Illinois § 2a

§ 2a.

Purchase of insurance or annuity. (a) If a purchaser selects the purchase of a life insurance policy or tax-deferred annuity contract to fund the pre-need contract, the application and collected premium shall be mailed within 30 days of signing the pre-need contract. (b) If life insurance or an annuity is used to fund a pre-need contract, the seller or provider shall not be named as the owner or beneficiary of the policy or annuity. No person whose only insurable interest in the insured is the receipt of proceeds from the policy or in naming who shall receive the proceeds nor any trust acting on behalf of such person or seller or provider shall be named as owner or beneficiary of the policy or annuity. (c) Nothing shall prohibit the purchaser from irrevocably assigning ownership of the policy or annuity used to fund a guaranteed price pre-need contract to a person or trust or from irrevocably assigning the benefits of the policy or annuity to a funeral home for the purpose of obtaining favorable consideration for Medicaid, Supplemental Security Income, or another public assistance program, as permitted under federal law. The seller or contract provider may be named a nominal owner of the life insurance policy only for such time as it takes to immediately transfer the policy into a trust. Except for this purpose, neither the seller nor the contract provider shall be named the owner or the beneficiary of the policy or annuity. (d) If a life insurance policy or annuity contract is used to fund a pre-need contract, except for guaranteed price contracts permitted in Section 4(a) of this Act, the pre-need contract must be revocable, and any assignment provision in the pre-need contract must contain the following disclosure in 12 point bold type: THIS ASSIGNMENT MAY BE REVOKED BY THE ASSIGNOR OR ASSIGNOR'S SUCCESSOR OR, IF THE ASSIGNOR IS ALSO THE INSURED AND DECEASED, BY THE REPRESENTATIVE OF THE INSURED'S ESTATE BEFORE THE RENDERING TO THE CEMETERY SERVICES OR GOODS OR FUNERAL SERVICES OR GOODS. IF THE ASSIGNMENT IS REVOKED, THE DEATH BENEFIT UNDER THE LIFE INSURANCE POLICY OR ANNUITY CONTRACT SHALL BE PAID IN ACCORDANCE WITH THE BENEFICIARY DESIGNATION UNDER THE INSURANCE POLICY OR ANNUITY CONTRACT. (e) Sales proceeds shall not be used to purchase life insurance policies or tax-deferred annuities unless the company issuing the life insurance policies or tax-deferred annuities is licensed with the Illinois Department of Insurance, and the insurance producer or annuity seller is licensed to do business in the State of Illinois. (Source: P.A. 102-959, eff. 5-27-22.)