Article XVI - Assessment Legal Reserve Life Companies
(215 ILCS 5/Art. XVI heading)
ARTICLE XVI.
ASSESSMENT LEGAL RESERVE LIFE COMPANIES
(215 ILCS 5/254) (from Ch. 73, par. 866)
Sec. 254. Scope of article.
(1) This article shall apply to
(a) all companies transacting or being organized to transact the kind or kinds of business described in Class 1 of section 4 upon an assessment legal reserve basis;
(b) companies organized or operating prior to the effective date of this Code, under an Act entitled "An Act to incorporate, regulate and control assessment life insurance companies," approved July 14, 1927; and
(c) assessment life insurance companies organized or operating prior to the effective date of this Code, under an Act entitled "An Act to incorporate companies doing the business of life or accident insurance on the assessment plan and to control such companies of this State and of other states doing business in this State, and to repeal a certain Act therein named and providing and fixing the punishment for violation of the provisions thereof," approved June 22, 1893.
(2) The provisions of this article shall not affect the rights and obligations of the companies specified in clauses (b) and (c) of subsection (1) or their members on any contracts heretofore made.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/255) (from Ch. 73, par. 867)
Sec. 255. Name.
The corporate name of any company organized under this article shall not be the same as, or deceptively similar to, the name of any domestic company or of any foreign or alien company authorized to transact business in this State.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/256) (from Ch. 73, par. 868)
Sec. 256. Principal office and place of business.
The principal office and place of business of any company organized under this article shall be located in this State.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/257) (from Ch. 73, par. 869)
Sec. 257. Authorized kinds of business.
Companies may be incorporated under this article for the purpose of transacting the kinds of business enumerated in clauses (a) and (b) of Class 1 of section 4 or the kinds specified in clause (a) of Class 1, but no company may be incorporated under this article for the sole purpose of transacting the kinds of business specified in clause (b) of such Class.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/258) (from Ch. 73, par. 870)
Sec. 258. Directors.
(1) After the date of incorporation as determined by section 264, and until the first meeting of the members the incorporators shall have the powers and perform the duties ordinarily possessed and exercised by a board of directors.
(2) Upon the issuance of a certificate of authority to a company organized under this article the corporate powers shall be exercised by, and its business and affairs shall be under the control of, a board of directors composed of, not less than three nor more than twenty‑one, natural persons who are at least twenty‑one years of age and at least three of whom are residents and citizens of this State. The first board of directors shall be elected at the first meeting of the members, and all directors shall be elected annually thereafter, except only as provided in subsection (3).
(3) The articles of incorporation may provide for the division of the board into classes as nearly equal in number as possible, and fix the term of office for each class, but no term shall be for more than three years.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/259) (from Ch. 73, par. 871)
Sec. 259. By‑laws.
(1) The incorporators shall adopt by‑laws for the company and such by‑laws may not be altered, amended or repealed prior to the issuance of a certificate of authority to the company, except with the approval of the Director.
(2) The by‑laws of a company organized under this article shall provide that each policyholder shall be a member of the company and shall be entitled to one or more votes in person or by proxy, based upon the amount of insurance in force or the number of policies held as may be stated in such by‑laws.
(3) After a certificate of authority is issued to a company organized under this article, the power to make, alter, amend or repeal by‑laws shall be vested in the board of directors unless reserved to the policyholders by the articles of incorporation.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/260) (from Ch. 73, par. 872)
Sec. 260. Articles of incorporation.
Any three or more natural persons, a majority of whom are residents of this State, who desire to form an assessment legal reserve life company shall sign and acknowledge before an officer authorized to take acknowledgments, articles of incorporation in duplicate. The articles shall set forth
(a) the corporate name;
(b) the location of its principal office;
(c) the addresses, including street and number, if any, of the incorporators;
(d) the period of duration which may be perpetual;
(e) whether it proposes to engage in the kinds of insurance business specified in clauses (a) and (b) of Class 1 of section 4 or only in the kind specified in clause (a) thereof;
(f) the number, terms of office and manner of electing the Directors; and
(g) such other provisions not inconsistent with law as may be deemed by the incorporators to be necessary or advisable.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/261) (from Ch. 73, par. 873)
Sec. 261. Documents to be delivered to the Director.
Upon the execution of the articles of incorporation there shall be delivered to the Director
(a) duplicate originals of the articles of incorporation;
(b) a copy of the by‑laws adopted by the incorporators;
(c) forms of applications for insurance;
(d) forms of insurance policies, literature and advertisements;
(e) forms for guarantee fund subscriptions and certificates, if any; and
(f) two organization bonds or the cash or securities, provided for in section 262.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/262) (from Ch. 73, par. 874)
Sec. 262. Organization bonds.
The incorporators shall deliver to the Director two bonds in the same penalties and containing the same provisions, so far as applicable, as the bonds required for the organization of a stock company by section 16, for the use and benefit of the State of Illinois, members, subscribers to the guaranty fund, if any, and creditors, or in lieu of delivering such bonds, the incorporators may deposit cash or securities of the same kind and amount and on the same terms and conditions, so far as applicable, as provided by said section.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/263) (from Ch. 73, par. 875)
Sec. 263. Publication of intention.
(1) Upon complying with the provisions of section 262, the incorporators shall cause to be published in a newspaper of general circulation in this State, in the county where the proposed principal office of the company is to be located, once each week for three consecutive weeks, a notice setting forth:
(a) their intent to form the company and the proposed name thereof;
(b) the address where its principal office shall be located.
(2) Proof of such publication made by a certificate of the publisher or his agent shall be delivered to the Director.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/264) (from Ch. 73, par. 876)
Sec. 264. Approval of documents.
The documents and papers so delivered to the Director may be approved or disapproved by the Director and the incorporators shall be entitled to a hearing in the same manner as provided in section 18 in the case of documents delivered for approval in connection with the organization of stock companies. If the documents and papers so delivered are approved by the Director, he shall thereupon place on file in his office by‑laws, forms of applications, policies, literature, advertisements, forms of guaranty subscriptions and certificates, if any, bonds or securities and one of the duplicate originals of the articles of incorporation and endorse upon the other duplicate original his approval thereof and the month, day and year of his approval and deliver it to the incorporators. The company shall be deemed to be fully established as a body corporate as of the date of the approval of the articles of incorporation by the Director, and said date shall be the date of incorporation of the company.
(Source: Laws 1959, p. 627.) |
(215 ILCS 5/265) (from Ch. 73, par. 877)
Sec. 265. Recording articles of incorporation. The duplicate original of the articles of incorporation returned by the Director shall be filed for record, within 15 days after it is delivered to the company, in the office of the recorder of the county where the principal office of the company is to be located.
(Source: P.A. 83‑358.) |
(215 ILCS 5/266) (from Ch. 73, par. 878)
Sec. 266. Authority to solicit applications and subscriptions.
Upon the approval of the articles of incorporation by the Director he shall issue to the company a permit, which shall expire at the end of one year from its date, authorizing it to solicit applications and advance premiums or deposits for insurance, and subscriptions to the guarantee fund, if any, and to do such other acts as may be necessary and proper in order to complete its organization and to entitle it to receive a certificate of authority to transact an insurance business.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/267) (from Ch. 73, par. 879)
Sec. 267. Subscription requirements ‑ Surplus.
(1) No assessment legal reserve life company shall receive a certificate of authority from the Director to transact an insurance business unless it has 250 bona fide applications from 250 persons for life insurance in the aggregate of at least $125,000 and shall have a surplus of at least $100,000.
(2) No such company shall be authorized to transact business of the kind specified in clause (b) of Class 1 of Section 4 until it:
(a) has qualified as prescribed in subsection (1) of |
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(b) obtains bona fide applications from at least 500 |
| persons for insurance of the kind specified in clause (b) of Class 1 of Section 4, for not less than $500 nor more than $1,000 of maximum liability each; | |
(c) collects one full annual premium in cash on each |
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(d) has a surplus, in addition to the requirement of |
| subsection (1), of at least $100,000. | |
(3) Every company subject to the provisions of this Article and organized on or after July 15, 1959, shall have and at all times maintain a minimum surplus in an amount equal to 2/3 of the original surplus required by subsections (1) and (2), provided, however, that any such company organized prior to July 15, 1959, shall have and at all times maintain a minimum surplus in an amount equal to that which would have been required immediately prior to July 15, 1959.
(4) All companies operating under this Article XVI and authorized to transact any of the types of business enumerated in clause (b) of Class 1 of Section 4, in addition to the minimum surplus required by paragraph (3) of this Section, shall have and at all times maintain an additional minimum surplus of not less than $250,000.
(5) The Director shall take action under Section 401.1 against any company which fails to maintain the additional minimum surplus required by this Section. "Minimum surplus" means the "surplus as regards policyholders", as it appears on the annual statement of an assessment company on the annual statement form prescribed by the National Association of Insurance Commissioners.
(Source: P.A. 91‑357, eff. 7‑29‑99.) |
(215 ILCS 5/268) (from Ch. 73, par. 880)
Sec. 268. Guarantee fund.
(1) Any domestic company subject to the provisions of this article may provide for a guarantee fund in the minimum sum of $10,000 and the maximum sum of $300,000, for the purpose of its business or to enable it to comply with any requirements of the law. Such guarantee fund and such interest thereon as may have been agreed upon, not exceeding 7% per annum, shall not be a liability or claim against the company or any of its assets except as herein provided and such interest shall be paid and such principal shall be retired only out of the earned surplus of the company. No part of such principal shall be retired unless the earned surplus derived from contracts permitted to be written by this Code is at least equal to the amount of such guarantee fund retired. No promotion or commission expense of any kind shall be paid or allowed in connection with the raising of such guarantee fund and the amount of such guarantee fund together with interest thereon and any portion thereof retired during the year shall be reported in each annual statement.
(2) Nothing in this section shall be construed to mean that a company may not borrow money; but the amount so borrowed with accrued interest thereon shall be carried by the company as a liability.
(Source: Laws 1959, p. 1147.) |
(215 ILCS 5/269) (from Ch. 73, par. 881)
Sec. 269. Issuance of certificate of authority.
If the Director shall have determined from such examination as he may deem necessary, or such evidence as he may require, that such company is duly qualified under the laws of this State to transact business of insurance therein he shall issue to such company a certificate of authority to transact the kind or kinds of business specified therein. No company shall transact any business of insurance in this State until it shall have received such certificate of authority as herein prescribed nor any business of insurance not specified in such certificate of authority.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/270) (from Ch. 73, par. 882)
Sec. 270. Voluntary surrender of the articles of incorporation.
At any time prior to the issuance of the certificate of authority to the company the articles of incorporation may be voluntarily surrendered and the company dissolved by a written agreement signed by a majority of the incorporators and filed with the Director. Such surrender and dissolution shall become effective only upon the approval thereof by the Director. The Director shall approve the surrender of such articles of incorporation if upon investigation he shall find that
(a) no insurance business has been transacted by the company under the articles of incorporation;
(b) all sums of money, if any, collected as advance premiums or upon subscriptions to the guarantee fund have been returned to the members or subscribers respectively; and
(c) all obligations of the company have been paid or discharged.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/271) (from Ch. 73, par. 883)
Sec. 271. Amendment of articles of incorporation. (1) Any domestic assessment legal reserve life insurance company may amend its articles of incorporation in any respect not in violation of law but may not amend its articles to insert any provision prohibited or to delete any provision required in original articles of incorporation for a similar domestic company organized under this Code except only as provided in section 280.
(2) The board of directors shall adopt the amendment by resolution and upon such adoption articles of amendment setting forth the articles of incorporation as amended shall be executed in duplicate by the company by its president or vice‑president and its secretary or assistant secretary or officers corresponding thereto and the corporate seal shall be thereto affixed. Such duplicate originals shall be delivered to the Director and may be approved or disapproved by the Director in the same manner as original articles of incorporation. If said articles of amendment be approved by the Director he shall place on file in his office one of the duplicate originals and shall endorse upon the other his approval thereof and the month, day and year of such approval and deliver it to the company. The amendment shall be effective as of the date of the approval thereof by the Director.
(3) The duplicate original of the articles of amendment returned by the Director shall be filed for record within fifteen days after it is delivered to the company in the office of the recorder of the county where the principal office of the company is located.
(Source: P.A. 83‑358.) |
(215 ILCS 5/272) (from Ch. 73, par. 884)
Sec. 272. Maximum Single Risk Reinsurance. (1) Until January 1, 1988, the maximum amount of insurance to be retained by any company governed by this Article on any one life shall not exceed $1,000 nor more than 0.1% of the total amount of insurance in force, whichever is the greater. On and after January 1, 1988, the maximum amount of insurance to be retained by any company governed by this Article on any one life shall not exceed $10,000 nor more than 0.2% of the total amount of insurance in force, whichever is the greater. In computing the maximum amount of insurance to be retained on any one life, the amounts involved in supplementary contracts, attached to or endorsed upon life contracts and made a part thereof, granting benefits in event of total and permanent disability or death by accident of the insured or in event of death or total and permanent disability of the person paying the premiums on any minor's contract shall not be included.
(2) Such company shall have the right to cede or accept reinsurance subject to the provisions of Article XI.
(3) If any company shall issue any contract under which the risk is in excess of the maximum risk herein prescribed, such excess shall be reinsured simultaneously with the issuance of such contract and all such reinsurance ceded shall at all times be kept in force in such amounts that the total risk assumed by the company shall not exceed in any instance the maximum risk herein prescribed, or it shall, in lieu thereof maintain assets in addition to all other assets required under the provisions of this Article not less than the total of the excess of each of the insurances in force and not reinsured over the maximum risk herein prescribed.
(Source: P.A. 83‑584.) |
(215 ILCS 5/273) (from Ch. 73, par. 885)
Sec. 273. Reserves to be maintained.
Every company subject to the provisions of this article shall have and maintain upon every contract of life insurance issued on and after the effective date of this Code, assets in excess of other liabilities, to provide for reserves not less than the minimum reserves prescribed by section 281.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/274) (from Ch. 73, par. 886)
Sec. 274. Segregation of assets.
(1) The assets representing the reserves on all life contracts issued on and after the effective date of this Code, and on all such other life contracts as the company shall designate upon which a reserve at least equal to the minimum reserves prescribed by section 281 has been accumulated, shall be held separate and distinct for the sole and separate use and benefit of such contracts and the insured and beneficiaries thereunder, and no other contracts, insured, beneficiaries or claimants shall have or acquire any right or interest therein; and provision shall be made for requiring during each calendar year from such contracts as are not included under this paragraph, contributions, which together with available assets, not so held separate, shall be sufficient to provide for the share of claims, expenses and other current liabilities to be borne by such contracts as are not included herein, provided, that no such separation shall be required whenever reserves on all outstanding contracts are maintained in accordance with the provisions of section 281.
(2) Such company may accumulate, maintain and distribute a surplus or surpluses over and above such reserves as the by‑laws of the company may provide, not in violation of the provisions of this Code.
(3) Nothing herein shall be construed as giving to any individual contract, insured or beneficiary any right or claim to any reserves or surplus or to any part thereof other than in the manner and to the extent provided in the contract or by‑laws of the company; nor as making any such reserves, except the reserves required by section 281, a liability in determining the solvency of the company.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/275) (from Ch. 73, par. 887)
Sec. 275. Contingent liability of members. (1) All insurance contracts issued or delivered in this State by any company subject to this Article shall provide, in addition to the regular contributions, for the payment currently of additional contributions to the extent needed to pay its share of claims and expenses and to maintain the tabular, loss, unearned premium and other reserves and liabilities required by this Code, or requiring such additional amount to be charged as an indebtedness, at a rate of interest specified in the contract, not exceeding the tabular or unearned premium reserves on the contract and providing for terminating the contract whenever the total indebtedness thereon shall equal such tabular or unearned premium reserves, and on such contract no liability shall be charged in any valuation for any deficiency in future contribution as long as such payments are actually collected or such charges are actually made; provided that no such additional contribution shall be enforced against any holder of an insurance contract except upon due notice to such holder.
(2) Every such holder shall have the option of paying such additional contribution in cash or permitting the contribution to be charged as an indebtedness against the tabular or unearned premium reserves as above provided, but if no option selection is made within thirty days after the mailing of such notice the second option shall become applicable and said additional contributions shall become a lien upon said contract. All such insurance contracts and notices of such additional contributions shall contain a statement of the provision of this subsection.
(3) Each assessable insurance contract issued or delivered in this State after the effective date of this amendatory Act of 1983 by any company subject to this Article shall have the following statement printed in bold face type on the face of the policy: "This is an assessable policy".
(Source: P.A. 83‑584.) |
(215 ILCS 5/276) (from Ch. 73, par. 888)
Sec. 276. Determination and distribution of mortality.
Unless a company shall provide otherwise, the actual mortality experienced on all outstanding life contracts shall be determined and distributed between all such outstanding contracts in proportion to the cost of insurance on the basis in this article provided or such other mortality table approximating the experience of the company, as it may provide.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/277) (from Ch. 73, par. 889)
Sec. 277. Additional provisions permitted.
Every company may include in contracts issued, provisions for total and permanent disability benefits, accidental death benefits, annuities, and the payment of the benefits in installments; provided, that it shall maintain for all such benefits, any additional reserves required upon similar benefits by the provisions of law relating to legal reserve life companies and such additional reserves shall be subject to the provisions of this article for segregation of reserves.
(Source: Laws 1937, p. 696.) |
(215 ILCS 5/278) (from Ch. 73, par. 890)
Sec. 278. Reserve deposits. A company subject to this Article shall from time to time deposit with the Director, securities of the kind authorized for investment by a company transacting the kind of business enumerated in Class 1 of Section 4, in such amount that the market value of the securities deposited shall, at all times, be at least equal to the total of the reserved required by this Code on the life contracts issued by said company until there shall be on deposit at least $200,000. Thereafter, while the reserves on all such contracts are maintained, further deposits shall be optional with the company. Each separate deposit, except in the case of newly organized companies during the first 2 years of existence, shall be in the sum of not less than $1,000 and such securities may be deposited at any time. Any such company may at any time, withdraw any of such securities in excess of the minimum herein required and may from time to time exchange any of such securities by depositing others of the kind in which the company is authorized to invest, of equal value. So long as the said company shall remain solvent and maintain its deposits as herein required, it may collect the interest or other income of the securities deposited as the same may accrue. All such deposits shall be held by the Director in trust for the benefit of the holders of life contracts upon which contracts reserves at least equal to the minimum reserves prescribed by Section 281 are required. The Director may release the required deposit of securities upon receipt of an order of a court having proper jurisdiction or upon: (i) certification by the company that it has no outstanding life contracts on which reserves are required, life insurance policyholders, or policy obligations in effect and no plans to engage in the business of insurance; (ii) receipt of a lawful resolution of the company's board of directors effecting the surrender of its articles of incorporation for administrative dissolution by the Director; and (iii) receipt of the name and forwarding address for each of the final officers and directors of the company, together with a plan of dissolution approved by the Director.
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