LIFE INSURANCE-POLICY PROVISIONS.

§ 1. Amends section 1, Act of 1907.

(HOUSE BILL No. 700.

§ 1. Payment of premiums. APPROVED JUNE 22, 1917.)

AN ACT to amend section 1 of an Act entitled, “An Act relating to the transaction of the business of life insurance in the State of Illinois, and regulating the conditions and provisions of policies of life insurance companies, organized under the laws of this State, or doing business herein," approved May 20, 1907, in force January 1, 1908.

SECTION 1. Be it enacted by the People of the State of Illinois, represented in the General Assembly: That section 1 of an Act entitled, "An Act relating to the transaction of the business of life insurance in the State of Illinois, and regulating the conditions and provisions of policies of life insurance companies, organized under the laws of this State, or doing business herein," approved May 20, 1907, in force January 1, 1908, be and the same is hereby amended so that said section 1, as amended, shall read as follows:

§ 1. That from and after January 1, 1908, no policy of life insurance shall be issued or delivered in this State or be issued by a life insurance company organized under the laws of this State, unless the same shall provide the following:

(1) That all premiums after the first shall be payable in advance, either at the home office of the company or to an agent of the company, upon delivery of a receipt signed by one or more of the officers who shall be designated in the policy.

(2) For a grace of one month for the payment of every premium after the first year which may be subject to an interest charge, during which month the insurance shall continue in force: Provided, that if the insured shall die within the month of grace the unpaid premium for the current policy year may be deducted in any settlement under the policy.

(3) That the policy, together with the application therefor, a copy of which application shall be endorsed upon or attached to the policy and made a part thereof, shall constitute the entire contract between the parties and shall be incontestable after two years from its date, except for non-payment of premiums and except for violations of the conditions of the policy relating to the naval or military service in time of war: Provided, that the application therefor need not be attached to any policy containing a clause making the policy incontestable from date of issue.

(4) That if the age of the insured has been misstated the amount payable under the policy shall be such as the premium would have purchased at the correct age, or the premium may be adjusted and credit given to the insured or to the company, according to the company's published rate at date of issue.

(5a) That the policy shall participate in the surplus of the company, and any policy containing provision for participation at the end. of the first policy year, and annually thereafter, may also provide that each dividend shall be paid subject to the payment of the premium for the next ensuing year; and the insured under any annual dividend policy

shall have the right each year to have the dividend arising from such participation paid in cash, and if the policy shall provide other dividends options, it shall further provide that if the insured shall not elect any such other options, the dividend shall be paid in cash. Such participation may, however, begin not later than the end of the twentieth policy

year.

(5b) If any company shall issue any policies under the terms of which the payment of dividends is deferred later than the third policy year, such company shall furnish the Department of Trade and Commerce each year a statement showing the number and amount of all policies with deferred dividends in force at the beginning of the year for which the statement is made; of all such policies issued and revived or terminated during the said year with the mode of termination; and the number and amount of all such policies in force at the end of said year. Also a statement showing any and all amounts provisionally set apart, ascertained or calculated or held awaiting apportionment upon such policies at the beginning of said year, the additions made to the said fund during the year, with the source from which such additions arose, the deductions made from the said funds during the year, with the reasons therefor and the amount of said fund at the end of the year; which shall be carried as a distinct and separate liability to such class of policies on and for which the sum was accumulated. Upon the written request of the insured under any deferred dividend policy, after said policy shall have been in force more than three years, the company shall furnish said policy holder with a statement of the amount of surplus provisionally ascertained or set aside on such policy and held awaiting apportionment at the expiration of the deferred dividend period.

(5c) The provisions of the preceding paragraphs numbered (5a) and (5b) of this section shall not apply to any form of paid-up insurance or temporary insurance or pure endowment insurance, issued or granted in exchange for lapsed or surrendered policies, or to non-participating policies; provided, however, that if any company shall issue any non-participating policy under the terms of which any stipulated part of premiums received is to be placed in a separate fund for subsequent apportionment, such company shall furnish the Department of Trade and Commerce each year a statement showing the number and amount of all such policies in force at the beginning of the year for which the statement is made; of all such policies issued and revived or terminated during the said year with the mode of termination; and the number and amount of all such policies in force at the end of said year. Also a statement showing any and all amounts provisionally set apart, ascertained or calculated or held awaiting apportionment upon such policies, according to classes, at the beginning of said year, the additions made to the said fund during the year with the source from which such additions arose, the deductions made from the said fund (if permitted by the contract) during the year with the reasons therefor and the amount of said fund at the end of the year; which shall be carried as a distinct and separate reserve liability of the company for the benefit of the classes of policies from the premium payments on which the sum

was accumulated. No part of said fund prior to the time of distribution stipulated in the contract, shall be considered in determining the loan and cash and other surrender values provided for by this Act. Upon written request of the insured under any such policy, after said policy shall have been in force more than three years, the company shall furnish said policyholder with a statement of the amount of the contingent interest of said policyholder in the fund so accumulated and held awaiting apportionment at the expiration of the accumulation period. No. such policy shall be issued which by its terms shall provide that more than twenty-five per cent of the annual premium shall be placed in such fund, nor shall any such provision be made a part of a term insurance policy.

(6) That after three full years' premiums have been paid, the company, at any time, while the policy is in force, will loan, on the execution of a proper note or loan agreement by the insured, and on proper assignment and delivery of the policy and on the sole security thereof, at a specified rate of interest, a sum equal to, or at the option of the insured. less than, the reserve at the end of the current policy year on the policy and on the dividend additions thereto, if any, (the policy to specify the mortality table and the rate of interest adopted for computing such reserve), less a specified percentage (not more than two and one-half) of the amount insured by the policy and of the dividend additions thereto, if any, and that the company will deduct from such loan value any existing indebtedness on or secured by the policy and any unpaid balance of the premium for the current policy year, and may collect interest in advance on the loan to the end of the current policy year: Provided, that such loan may be deferred for not exceeding six months after the application therefor is made. No condition other than is herein provided shall be exacted as a prerequisite to any such loan. This provision shall not be required in term insurance, nor shall it apply to temporary insurance or pure endowment insurance, issued or granted in exchange for lapsed or surrendered policies.

(7) That in event of default in premium payments, after premiums shall have been paid for three years, the insured shall be entitled to a stipulated form of insurance the net value of which shall be at least equal to the reserve at the date of default on the policy and on dividend additions thereto, if any, (the policy to specify the mortality table and rate of interest adopted for computing such reserve), less a specified percentage (not more than two and a half) of the amount insured by the policy and of existing dividend additions thereto, if any, and less any existing indebtedness to the company on or secured by the policy: Provided, that the policy may be surrendered to the company at its home office within one month of date of default for a specified cash value at least equal to the sum which would otherwise be available for the purchase of insurance as aforesaid: And, provided, further, that the company may defer payment for not more than six months after the application therefor is made. This provision shall not be required in term insurance of twenty years or less.

(8) A table showing in figures the loan values, and the options available under the policies each year upon default in premium payments, during at least the first twenty years of the policy, beginning with the year in which such values and options become available. The specified percentage referred to in (6) and (7) need not be stated for the policy years included in said table.

(9) That if in event of default in premium payments, the value of the policy shall be applied to the purchase of other insurance, and if such insurance shall be in force and the original policy shall not have been surrendered to the company and canceled, the policy may be reinstated within three years from such default, upon evidence of insurability satisfactory to the company and payment of arrears of premiums with interest.

(10) That when a policy shall become a claim by the death of the insured, settlement shall be made upon receipt of proof of death and of the interest of the claimant and not later than two months after the receipt of such proof.

(11) A table showing the amount of installments in which the policy may provide its proceeds may be payable.

(12) Title on the face and on the back of the policy, correctly describing the same.

APPROVED June 26, 1917.

ORGANIZATION AND REGULATION OF DISTRICT MUTUAL WINDSTORM, CYCLONE OR TORNADO INSURANCE COMPANIES.

§ 1. Amends sections 7, 8, 9 and 11 Act of 1893.

§ 7. How owners of property

adjoining such district
may become members.

(SENATE BILL No. 354.

§ 11. Assessment to meet losses. APPROVED JUNE 22, 1917.)

AN ACT to amend an Act entitled, "An Act authorizing the organization, and to regulate district mutual windstorm, cyclone or tornado insurance companies," approved June 15, 1893, in force July 1, 1893, as subsequently amended, by amending sections seven (7), eight (8), nine (9), and eleven (11) thereof.

SECTION 1. Be it enacted by the People of the State of Illinois represented in the General Assembly: That an Act entitled, "An Act authorizing the organization, and to regulate district mutual windstorm, cyclone or tornado insurance companies," approved June 15, 1893, in force July 1, 1893, as subsequently amended, be and the same is hereby amended, by amending sections seven (7), eight (8), nine (9) and eleven (11), thereof to read as follows:

§ 7. Any person owning property in a district in which any such company is formed, and any person owning property in any county adjoining such district in which no county or district windstorm insurance company exists may become a member of such company by insuring therein and shall be entitled to all the rights and privileges pertaining thereon.

§ 8. Such company may issue policies on dwellings, barns or other farm buildings, churches or seshoolhouses, town halls and such property as may be properly contained therein; also on horses and cattle on the premises of the assured, and anywhere in the territory of the company, for any time not exceeding five (5) years and not to exceed beyond the limit duration of the chartar [charter], and for an amount not exceeding four thousand five hundred dollars ($4,500) on any one building and contents. Any such company may reinsure the whole or any part of its risks with any other company organized under the provisions of this Act and may underwrite or reinsure the whole or any part of the risks of any other company organized hereunder. All persons so insured shall give their obligations to the company, binding themselves, their heirs and assigns to pay their pro rata share to the company of the necessary expenses and of losses by windstorm, cyclones or tornadoes, which may be sustained by any member thereof during the time for which their respective policies are written, and they shall also, at the time of effecting the insurance, pay such percentage in cash and such other charges as may be required by the rules and by-laws of the company.

§ 9. Any such company may insure any property within the limits of the district comprised in the formation of the company, and any property in any county adjoining such territory in which no country [county] or district mutual windstorm, cyclone or tornado insurance company exists, but shall not insure any property within the limits of any city, town or village.

§ 11. Whenever the amount of any loss shall have been ascertained which exceeds in amount the cash fund of the company, the president shall have the power to borrow money not to exceed one-tenth of one per cent of all property insured with which to pay said loss, and when the amount of said loss shall exceed one-tenth of one per cent of all property insured, to convene the directors of the company who shall make an assessment, in such amount upon all property, distributing the same pro rata against such several pieces of property, sufficient to cover all the loses, debts and obligations of the company up to the time of making such assessment, and in addition thereto, a sum equal to onetenth of one per cent on all the property insured: Provided, that if no quorum be present the secretary shall enter the fact upon his journal, and the names of the directors present, whereupon the president, secretary and treasurer shall proceed to estimate the rate per cent necessary to cover the loss and expense thereby incurred, and assess the same upon all the insured property of the several members of said company, which assessment shall be valid and shall be collected in the same manner as though it had been made by the board of directors; Provided, that at the time said assessment is made, said assessment shall be made for an amount sufficient to pay all indebtedness of said company up to the date of said assessment, and may include in addition thereto a sum equal to one-tenth of one per cent on the value of all the property insured. APPROVED June 22, 1917.