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Public Act 92-0139
HB2554 Enrolled LRB9202146JSpc
AN ACT concerning payment of insurance claims.
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 357.9a 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
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 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 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 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 of
due proof of death 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% 6% 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.
(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 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. 83-598.)
(215 ILCS 5/357.9a) (from Ch. 73, par. 969.9a)
Sec. 357.9a. Delay in payment of claims. Periodic
payments of accrued indemnities for loss-of-time coverage
under accident and health policies shall commence not later
than 30 days after the receipt by the company of the required
written proofs of loss. An insurer which violates this
Section if liable under said policy, shall pay to the
insured, in addition to any other penalty provided for in
this Code, interest at the rate of 9% 8 per cent per annum
from the 30th day after receipt of such proofs of loss to the
date of late payment of the accrued indemnities, provided
that interest amounting to less than one dollar need not be
paid.
(Source: P.A. 79-792.)
Section 99. Effective date. This Act takes effect upon
becoming law.
Passed in the General Assembly May 03, 2001.
Approved July 24, 2001.
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