215 ILCS 5/226
2021 Illinois Compiled Statutes|Chapter 215 - INSURANCE|215 ILCS 5/ - Illinois Insurance Code.|Article XIV - Legal Reserve Life Insurance

 (from Ch. 73, par. 838)Sec. 226.         Standard  provisions for annuities and pure endowment contracts.  (1) After the effective  date of this Section and any amendments thereto no annuity  or pure endowment  contract, except in case of reversionary annuities, survivorship annuities  or annuities contracted by an employer on behalf of his employees, shall be  issued or delivered in this State unless it contains in substance the  following provisions:(a) A provision that there shall be a period of grace, either of thirty  days or of one month, within which any stipulated payment to the company  falling due after the first year may be made, subject at the option of the  company, to an interest charge thereon at a rate to be specified in the  contract but not exceeding six per centum per annum for the number of days  of grace elapsing before such payment, during which period of grace, the  contract shall continue in full force; but in case a claim arises under the  contract on account of death during the said period of grace before the  overdue payment to the company or the deferred payments of the current  contract year, if any, are made, the amount of such payments, with interest  on any overdue payments, may be deducted from any amount payable under the  contract in settlement.(b) If statements, other than those relating to age and identity, are  required as a condition to issuing the contract, a provision that the  contract shall be incontestable after it has been in force during the  lifetime of the person or each of the persons as to whom such statements  are required, for a period of two years from its date of issue, except  where stipulated payments to the company have not been made and except for  violations of the conditions of the contract relating to military or naval  service in time of war 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 insurance specifically  against death by accident.(c) A provision that such a contract shall constitute the entire  contract between the parties, but if the company desires to make the  application a part of the contract it may do so, provided a copy of such  application shall be endorsed upon or attached to such contract when  issued, and in such case such contract shall contain a provision that it,  together with the application therefor, shall constitute the entire  contract between the parties.(d) A provision that if the age or ages of the person or persons upon  whose life or lives the contract is based, or any of them, have been  misstated, the amount payable under the contract shall be such as the  stipulated payments to the company would have purchased at the correct age  or ages.(e) If the contract is participating, a provision that the divisible  surplus shall be apportioned annually and dividends shall be payable in  cash or shall be applicable to any stipulated payment or payments to the  company under the contract.(f) A provision that after the contract has been in force for three  years, if it shall, by its terms, lapse because any stipulated payment to  the company shall not have been made, the reserve on such contract,  exclusive of the reserve on account of total and permanent disability and  additional accidental death benefits, computed according to the standard  adopted by the company and in accordance with section 223, shall after  deducting not more than one-fifth of the said entire reserve and any  indebtedness to the company under the contract, be applied as a net single  payment according to said standard, for the purchase of a paid-up annuity  or a pure endowment contract, which may be nonparticipating and which  shall be payable by the company under the same terms and conditions as the  original contract, except as to amount.(g) A provision that the contract may be reinstated at any time within  one year from the date of default in making stipulated payments to the company,  but all overdue stipulated payments and any indebtedness to the company  on the contract shall be paid or reinstated, with interest thereon at a  rate to be specified in the contract but not exceeding six per centum per  annum payable annually, and in cases where applicable, a company may also  include a requirement of evidence of insurability satisfactory to the company.(h) A provision, or a notice attached to the contract, to the effect  that during a period of 10 days from the date the contract is delivered  to the contract-owner  it may be surrendered to the insurer together with a written request for  cancellation of the contract, and that in such event, with the exception  of a variable annuity contract, the insurer will refund any premium paid  for the contract, including any contract fees or other charges.  Cancellation  under a variable annuity contract shall entitle a person to an amount equal  to the sum of (i) the difference between the premiums paid including any  contract fees or other services and the amounts allocated to any separate  accounts under the contract and (ii) the cash value of the contract or,  if the contract does not have a cash value, the reserve for the contract,  on the date the return contract is received by the insurer or its agent. The Director  may by rule exempt specific types of contracts from this paragraph.(2) Any overpayment by the company on account of misstatement of age,  shall be charged against the current or next succeeding payment or payments  to be made by the company under the contract, with interest thereon at a  rate to be specified in the contract but not exceeding six per centum per annum.(3) A company may provide, in lieu of the paid-up values provided in  clause (f) of subsection (1), for a paid-up annuity or pure endowment  contract in an amount bearing the same proportion to the original annuity  or pure endowment contract as the number of stipulated payments which shall  have been made to the company shall bear to the total number of stipulated  payments required to be made to the company under contract, and if there be  any indebtedness to the company under the contract the amount of such  paid-up annuity or pure endowment shall be reduced by an amount bearing the  same proportion to such paid-up annuity or pure endowment as such  indebtedness bears to the cash value on such paid-up annuity or pure  endowment, computed according to the standard adopted by the company in  accordance with section 223.    (Source: P.A. 82-594.)