[ Search ] [ Legislation ] [ Bill Summary ]
[ Home ] [ Back ] [ Bottom ]
90_SB0192
215 ILCS 5/531.03 from Ch. 73, par. 1065.80-3
Amends the Illinois Life and Health Insurance Association
Guaranty Law Article of the Illinois Insurance Code. Extends
coverage to certain unallocated annuity contracts issued
before January 1, 1990. Applies retroactively. Effective
immediately.
LRB9001979JSmg
LRB9001979JSmg
1 AN ACT to amend the Illinois Insurance Code by changing
2 Section 531.03.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Insurance Code is amended by
6 changing Section 531.03 as follows:
7 (215 ILCS 5/531.03) (from Ch. 73, par. 1065.80-3)
8 Sec. 531.03. Coverage and limitations.
9 (1) This Article shall provide coverage for the policies
10 and contracts specified in paragraph (2) of this Section:
11 (a) to persons who, regardless of where they reside
12 (except for non-resident certificate holders under group
13 policies or contracts), are the beneficiaries, assignees
14 or payees of the persons covered under subparagraph
15 (1)(b), and
16 (b) to persons who are owners of or certificate
17 holders under such policies or contracts; or, in the case
18 of unallocated annuity contracts, to the persons who are
19 the contract holders, and who
20 (i) are residents of this State, or
21 (ii) are not residents, but only under all of
22 the following conditions:
23 (A) the insurers which issued such
24 policies or contracts are domiciled in this
25 State;
26 (B) such insurers never held a license or
27 certificate of authority in the states in which
28 such persons reside;
29 (C) such states have associations similar
30 to the association created by this Act; and
31 (D) such persons are not eligible for
-2- LRB9001979JSmg
1 coverage by such associations.
2 (2)(a) This Article shall provide coverage to the
3 persons specified in paragraph (l) of this Section for
4 direct, (i) nongroup life, health, annuity and supplemental
5 policies, or contracts, (ii) for certificates under direct
6 group policies or contracts, (iii) for unallocated annuity
7 contracts and (iv) for contracts to furnish health care
8 services and subscription certificates for medical or health
9 care services issued by persons licensed to transact
10 insurance business in this State under the Illinois Insurance
11 Code. Annuity contracts and certificates under group annuity
12 contracts include but are not limited to guaranteed
13 investment contracts, deposit administration contracts,
14 unallocated funding agreements, allocated funding agreements,
15 structured settlement agreements, lottery contracts and any
16 immediate or deferred annuity contracts.
17 (b) This Article shall not provide coverage for:
18 (i) that portion or part of such policies or
19 contracts under which the risk is borne by the
20 policyholder; provided however, that nothing in this
21 subparagraph (i) shall make this Article inapplicable to
22 assessment life and accident and health insurance
23 policies or contracts; or
24 (ii) any such policy or contract or part thereof
25 assumed by the impaired or insolvent insurer under a
26 contract of reinsurance, other than reinsurance for which
27 assumption certificates have been issued; or
28 (iii) any portion of a policy or contract to the
29 extent such portion represents an accrued value that the
30 rate of interest on which it is accrued
31 (A) averaged over the period of four years
32 prior to the date on which the Association becomes
33 obligated with respect to such policy or contract,
34 exceeds a rate of interest determined by subtracting
-3- LRB9001979JSmg
1 two percentage points from Moody's Corporate Bond
2 Yield Average averaged for that same four year
3 period or for such lesser period if the policy or
4 contract was issued less than four years before the
5 Association became obligated; and
6 (B) on and after the date on which the
7 Association becomes obligated with respect to such
8 policy or contract, exceeds the rate of interest
9 determined by subtracting three percentage points
10 from Moody's Corporate Bond Yield Average as most
11 recently available;
12 (iv) any unallocated annuity contract issued to an
13 employee benefit plan protected under the federal Pension
14 Benefit Guaranty Corporation unless the unallocated
15 annuity contract was issued before January 1, 1990 to
16 replace or consolidate individual annuity contracts that
17 were validly issued before January 1, 1990; and
18 (v) any portion of any unallocated annuity contract
19 which is not issued to or in connection with a specific
20 employee, union or association of natural persons benefit
21 plan or a government lottery.
22 (vi) any burial society organized under Article XIX
23 of this Act, any fraternal benefit society organized
24 under Article XVII of this Act, any mutual benefit
25 association organized under Article XVIII of this Act,
26 and any foreign fraternal benefit society licensed under
27 Article VI of this Act; or
28 (vii) any health maintenance organization
29 established pursuant to the Health Maintenance
30 Organization Act including any health maintenance
31 organization business of a member insurer; or
32 (viii) any health services plan corporation
33 established pursuant to the Voluntary Health Services
34 Plans Act; or
-4- LRB9001979JSmg
1 (ix) any vision service plan corporation
2 established pursuant to the Vision Service Plan Act; or
3 (x) any dental service plan corporation established
4 pursuant to the Dental Service Plan Act; or
5 (xi) any stop-loss insurance, as defined in clause
6 (b) of Class 1 or clause (a) of Class 2 of Section 4, and
7 further defined in subsection (d) of Section 352; or
8 (xii) that portion or part of a variable life
9 insurance or variable annuity contract not guaranteed by
10 an insurer.
11 The changes made by this amendatory Act of 1997 shall be
12 given retroactive effect and be applied to all affected
13 unallocated annuity contracts validly issued before January
14 1, 1990. This retroactive effect is declared to be a
15 necessary and appropriate measure to accomplish the remedial
16 purposes of the Illinois Life and Health Insurance Guaranty
17 Association Law; and that in the absence of the retroactive
18 application of the changes made by this amendatory Act of
19 1995, numerous Illinois residents will lose the protections
20 and benefits that they had a right to expect at the time the
21 covered annuity contract was issued.
22 (3) The benefits for which the Association may become
23 liable shall in no event exceed the lesser of:
24 (a) the contractual obligations for which the
25 insurer is liable or would have been liable if it were
26 not an impaired or insolvent insurer, or
27 (b)(i) with respect to any one life, regardless of
28 the number of policies or contracts:
29 (A) $300,000 in life insurance death benefits,
30 but not more than $100,000 in net cash surrender and
31 net cash withdrawal values for life insurance;
32 (B) $300,000 in health insurance benefits,
33 including any net cash surrender and net cash
34 withdrawal values;
-5- LRB9001979JSmg
1 (C) $100,000 in the present value of annuity
2 benefits, including net cash surrender and net cash
3 withdrawal values;
4 (ii) with respect to each individual participating
5 in a governmental retirement plan established under
6 Section 401, 403(b) or 457 of the U.S. Internal Revenue
7 Code covered by an unallocated annuity contract or the
8 beneficiaries of each such individual if deceased, in the
9 aggregate, $100,000 in present value annuity benefits,
10 including net cash surrender and net cash withdrawal
11 values; provided, however, that in no event shall the
12 Association be liable to expend more than $300,000 in the
13 aggregate with respect to any one individual under
14 subparagraph (1) and this subparagraph:
15 (iii) with respect to any one contract holder
16 covered by any unallocated annuity contract not included
17 in subparagraph (3)(b)(ii) of this Section above,
18 $5,000,000 in benefits, irrespective of the number of
19 such contracts held by that contract holder.
20 (Source: P.A. 88-364.)
21 Section 99. Effective date. This Act takes effect upon
22 becoming law.