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| 1 | AN ACT concerning prepaid funeral or burial contracts.
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| 2 | Be it enacted by the People of the State of Illinois,
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| 3 | represented in the General Assembly:
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| 4 | Section 5. The Illinois Insurance Code is amended by | |||||||||||||||||||||||
| 5 | adding Section 245.3 as follows:
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| 6 | (215 ILCS 5/245.3 new) | |||||||||||||||||||||||
| 7 | Sec. 245.3. Irrevocable assignment of life insurance to a | |||||||||||||||||||||||
| 8 | funeral home. Neither any provision of this Code nor any other | |||||||||||||||||||||||
| 9 | law prohibits an insured or any other person who may be the | |||||||||||||||||||||||
| 10 | owner of rights under a policy of life insurance from making an | |||||||||||||||||||||||
| 11 | irrevocable assignment of all or a part of his or her rights, | |||||||||||||||||||||||
| 12 | not to exceed the purchase price of the prepaid funeral or | |||||||||||||||||||||||
| 13 | burial contract, under the policy to a funeral home and to have | |||||||||||||||||||||||
| 14 | an individual policy issued in accordance with paragraphs (G), | |||||||||||||||||||||||
| 15 | (H), and (K) of Section 231.1. Subject to the terms of the | |||||||||||||||||||||||
| 16 | policy or a contract relating to the policy, including, but | |||||||||||||||||||||||
| 17 | not limited to, a prepaid funeral or burial contract, an | |||||||||||||||||||||||
| 18 | irrevocable assignment by an insured or other owner of rights | |||||||||||||||||||||||
| 19 | under a policy made before or after the effective date of this | |||||||||||||||||||||||
| 20 | amendatory Act of the 102nd General Assembly is valid for the | |||||||||||||||||||||||
| 21 | purpose of vesting in the assignee, in accordance with the | |||||||||||||||||||||||
| 22 | policy or contract as to the time at which it is effective, all | |||||||||||||||||||||||
| 23 | rights assigned. That irrevocable assignment is, however, | |||||||||||||||||||||||
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| 1 | without prejudice to the company on account of any payment it | ||||||
| 2 | makes or individual policy it issues in accordance with | ||||||
| 3 | paragraphs (G), (H), and (K) of Section 231.1 before receipt | ||||||
| 4 | of notice of the assignment. This amendatory Act of the 102nd | ||||||
| 5 | General Assembly acknowledges, declares, and codifies the | ||||||
| 6 | existing right of assignment of interests under life insurance | ||||||
| 7 | policies.
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| 8 | Section 10. The Illinois Funeral or Burial Funds Act is | ||||||
| 9 | amended by changing Section 2a as follows:
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| 10 | (225 ILCS 45/2a)
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| 11 | Sec. 2a. Purchase of insurance or annuity.
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| 12 | (a) If a purchaser selects the purchase of a life | ||||||
| 13 | insurance policy or
tax-deferred annuity contract to fund the | ||||||
| 14 | pre-need contract, the application
and collected premium shall | ||||||
| 15 | be mailed within 30 days of signing the pre-need
contract.
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| 16 | (b) If life insurance or an annuity is used to fund a
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| 17 | pre-need contract,
the seller or provider shall not be named | ||||||
| 18 | as the owner or beneficiary of the
policy or annuity. No person | ||||||
| 19 | whose only insurable interest in the insured is
the receipt of | ||||||
| 20 | proceeds from the policy or in naming who shall receive the
| ||||||
| 21 | proceeds nor any trust acting on behalf of such person or | ||||||
| 22 | seller or provider
shall be named as owner or beneficiary of | ||||||
| 23 | the policy or annuity.
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| 24 | (c) Nothing shall prohibit the purchaser from irrevocably | ||||||
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| 1 | assigning
ownership of the policy or annuity used to fund a | ||||||
| 2 | guaranteed price pre-need
contract to a funeral home person or | ||||||
| 3 | trust for the purpose of obtaining favorable
consideration for | ||||||
| 4 | Medicaid, Supplemental Security Income, or another public
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| 5 | assistance program, as permitted under federal law. The seller | ||||||
| 6 | or contract
provider may be named a
nominal owner of the life | ||||||
| 7 | insurance policy only for such
time as it takes to immediately | ||||||
| 8 | transfer the policy into a
trust. Except for this purpose, | ||||||
| 9 | neither the
seller nor the contract provider shall be named | ||||||
| 10 | the owner
or the beneficiary of the policy or annuity.
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| 11 | (d) If a life insurance policy or annuity contract is used | ||||||
| 12 | to fund a
pre-need contract, except for guaranteed price | ||||||
| 13 | contracts permitted in Section
4(a) of this Act, the pre-need | ||||||
| 14 | contract must be revocable, and any
assignment
provision in | ||||||
| 15 | the pre-need contract must contain the following disclosure in | ||||||
| 16 | 12
point bold type:
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| 17 | THIS ASSIGNMENT MAY BE REVOKED BY THE ASSIGNOR OR | ||||||
| 18 | ASSIGNOR'S SUCCESSOR OR, IF
THE ASSIGNOR IS ALSO THE INSURED | ||||||
| 19 | AND DECEASED, BY THE REPRESENTATIVE OF THE
INSURED'S ESTATE | ||||||
| 20 | BEFORE THE RENDERING TO THE CEMETERY SERVICES OR GOODS OR
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| 21 | FUNERAL SERVICES OR GOODS. IF THE ASSIGNMENT IS REVOKED, THE | ||||||
| 22 | DEATH BENEFIT
UNDER THE LIFE INSURANCE POLICY OR ANNUITY | ||||||
| 23 | CONTRACT SHALL BE PAID IN ACCORDANCE
WITH THE BENEFICIARY | ||||||
| 24 | DESIGNATION UNDER THE INSURANCE POLICY OR ANNUITY
CONTRACT.
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| 25 | (e) Sales proceeds shall not be used to purchase life | ||||||
| 26 | insurance policies
or tax-deferred annuities unless the | ||||||
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| 1 | company issuing the life insurance
policies or tax-deferred | ||||||
| 2 | annuities is licensed with the Illinois Department of
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| 3 | Insurance, and the insurance producer or annuity seller is | ||||||
| 4 | licensed to do
business in the State of Illinois.
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| 5 | (Source: P.A. 92-419, eff. 1-1-02.)
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| 6 | Section 15. The Illinois Public Aid Code is amended by | ||||||
| 7 | changing Section 3-1.2 as follows:
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| 8 | (305 ILCS 5/3-1.2) (from Ch. 23, par. 3-1.2)
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| 9 | Sec. 3-1.2. Need. Income available to the person, when | ||||||
| 10 | added to
contributions in money, substance, or services from | ||||||
| 11 | other sources,
including contributions from legally | ||||||
| 12 | responsible relatives, must be
insufficient to equal the grant | ||||||
| 13 | amount established by Department regulation
for such person.
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| 14 | In determining earned income to be taken into account, | ||||||
| 15 | consideration
shall be given to any expenses reasonably | ||||||
| 16 | attributable to the earning of
such income. If federal law or | ||||||
| 17 | regulations permit or require exemption
of earned or other | ||||||
| 18 | income and resources, the Illinois Department shall
provide by | ||||||
| 19 | rule and regulation that the amount of income to be
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| 20 | disregarded be increased (1) to the maximum extent so required | ||||||
| 21 | and (2)
to the maximum extent permitted by federal law or | ||||||
| 22 | regulation in effect
as of the date this amendatory Act | ||||||
| 23 | becomes law. The Illinois Department
may also provide by rule | ||||||
| 24 | and regulation that the amount of resources to
be disregarded | ||||||
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| 1 | be increased to the maximum extent so permitted or required. | ||||||
| 2 | Subject to federal approval, resources (for example, land, | ||||||
| 3 | buildings, equipment, supplies, or tools), including farmland | ||||||
| 4 | property and personal property used in the income-producing | ||||||
| 5 | operations related to the farmland (for example, equipment and | ||||||
| 6 | supplies, motor vehicles, or tools), necessary for | ||||||
| 7 | self-support, up to $6,000 of the person's equity in the | ||||||
| 8 | income-producing property, provided that the property produces | ||||||
| 9 | a net annual income of at least 6% of the excluded equity value | ||||||
| 10 | of the property, are exempt. Equity value in excess of $6,000 | ||||||
| 11 | shall not be excluded. If the activity produces income that is | ||||||
| 12 | less than 6% of the exempt equity due to reasons beyond the | ||||||
| 13 | person's control (for example, the person's illness or crop | ||||||
| 14 | failure) and there is a reasonable expectation that the | ||||||
| 15 | property will again produce income equal to or greater than 6% | ||||||
| 16 | of the equity value (for example, a medical prognosis that the | ||||||
| 17 | person is expected to respond to treatment or that | ||||||
| 18 | drought-resistant corn will be planted), the equity value in | ||||||
| 19 | the property up to $6,000 is exempt. If the person owns more | ||||||
| 20 | than one piece of property and each produces income, each | ||||||
| 21 | piece of property shall be looked at to determine whether the | ||||||
| 22 | 6% rule is met, and then the amounts of the person's equity in | ||||||
| 23 | all of those properties shall be totaled to determine whether | ||||||
| 24 | the total equity is $6,000 or less. The total equity value of | ||||||
| 25 | all properties that is exempt shall be limited to $6,000.
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| 26 | In determining the resources of an individual or any | ||||||
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| 1 | dependents, the
Department shall exclude from consideration | ||||||
| 2 | the value of funeral and burial
spaces, funeral and
burial | ||||||
| 3 | insurance the proceeds of which can only be used to pay the | ||||||
| 4 | funeral
and burial expenses of the insured and funds | ||||||
| 5 | specifically set aside for the
funeral and burial arrangements | ||||||
| 6 | of the individual or his or her dependents,
including prepaid | ||||||
| 7 | funeral and burial plans, to the same extent that such
items | ||||||
| 8 | are excluded from consideration under the federal Supplemental
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| 9 | Security Income program (SSI). At any time after submitting an | ||||||
| 10 | application for medical assistance and before a final | ||||||
| 11 | determination of eligibility has been made by the Department, | ||||||
| 12 | an applicant may use available resources to purchase one of | ||||||
| 13 | the prepaid funeral or burial contracts exempted under this | ||||||
| 14 | Section. | ||||||
| 15 | Prepaid funeral or burial contracts are exempt to the | ||||||
| 16 | following extent:
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| 17 | (1) Funds in a revocable prepaid funeral or burial | ||||||
| 18 | contract are exempt up to $1,500, except that any portion | ||||||
| 19 | of a contract that clearly represents the purchase of | ||||||
| 20 | burial space, as that term is defined for purposes of the | ||||||
| 21 | Supplemental Security Income program, is exempt regardless | ||||||
| 22 | of value. | ||||||
| 23 | (2) Funds in an irrevocable prepaid funeral or burial | ||||||
| 24 | contract are exempt up to $5,874, except that any portion | ||||||
| 25 | of a contract that clearly represents the purchase of | ||||||
| 26 | burial space, as that term is defined for purposes of the | ||||||
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| 1 | Supplemental Security Income program, is exempt regardless | ||||||
| 2 | of value. This amount shall be adjusted annually for any | ||||||
| 3 | increase in the Consumer Price Index. The amount exempted | ||||||
| 4 | shall be limited to the price of the funeral goods and | ||||||
| 5 | services to be provided upon death. The contract must | ||||||
| 6 | provide a complete description of the funeral goods and | ||||||
| 7 | services to be provided and the price thereof. Any amount | ||||||
| 8 | in the contract not so specified shall be treated as a | ||||||
| 9 | transfer of assets for less than fair market value. | ||||||
| 10 | (3) A prepaid, guaranteed-price funeral or burial | ||||||
| 11 | contract, funded by an irrevocable assignment of a | ||||||
| 12 | person's life insurance policy to a trust, is exempt. The | ||||||
| 13 | amount exempted shall be limited to the amount of the | ||||||
| 14 | insurance benefit designated for the cost of the funeral | ||||||
| 15 | goods and services to be provided upon the person's death. | ||||||
| 16 | The contract must provide a complete description of the | ||||||
| 17 | funeral goods and services to be provided and the price | ||||||
| 18 | thereof. Any amount in the contract not so specified shall | ||||||
| 19 | be treated as a transfer of assets for less than fair | ||||||
| 20 | market value. The trust must include a statement that, | ||||||
| 21 | upon the death of the person, the State will receive all | ||||||
| 22 | amounts remaining in the trust, including any remaining | ||||||
| 23 | payable proceeds under the insurance policy up to an | ||||||
| 24 | amount equal to the total medical assistance paid on | ||||||
| 25 | behalf of the person. The trust is responsible for | ||||||
| 26 | ensuring that the provider of funeral services under the | ||||||
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| 1 | contract receives the proceeds of the policy when it | ||||||
| 2 | provides the funeral goods and services specified under | ||||||
| 3 | the contract. The irrevocable assignment of ownership of | ||||||
| 4 | the insurance policy must be acknowledged by the insurance | ||||||
| 5 | company. | ||||||
| 6 | Notwithstanding any other provision of this Code to the | ||||||
| 7 | contrary, an irrevocable trust containing the resources of a | ||||||
| 8 | person who is determined to have a disability shall be | ||||||
| 9 | considered exempt from consideration. A pooled trust must be | ||||||
| 10 | established and managed by a non-profit association that pools | ||||||
| 11 | funds but maintains a separate account for each beneficiary. | ||||||
| 12 | The trust may be established by the person, a parent, | ||||||
| 13 | grandparent, legal guardian, or court. It must be established | ||||||
| 14 | for the sole benefit of the person and language contained in | ||||||
| 15 | the trust shall stipulate that any amount remaining in the | ||||||
| 16 | trust (up to the amount expended by the Department on medical | ||||||
| 17 | assistance) that is not retained by the trust for reasonable | ||||||
| 18 | administrative costs related to wrapping up the affairs of the | ||||||
| 19 | subaccount shall be paid to the Department upon the death of | ||||||
| 20 | the person. After a person reaches age 65, any funding by or on | ||||||
| 21 | behalf of the person to the trust shall be treated as a | ||||||
| 22 | transfer of assets for less than fair market value unless the | ||||||
| 23 | person is a ward of a county public guardian or the State | ||||||
| 24 | Guardian pursuant to Section 13-5 of the Probate Act of 1975 or | ||||||
| 25 | Section 30 of the Guardianship and Advocacy Act and lives in | ||||||
| 26 | the community, or the person is a ward of a county public | ||||||
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| 1 | guardian or the State Guardian pursuant to Section 13-5 of the | ||||||
| 2 | Probate Act of 1975 or Section 30 of the Guardianship and | ||||||
| 3 | Advocacy Act and a court has found that any expenditures from | ||||||
| 4 | the trust will maintain or enhance the person's quality of | ||||||
| 5 | life. If the trust contains proceeds from a personal injury | ||||||
| 6 | settlement, any Department charge must be satisfied in order | ||||||
| 7 | for the transfer to the trust to be treated as a transfer for | ||||||
| 8 | fair market value. | ||||||
| 9 | The homestead shall be exempt from consideration except to | ||||||
| 10 | the extent
that it meets the income and shelter needs of the | ||||||
| 11 | person. "Homestead"
means the dwelling house and contiguous | ||||||
| 12 | real estate owned and occupied
by the person, regardless of | ||||||
| 13 | its value. Subject to federal approval, a person shall not be | ||||||
| 14 | eligible for long-term care services, however, if the person's | ||||||
| 15 | equity interest in his or her homestead exceeds the minimum | ||||||
| 16 | home equity as allowed and increased annually under federal | ||||||
| 17 | law. Subject to federal approval, on and after the effective | ||||||
| 18 | date of this amendatory Act of the 97th General Assembly, | ||||||
| 19 | homestead property transferred to a trust shall no longer be | ||||||
| 20 | considered homestead property.
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| 21 | Occasional or irregular gifts in cash, goods or services | ||||||
| 22 | from persons
who are not legally responsible relatives which | ||||||
| 23 | are of nominal value or
which do not have significant effect in | ||||||
| 24 | meeting essential requirements
shall be disregarded. The | ||||||
| 25 | eligibility of any applicant for or recipient
of public aid | ||||||
| 26 | under this Article is not affected by the payment of any
grant | ||||||
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| 1 | under the "Senior Citizens and Disabled Persons Property Tax
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| 2 | Relief Act" or any distributions or items of
income described | ||||||
| 3 | under subparagraph (X) of paragraph (2) of subsection (a) of
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| 4 | Section 203 of the Illinois Income Tax Act.
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| 5 | The Illinois Department may, after appropriate | ||||||
| 6 | investigation, establish
and implement a consolidated standard | ||||||
| 7 | to determine need and eligibility
for and amount of benefits | ||||||
| 8 | under this Article or a uniform cash supplement
to the federal | ||||||
| 9 | Supplemental Security Income program for all or any part
of | ||||||
| 10 | the then current recipients under this Article; provided, | ||||||
| 11 | however, that
the establishment or implementation of such a | ||||||
| 12 | standard or supplement shall
not result in reductions in | ||||||
| 13 | benefits under this Article for the then current
recipients of | ||||||
| 14 | such benefits.
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| 15 | (Source: P.A. 97-689, eff. 6-14-12; 98-104, eff. 7-22-13.)
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