to the company and cancelled, the policy may be
reinstated within 3 years from such default, upon evidence
of insurability satisfactory to the company and payment of
arrears of premiums and the payment or reinstatement of any
other indebtedness to the company upon the policy, with
interest on the premiums at a rate not exceeding 6% per
annum payable annually and with interest on the
indebtedness at a rate not exceeding the rate prescribed by
Section 229.5.
(j) A provision that when a policy is a claim by the
death of the insured settlement shall be made upon receipt

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of due proof of death.
Such proof shall be in writing and establish (1) the
fact and date of the insured's death, (2) the claimant's
identity, and (3) the claimant's interest and the extent
thereof. Such proof includes information and documents
necessary for the insurer to determine its liability, pay
the claim in compliance with all laws and regulations, and
be discharged from liability. A claimant shall not be
required to provide documents otherwise available to the
insurer. Settlement shall be made and not later than 2
months after the receipt of such proof.
(k) If the policy provides for payment of its proceeds
in installments, a table showing the amount and period of
such installments shall be included in the policy.
(l) Interest shall accrue on the proceeds payable
because of the death of the insured, from date of death, at
the rate of 9% on the total amount payable or the face
amount if payments are to be made in installments until the
total payment or first installment is paid, unless payment
is made within fifteen (15) days from the date of receipt
by the company of due proof of loss. 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.

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Due proof of loss shall consist of information and
documents necessary for the insurer to determine its
liability, pay the proceeds, and be discharged from
liability. An insurer may include a provision in the policy
describing proof of loss, provided that such provision is
not inconsistent with this subsection.
(m) Title on the face and on the back of the policy
briefly describing its form.
(n) A provision, or a notice attached to the policy, to
the effect that during a period of ten 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 in such event, the
insurer will refund any premium paid therefor, including
any policy fees or other charges. The Director may by rule
exempt specific types of policies from the requirements of
this subsection.
(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

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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. 92-139, eff. 7-24-01.)
(215 ILCS 5/408.3) (from Ch. 73, par. 1020.3)
Sec. 408.3. Insurance Financial Regulation Fund; uses. The
monies deposited into the Insurance Financial Regulation Fund
shall be used only for (i) payment of the expenses of the
Department, including related administrative expenses,
incurred in analyzing, investigating and examining the
financial condition or control of insurance companies and other
entities licensed or seeking to be licensed by the Department,
including the collection, analysis and distribution of
information on insurance premiums, other income, costs and
expenses, and (ii) to pay internal costs and expenses of the
Interstate Insurance Receivership Commission allocated to this

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State and authorized and admitted companies doing an insurance
business in this State under Article X of the Interstate
Receivership Compact. All distributions and payments from the
Insurance Financial Regulation Fund shall be subject to
appropriation as otherwise provided by law for payment of such
expenses.
Sums appropriated under clause (ii) of the preceding
paragraph shall be deemed to satisfy, pro tanto, the
obligations of insurers doing business in this State under
Article X of the Interstate Insurance Receivership Compact.
Nothing in this Code shall prohibit the General Assembly
from appropriating funds from the General Revenue Fund to the
Department for the purpose of administering this Code.
No fees collected pursuant to Section 408 of this Code
shall be used for the regulation of pension funds or activities
by the Department in the performance of its duties under
Article 22 of the Illinois Pension Code.
If at the end of a fiscal year the balance in the Insurance
Financial Regulation Fund which remains unexpended or
unobligated exceeds the amount of funds that the Director may
certify is needed for the purposes enumerated in this Section,
then the General Assembly may appropriate that excess amount
for purposes other than those enumerated in this Section.
Moneys in the Insurance Financial Regulation Fund may be
transferred to the Professions Indirect Cost Fund, as
authorized under Section 2105-300 of the Department of

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Professional Regulation Law of the Civil Administrative Code of
Illinois.
(Source: P.A. 94-91, eff. 7-1-05.)