2023 Illinois Compiled Statutes › Chapter 215 - INSURANCE › 215 ILCS 5/ - Illinois Insurance Code. › Article IX 1/2 - Credit Life and Credit Accident and Health Insurance

(215 ILCS 5/Art. IX.5 heading)
ARTICLE IX 1/2.  
		CREDIT LIFE AND CREDIT ACCIDENT AND HEALTH INSURANCE
(215 ILCS 5/155.51) (from Ch. 73, par. 767.51)
Sec. 155.51. 
		
		Purpose and scope.)
(a) The purpose of this Article is to promote the public welfare by
regulating credit life insurance and credit accident and health insurance.
Nothing in this Article is intended to prohibit or discourage reasonable
competition.  The provisions of this Article are to be liberally construed.
(b) All life insurance and all accident and health insurance sold, or
otherwise made effective, in connection with loans or other credit transactions
of less than 10 years
duration is subject to this Article.  Such insurance sold in connection with
a loan or other credit transaction of 10 years duration or more is not
subject to this Article.
(Source: P.A. 79-930.)
(215 ILCS 5/155.52) (from Ch. 73, par. 767.52)
Sec. 155.52. Definitions.
For the purpose of this Article:
(a) "Credit life insurance" means insurance on the life of a debtor
pursuant to or in connection with a specific loan or other credit
transaction;
(b) "Credit Accident and health insurance" means insurance on a debtor
to provide indemnity for payments becoming due on a specific loan or other
credit transaction while the debtor is a person with a disability as defined in the policy;
(c) "Creditor" means the lender of money or vendor or lessor of goods,
services, property, rights or privileges, for which payment is arranged
through a credit transaction or any successor to the right, title or
interest of any such lender, vendor or lessor, and an affiliate, associate
or subsidiary of any of them or any director, officer or employee of any of
them or any other person in any way associated with any of them;
(d) "Debtor" means a borrower of money or a purchaser or lessee of
goods, services, property, rights or privileges for which payment is
arranged through a credit transaction;
(e) "Indebtedness" means the total amount payable by a debtor to a
creditor in connection with a loan or other credit transaction;
(f) "Director" means the Director of Insurance of the State of Illinois.
(Source: P.A. 99-143, eff. 7-27-15.)
(215 ILCS 5/155.53) (from Ch. 73, par. 767.53)
Sec. 155.53. 
		
		Forms of credit life insurance and credit accident and health
insurance.)
Credit life insurance and credit accident and health insurance shall be
issued only in the following forms:
(a) Individual policies of life insurance issued to debtors on the term
plan;
(b) Individual policies of accident and health insurance issued to
debtors on a term plan or disability benefit provisions in individual
policies of credit life insurance;
(c) Group policies of life insurance issued to creditors providing
insurance upon the lives of debtors on the term plan;
(d) Group policies of accident and health insurance issued to creditors
on a term plan insuring debtors or disability benefit provisions in group
credit life insurance policies to provide such coverage.
(Source: Laws 1959, p. 1140.)
(215 ILCS 5/155.54) (from Ch. 73, par. 767.54)
Sec. 155.54. 
		
		Amount of credit life insurance and credit accident and health
insurance.)  (a) Credit Life Insurance
The amount of credit life insurance shall not exceed the initial indebtedness.
Where an indebtedness is repayable in substantially equal installments,
the amount of insurance shall at no time exceed the scheduled or actual
amount of unpaid indebtedness, whichever is greater.
(b) Credit Accident and Health Insurance
The total amount of indemnity payable by credit accident and health insurance
in the event of disability, as defined in the policy, shall not exceed the
aggregate of the periodic scheduled unpaid installments of the indebtedness
and the amount of each periodic indemnity payment shall not exceed the original
indebtedness divided by the number of periodic installments.
(Source: P.A. 79-930.)
(215 ILCS 5/155.55) (from Ch. 73, par. 767.55)
Sec. 155.55. 
		Term  of credit life insurance and credit accident and health insurance.
The term of any credit life insurance or credit accident and health
insurance shall, subject to acceptance by the insurer, commence on the date
when the debtor becomes obligated to the creditor, or the date from which
interest or finance charges accrue, if later, except that, where a group
policy provides coverage with respect to existing obligations, the
insurance on a debtor with respect to such indebtedness shall commence on
the effective date of the policy. Where evidence of insurability is
required and such evidence is furnished more than 30 days after the date
when the debtor becomes obligated to the creditor, the term of the
insurance may commence on the date on which the insurer determines the
evidence to be satisfactory, and in such event there shall be an
appropriate refund or adjustment of any charge to the debtor for insurance.
The term of such insurance shall not extend more than 15 days beyond the
scheduled maturity date of the indebtedness except when extended without
additional cost to the debtor. If the indebtedness is discharged due to
renewal or refinancing prior to the scheduled maturity date, the insurance
in force shall be terminated before any new insurance may be issued in
connection with the renewed or refinanced indebtedness. In all cases of
termination prior to scheduled maturity, a refund shall be paid or credited
as provided in Section 155.58.
(Source: Laws 1959, p. 1140.)
(215 ILCS 5/155.56) (from Ch. 73, par. 767.56)
Sec. 155.56. 
		Provisions of policies and certificates of insurance; disclosure to debtors. 
		(a) All credit life insurance and credit accident and health insurance
sold shall be evidenced by an individual policy, or in the case of group
insurance by a certificate of insurance, which individual policy or group
certificate of insurance shall be delivered to the debtor.
(b) Each individual policy or group certificate of credit life
insurance, and/or credit accident and health insurance shall, in addition
to other requirements of law, set forth, the name and home office address
of the insurer, and the identity by name or otherwise of the person or
persons insured, the rate or amount of payment, if any, by the debtor
separately for credit life insurance and credit accident and health
insurance, a description of the amount, term and coverage including any
exceptions, limitations or restrictions, and shall state that the benefits
shall be paid to the creditor to reduce or extinguish the unpaid
indebtedness and, wherever the amount of insurance may exceed the unpaid
indebtedness, that any such excess shall be payable to a beneficiary, other
than the creditor, named by the debtor or to his estate.
(c) Said individual policy or group certificate of insurance shall be
delivered to the insured debtor at the time the indebtedness is incurred
except as hereinafter provided.
(d) If said individual policy or group certificate of insurance is not
delivered to the debtor at the time the indebtedness is incurred, a copy of
the application for such policy or a notice of proposed insurance, signed
by the debtor and setting forth the name and home office address of the
insurer, the identity by name or otherwise of the person or persons
insured, the rate or amount of payment by the debtor, if any, separately
for credit life insurance and credit accident and health insurance, a
description of the amount, term and coverage provided, shall be delivered
to the debtor at the time such indebtedness is incurred. The copy of the
application for, or notice of proposed insurance shall refer exclusively to
insurance coverage, and shall be separate and apart from the loan, sale or
other credit statement of account, instrument or agreement, unless the
information required by this subsection is prominently set forth therein.
Upon acceptance of the insurance by the insurer and within 30 days of the
date upon which the indebtedness is incurred, the insurer shall cause the
individual policy or group certificate of insurance to be delivered to the
debtor. Said application or notice of proposed insurance shall state that
upon acceptance by the insurer, the insurance shall become effective as
provided in Section 155.55.
(Source: Laws 1959, p. 1140.)
(215 ILCS 5/155.57) (from Ch. 73, par. 767.57)
Sec. 155.57. Filing, approval, and withdrawal of forms.
(a) All policies,
certificates of insurance, notices of proposed insurance, applications for
insurance, endorsements, and riders delivered or issued for delivery in this
State and the schedules of premium rates pertaining thereto shall be filed
with the Director.
(b) The Director shall within a reasonable time after the filing of any
such policies, certificates of insurance, notices of proposed insurance,
applications for insurance, endorsements, and riders, disapprove any such
form if the benefits provided therein are not reasonable in relation to
the premium charge, or if it contains provisions which are unjust, unfair,
inequitable, misleading, deceptive, or encourage misrepresentation of the
coverage, or are contrary to any provision of this Code or of any
rule or regulation promulgated thereunder.
(c) If the Director notifies the insurer that the form is disapproved,
it is unlawful thereafter for such insurer to issue or use such form.  In
such notice, the Director shall specify the reason for his disapproval and
state that a hearing will be granted within 20 days after request in writing
by the insurer.  No such policy, certificate of insurance, notice of proposed
insurance, nor any application, endorsement of rider, shall be issued or
used until after it has been so filed and the Director has given his prior
written approval thereto.
(d) The Director may at any time, after giving not less than 20 days prior
written notice to the insurer, withdraw his approval of any such form on
any ground set forth in subsection (b) above.  The written notice of withdrawal
shall state the reason for the action.  The insurer may request a hearing
within 10 days after receipt of the notice of withdrawal by giving the Director
written notice of such request, together with a statement of its objections.
The Director must then conduct a hearing in accordance
with Sections 402 and 403.  The withdrawal shall be stayed pending the issuance
of the Director's orders following the hearing.
However, if it appears to the Director that the continued use of any such
policy, certificate of insurance, notice of proposed insurance, application
for insurance, endorsement, or rider by an insurer is hazardous to its policyholders
or the public, the Director may take such action as is prescribed by Section 401.1.
(e) It is not lawful for the insurer to issue such forms or use them after
the effective date of such withdrawal.
(f) If a group policy of credit life insurance or credit accident and
health insurance has been or is delivered in another state before or after October 1, 1975 (the effective date of Public Act 79-930), the insurer shall be
required to file only the group certificate and notice of proposed insurance
delivered or issued for delivery in this State as specified in subsections
(b) and (d) of Section 155.57 of this Article and such forms shall be approved
by the Director if they conform with the requirements so specified in said
subsections and if the schedules of premium rates applicable to the insurance
evidenced by such certificate or notice are not in excess of the insurer's
schedules of premium rates filed with the Director; provided, however, the
premium rate in effect on existing group policies may be continued until
the first policy anniversary date following October 1, 1975 (the effective date of Public Act 79-930).
(g) Any order or final determination of the Director under the provisions
of this Section shall be subject to judicial review.
(Source: P.A. 100-863, eff. 8-14-18.)
(215 ILCS 5/155.58) (from Ch. 73, par. 767.58)
Sec. 155.58. 
		Premiums and refunds.
(a) Each insurer issuing credit life insurance or credit accident and
health insurance shall file with the Director its schedules of premium
rates for use in connection with such insurance. Any insurer may revise
such schedules from time to time, and shall file such revised schedules
with the Director. No insurer shall issue any credit life insurance policy
or credit accident and health insurance policy for which the premium rate
exceeds that determined by the schedules of such insurer as then on file
with the Director. The Director may require the filing of the schedule of
premium rates for use in connection with and as a part of the specific
policy filings as provided by Section 155.57.
(b) Each individual policy, group certificate or notice of proposed
insurance shall provide that in the event of termination of the insurance
prior to the scheduled maturity date of the indebtedness, any refund of an
amount paid by the debtor for insurance shall be paid or credited promptly
to the person entitled thereto; provided, however, that the Director shall
prescribe a minimum refund and no refund which would be less than such
minimum need be made. The formula to be used in computing such refund shall
be filed with and approved by the Director.
(c) If a creditor requires a debtor to make any payment for credit life
insurance or credit accident and health insurance and an individual policy
or group certificate of insurance is not issued, the creditor shall
immediately give written notice to such debtor and shall promptly make an
appropriate credit to the account.
(d) The amount charged to a debtor for credit life or credit health and
accident insurance shall not exceed the premium charged by the insurer, as
computed at the time the charge to the debtor is determined.
(e) Nothing in this Article shall be construed to authorize any payments
for insurance now prohibited under any statute, or rule thereunder,
governing credit transactions.
(Source: Laws 1959, p. 1140.)
(215 ILCS 5/155.59) (from Ch. 73, par. 767.59)
Sec. 155.59. 
		Issuance of policies.
All policies of credit life insurance and credit accident and health
insurance shall be delivered or issued for delivery in this state only by
an insurer authorized to do an insurance business herein, and shall be
issued only through licensed agents or brokers.
(Source: Laws 1959, p. 1140.)
(215 ILCS 5/155.60) (from Ch. 73, par. 767.60)
Sec. 155.60. 
		Claims.
(a) All claims shall be promptly reported to the insurer or its
designated claim representative, and the insurer shall maintain adequate
claim files. All claims shall be settled as soon as possible and in
accordance with the terms of the insurance contract.
(b) All claims shall be paid either by draft drawn upon the insurer or
by check of the insurer to the order of the claimant to whom payment of the
claim is due pursuant to the policy provisions, or upon direction of such
claimant to one specified.
(c) No plan or arrangement shall be used whereby any person, firm or
corporation other than the insurer or its designated claim representative
shall be authorized to settle or adjust claims. The creditor shall not be
designated as claim representative for the insurer in adjusting claims;
provided, that a group policyholder may, by arrangement with the group
insurer, draw drafts or checks in payment of claims due to the group
policyholder subjects to audit and review by the insurer.
(Source: Laws 1959, p. 1140.)
(215 ILCS 5/155.61) (from Ch. 73, par. 767.61)
Sec. 155.61. 
		Existing insurance-Choice of insurer.
When credit life insurance or credit accident and health insurance is
required as additional security for any indebtedness, the debtor shall,
upon request to the creditor, have the option of furnishing the required
amount of insurance through existing policies of insurance owned or
controlled by him or of procuring and furnishing the required coverage
through any insurer authorized to transact an insurance business within
this state.
(Source: Laws 1959, p. 1140.)
(215 ILCS 5/155.62) (from Ch. 73, par. 767.62)
Sec. 155.62. 
		Enforcement.
The Director may, issue such rules and regulations as he deems
appropriate for the administration of this Article. Whenever the Director
finds that there has been a violation of this Article or any rules or
regulations issued pursuant thereto, and after written notice thereof and
hearing given to the insurer or other person authorized or licensed by the
Director, he shall set forth the details of his findings together with an
order for compliance by a specified date. Such order shall be binding on
the insurer and other person authorized or licensed by the Director on the
date specified unless sooner withdrawn by the Director or a stay thereof
has been ordered by a court of competent jurisdiction.
(Source: Laws 1959, p. 1140.)
(215 ILCS 5/155.63) (from Ch. 73, par. 767.63)
Sec. 155.63. 
		Judicial review.
Any party to the proceeding affected by an order of the Director shall
be entitled to judicial review by following the procedure set forth in
Section 407 of the Illinois Insurance Code.
(Source: Laws 1959, p. 1140.)
(215 ILCS 5/155.64) (from Ch. 73, par. 767.64)
Sec. 155.64. 
		Penalties.
In addition to any other penalty provided by law, any person who
violates an order of the Director after it has become final, and while such
order is in effect, shall, upon proof thereof to the satisfaction of the
court, forfeit and pay to the State of Illinois a sum not to exceed $250.00
which may be recovered in a civil action, except that if such violation is
found to be willful, the amount of such penalty shall be a sum not to
exceed $1,000.00. The Director in his discretion, may revoke or suspend the
license or certificate of authority of a person guilty of such violation.
Such order for suspension or revocation shall be upon notice and hearing,
and shall be subject to judicial review as provided in Section 155.63 of
this Article.
(Source: Laws 1959, p. 1140.)
(215 ILCS 5/155.65) (from Ch. 73, par. 767.65)
Sec. 155.65. 
		Separability provision.
If any provision of this Article, or the application of such provision
to any person or circumstances, shall be held invalid, the remainder of the
Article, and the application of such provision to any person or
circumstances other than those as to which it is held invalid, shall not be
affected thereby.
(Source: Laws 1959, p. 1140.)