Bill Text: IL SB3721 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the Illinois Insurance Code. Provides that a policy of group life insurance shall contain, if 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 specified conditions are met. Makes other changes.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2021-01-13 - Session Sine Die [SB3721 Detail]

Download: Illinois-2019-SB3721-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 SB3721 Introduced 2/14/2020, by Sen. Dave Syverson SYNOPSIS AS INTRODUCED:
215 ILCS 5/231.1 from Ch. 73, par. 843.1
Amends the Illinois Insurance Code. Provides that a policy of group life insurance shall contain, if 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 specified conditions are met. Makes other changes.
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A BILL FOR
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AN ACT concerning regulation.
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 Section 231.1 as follows:
(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

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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

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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

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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:
(1) the individual policy may, at the option of such
person, be on any one of the forms then customarily issued

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by the insurer at the age and for the amount applied for,
except that the group policy may exclude the option to
elect term insurance;
(2) the individual policy shall be in an amount equal
to, unless such person chooses to elect a lesser amount,
the amount of life insurance which ceases because of such
termination, less the amount of any life insurance for
which such person becomes eligible under the same or any
other group policy within 31 days after such termination,
provided that any amount of insurance which shall have
matured on or before the date of such termination as an
endowment payable to the person insured, whether in one sum
or in installments or in the form of an annuity, shall not,
for the purposes of this provision, be included in the
amount which is considered to cease because of such
termination; and
(3) the premium on the individual policy shall be at
the insurer's then customary rate applicable to the form
and amount of the individual policy, to the class of risk
to which such person then belongs, and to such person's age
attained on the effective date of the individual policy.
(4) If any individual insured under a group life
insurance policy becomes entitled under the terms of such
policy to have an individual policy of life insurance
issued and if such individual is not given notice of the
existence of such right at least 15 days prior to the

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expiration date of such period, then in such event the
individual shall have an additional period within which to
exercise such right, but nothing herein contained shall be
construed to continue any insurance beyond the period
provided in such policy. This additional period shall
expire 15 days next after the individual is given such
notice but in no event shall such additional period extend
beyond 60 days next after the expiration date of the period
provided in such policy. Written notice presented to the
individual or mailed by the policyholder to the last known
address of the individual or mailed by the insurer to the
last known address of the individual as furnished by the
policyholder shall constitute notice for the purpose of
this Section.
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

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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

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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) 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

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the new policy if the following conditions are met:
(1) the active employee was insured under the prior
carrier's group life insurance policy immediately prior to
the effective date of the policy;
(2) the active employee is not actively at work on the
effective date of the new policy;
(3) the active employee is a member of an eligible
class under the policy; and
(4) the active employee is not receiving or eligible to
receive benefits under the prior carrier's group life
insurance policy.
(O) (N) 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. 83-1465.)