Illinois Administrative Code › Title 50 - INSURANCE › Part 2004 - ACCIDENT AND HEALTH RESERVES › Section 2004.20 - Active Life Reserves - Individual Policies

Current through Register Vol. 48, No. 28, July 12, 2024
a) General Provisions
Active life reserves are required for all in force policies and
				are in addition to any reserves required in connection with claims. For policy
				types in subsections (b)(1)-(3) of this Section, the minimum reserve shall be
				determined as specified in this Part. It should be emphasized, however, that
				these are minimum standards and higher, adequate reserves shall be established
				by the company in any case in which experience indicates that these minimum
				standards do not place a sound value on the liabilities under the policy. For
				policy types in subsection (b)(4) of this Section, the minimum reserve shall be
				the gross pro rata unearned premium.
b) Types of individual accident and health
			 insurance policies
1) Policies that are
			 noncancellable or noncancellable and guaranteed renewable for life or to a
			 specified age, such as 60 or 65.
2)
			 Policies that are guaranteed renewable for life or to a specified age, such as
			 60 or 65, but under which the company reserves the right to change the scale of
			 premiums.
3) Policies in which the
			 company has reserved the right to cancel or refuse renewal for one or more
			 reasons, but has agreed implicitly or explicitly that, prior to a specified
			 time or age, it will not cancel or decline renewal solely because of
			 deterioration of health after issue; however, policies shall not be considered
			 of this type if the company has reserved the right to refuse renewal provided
			 the right is to be exercised at the same time for all policies in the same
			 category, unless premiums are based on the level premium principle.
4) All other individual policies.
5) Notices:
A) This subsection (b) does not classify
			 "franchise" as a type of policy. Such policies are frequently written under an
			 agreement limiting the company's right to cancel or refuse renewal. Usually the
			 right is reserved to refuse renewal of all policies in the group or other
			 categories such as those ceasing to be members of the association, and this
			 would place those policies, in subsection (b)(4) of this Section in accordance
			 with the last clause under subsection (b)(3) of this Section. However, if
			 premiums are based on the level premium principle or if the renewal privilege
			 granted to the individual insured meets the requirements for policies in
			 subsections (b)(1)-(3) of this Section, the franchise policy shall be so
			 classified for reserve purposes.
B)
			 "Family group accident and health insurance policies", as defined in Section
			 367(4) of the Code [215 ILCS
			 5/367(4) ], should have active life
			 reserves determined under this Section.
C) A policy may have guarantees qualifying it
			 as a policy listed in subsections (b)(1)-(3) of this Section until a specified
			 age or duration, after which the guarantees, or lack of guarantees, may qualify
			 it as a policy such as listed in subsections (b)(1)-(4) of this Section. In
			 such case, the policy in each period shall be considered for reserve purposes
			 according to the type to which it then belongs.
D) Where all of the benefits of a policy, as
			 provided by rider or otherwise, are not of the same type as listed in this
			 subsection (b), each benefit shall be considered for reserve purposes according
			 to the type to which it belongs.