225 ILCS 45/2b — Illinois Code / Chapter 225 / Act 45 / Section 2b
Section 2b
Status: in_force

(225 ILCS 45/2b) Sec. 2b. Irrevocable designation of beneficiary of existing life insurance. (a) In accordance with Section 245.3 of the Illinois Insurance Code, an insured or any other person who may be the owner of rights under an existing policy of life insurance may make an irrevocable assignment of all or a part of his or her rights under the policy to a provider in consideration for signing a guaranteed pre-need contract for the purpose of obtaining favorable consideration for Medicaid, Supplemental Security Income, or another public assistance program. The form that shall effectuate the irrevocable assignment and thereby provide for the irrevocable designation of beneficiary of one or more life insurance policies, which shall comply with all applicable federal laws and regulations, shall be prepared by the Department of Healthcare and Family Services under paragraph (4) of subsection (c) of Section 3-1.2 of the Illinois Public Aid Code or such form, approved in advance by the Department of Healthcare and Family Services, that has been prepared by an insurance company licensed to operate in the State of Illinois. The insured or any other person who may be the owner of rights under an existing policy of life insurance shall sign a guaranteed pre-need contract with the provider that describes the cost of the funeral goods and services to be provided upon the person's death, up to $7,248, except that any portion of a contract that clearly represents the purchase of burial space, as that term is defined for purposes of the Supplemental Security Income program, is exempt regardless of value. This amount shall be adjusted annually by the Department of Human Services for any increase in the Consumer Price Index. The guaranteed pre-need contract must provide a complete description and cost of the goods and services and any cash advances. More than one policy may be subject to this Section if the total face value of the policies is necessary to pay the amount described in the guaranteed pre-need contract with the provider. All policies shall be listed on the form. The insured or any other person who may be the owner of rights under an existing policy of life insurance shall be given a copy of the executed form. The licensee shall retain copies for inspection by the Comptroller and shall report annually to the Comptroller the following: the name of the insured, the insurance policy number, the amount of the guaranteed pre-need contract, the current value of the policy or benefits designated, and the name of the insurance company issuing the policy. (b) The insured or any other person who may be the owner of rights under an existing policy of life insurance shall acknowledge that by making this assignment irrevocable, the policy cannot be canceled, although it does not affect the right of the policy owner to cancel the insurance policy within the examination period provided under the policy. (c) No commission may be sought or received in connection with any cash advance allowance included in the guaranteed pre-need contract. (d) For guaranteed pre-need contracts with cash advances, the contract shall include a disclosure, in 12 point bold type and located immediately above such cash advance allowance, that states: "No interment, inurnment, or entombment right has been selected or reserved with this allowance; cash advances are merely an allowance toward the then-current costs for the involved items, to be purchased after death. Burial space allowances may only be excluded from resources under Medicaid if a separate contract is executed for such burial space with a cemetery." (e) Upon the death of the insured, the proceeds of the life insurance policies subject to this Section shall be paid to the provider, who shall apply such proceeds in the following order or priority: (1) first, to the provider in an amount equal to the lesser of: (A) the amount of the guaranteed pre-need contract for payment of all services,