95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB2237

 

Introduced 2/14/2008, by Sen. John J. Cullerton

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Insurable Interests Act. Provides that any individual of lawful age may take out an insurance contract upon himself for the benefit of any person. Provides that no person shall knowingly procure or cause to be procured any insurance contract upon another individual unless the benefits under the contract are payable to (i) the insured or his personal representative; or (ii) a person having an insurable interest in the insured at the time when the contract was made. With respect to trusts, the Act applies to trusts existing before, on, or after the Act's effective date. Contains other provisions. Effective immediately.


LRB095 18367 KBJ 44453 b

 

 

A BILL FOR

 

SB2237 LRB095 18367 KBJ 44453 b

1     AN ACT concerning regulation.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 1. Short title. This Act may be cited as the
5 Insurable Interests Act.
 
6     Section 5. Insurable interest. Any individual of lawful age
7 may take out an insurance contract upon himself for the benefit
8 of any person. No person shall knowingly procure or cause to be
9 procured any insurance contract upon another individual unless
10 the benefits under the contract are payable to (i) the insured
11 or his personal representative; or (ii) a person having an
12 insurable interest in the insured at the time the contract was
13 made.
 
14     Section 10. Definitions. In this Act:
15     "Insurable interest" means:
16         (a) in the case of individuals related closely by blood
17     or by law, or who would be, but for the individuals being
18     of the same gender and a marriage between them not then
19     recognized by this State, a substantial interest
20     engendered by love and affection;
21         (b) in the case of other persons, a lawful and
22     substantial economic interest in the life, health, and

 

 

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1     bodily safety of the insured. "Insurable interest" shall
2     not include an interest that arises only upon the death,
3     disability, or injury of the insured;
4         (c) an employer providing life, health, disability,
5     retirement, or similar benefits to some or all of its
6     employees or the employees of its affiliates, or their
7     dependents or beneficiaries has an insurable interest in
8     the lives of all its employees or the employees of its
9     affiliates. The trustees of a trust established by an
10     employer substantially for the benefit of the employer, or
11     for the benefit of some or all of the employees in which
12     such employer has an insurable interest, or the dependents
13     or beneficiaries of such employees has the same insurable
14     interest in the life of such employees as does the
15     employer;
16         (d) in the case of a party to a contract or option for
17     the purchase or sale, including a redemption of an interest
18     in a business proprietorship, partnership, or firm or of
19     shares of stock of a corporation or of an interest in such
20     shares, the lawful and substantial economic interest
21     required in subsection (b) of this Section shall be deemed
22     to exist in each individual party to such contract or
23     option and for the purpose of such contract or option only,
24     in addition to any insurable interest that may otherwise
25     exist as to the life of such individual;
26         (e) in the case of a trustee, the lawful and

 

 

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1     substantial economic interest required in subsection (b)
2     of this Section shall be deemed to exist in (i) the
3     individual insured who established the trust, (ii) each
4     individual in whose life the owner of the trust for federal
5     income tax purposes has an insurable interest, and (ii)
6     each individual in whose life a beneficiary of a trust has
7     an insurable interest;
8         (f) in the case of an organization described in
9     paragraph (3), (4), (5), (9), or (10) of subsection (c) of
10     Section 501 of the Internal Revenue Code, the lawful and
11     substantial economic interest required in subsection (b)
12     of this Section shall be deemed to exist where (i) the
13     insured or proposed insured has either assigned all or part
14     of his ownership rights in a policy of contract to such an
15     organization or has executed a written consent to the
16     issuance of a policy or contract to such organization and
17     (ii) such organization is named in the policy or contract
18     as owner or as beneficiary.
19     "Employee" includes any and all directors, officers,
20 partners, employees, and retired employees and it shall include
21 any other former employees, but only for the purpose of
22 replacing existing life insurance policies that will be
23 surrendered in exchange for new life insurance policies in an
24 amount not exceeding the insurance being surrendered, except
25 that the amount of new life insurance may exceed the insurance
26 being surrendered to the extent the application of the cash

 

 

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1 surrender value from the old insurance as a premium under the
2 new life insurance contract requires a larger amount of
3 insurance to qualify as life insurance, and not be treated as a
4 modified endowment contract for federal income tax purposes.
5     "Employer" includes corporations, limited liability
6 companies or partnerships, statutory trusts, business trusts,
7 and other business entities, including associations of
8 employers and their affiliates.
 
9     Section 15. Application. This Act shall apply to all trusts
10 existing before, on, or after its enactment, regardless of the
11 effective date of the governing instrument under which the
12 trust was created.
 
13     Section 99. Effective date. This Act takes effect upon
14 becoming law.