Key Takeaways
- Illinois regulates group life insurance under the Illinois Insurance Code
- Group life certificates must include conversion privilege information
- Employees have 31 days to convert group life to individual coverage after termination
- Group life insurance does not require evidence of insurability for eligible employees
- Minimum group size requirements apply to prevent adverse selection
Illinois Group Life Insurance
Group life insurance in Illinois is regulated to protect employees and their beneficiaries. Understanding these regulations is important for the licensing exam.
Group Life Insurance Basics
Group life insurance provides coverage for members of a group, typically employees:
| Feature | Description |
|---|---|
| Master Policy | Held by employer or group policyholder |
| Certificates | Given to each covered employee |
| Premium | Often paid by employer, may be shared |
| Underwriting | Group basis, not individual |
Eligible Groups in Illinois
Illinois recognizes several types of groups:
- Employer groups - Employees of a single employer
- Labor unions - Members of a union
- Associations - Professional or trade associations
- Creditor groups - Debtors of a common creditor
- Multiple employer trusts - Employees of associated employers
Certificate Requirements
Each covered employee must receive a certificate that includes:
Required Certificate Information
| Item | Must Include |
|---|---|
| Coverage Amount | Death benefit amount |
| Beneficiary | How to designate beneficiary |
| Conversion Rights | Right to convert to individual |
| Claim Procedure | How to file a claim |
| Effective Date | When coverage begins |
Exam Tip: The employer holds the master policy, but each employee must receive a certificate explaining their coverage and rights.
Conversion Privilege
Illinois requires group life policies to include a conversion privilege:
Conversion Rights
| Aspect | Requirement |
|---|---|
| Timing | 31 days after termination |
| Health Evidence | None required |
| Amount | Up to amount of group coverage |
| Premium | Standard rates for attained age |
When Conversion Applies
The conversion right is triggered by:
- Employment termination
- Reduction in coverage amount
- Group policy termination
- Class change making employee ineligible
Conversion Process
- Employee terminates employment
- 31-day conversion period begins
- Employee applies for individual policy
- No evidence of insurability required
- New policy issued at individual rates
Important: If an employee dies during the 31-day conversion period without having converted, the death benefit is still payable under the group policy.
Minimum Participation Requirements
To prevent adverse selection, Illinois group life policies typically require:
| Group Size | Participation Requirement |
|---|---|
| Contributory | Usually 75% of eligible |
| Non-Contributory | 100% of eligible |
Why Participation Matters
- Prevents only sick/high-risk employees from enrolling
- Spreads risk across the group
- Keeps premiums affordable
Group Life Exclusions
Illinois group life policies may exclude:
- Suicide within first 2 years
- Death during war or military action
- Death from specifically excluded activities
How many days does an Illinois employee have to convert group life insurance to an individual policy after termination?
Who holds the master policy in a group life insurance arrangement?
What happens if an employee dies during the 31-day conversion period without having converted?
Is evidence of insurability required for the group life conversion privilege?