Illinois Life Insurance
- Laws and regulations protect consumers of Illinois life insurance. Read about mandatory policy provisions and what happens if an insurer has financial trouble.
A life insurance policy can ease the financial burden on your loved ones if you pass away. Life insurance options and laws are different in every state. Learning about life insurance in Illinois can help you make the best decisions and protect your family.
Illinois Life Insurance Rules and Specifics
Two sets of state laws control life insurance in Illinois:
The Illinois Department of Insurance regulates life insurance companies and policies.
Financial Protection for Consumers
Illinois residents who purchase policies from companies licensed in the state have policy protection of up to $300,000 on any one life. The law also protects up to $100,000 of net cash surrender value. These amounts are protected by the Illinois Life and Health Guaranty Association if a licensed insurance company goes bankrupt.
Mandatory Illinois Life Insurance Provisions
Individual life insurance policies sold in Illinois are required to contain specific provisions intended to protect the insured and their beneficiaries. All policies must include an incontestability clause which means that an insurance company can't invalidate a policy that has been in effect for more than two years. There are a few situations where an insurance company can deny benefits:
- Nonpayment of premiums
- The insured's death is the result of an act of war while serving with a military unit (even as a noncombatant civilian)
- The insured's death is related to aviation, except as a passenger on a commercial airline
The insurer can also deny benefits within the first two years of a policy if the insured commits suicide or provided false information on their application.
Consumers are entitled to a 30-day grace period for payment of premiums and a free look period. A free look period means the insured has 10 days after a policy is issued to decide if they want to keep it or get a refund.
Life Insurance Resources in Illinois
The following agencies in Illinois assist with life insurance regulations and questions:
- The Illinois Department of Insurance answers consumer questions and regulates insurance companies. Consumers can file a complaint about an insurance company or contact the Department with questions.
- The Illinois Life and Health Guaranty Association is a private organization created by the Illinois legislature. It protects Illinois residents if their insurance company faces financial problems. The ILHGA can help consumers determine if an insurance company is properly licensed and if a policy is eligible for protection.