Illinois Law Expands Anti-Discrimination Protections in Final-Expense Insurance

The Illinois legislature has enacted a new amendment to the state's insurance code effective January 1, 2026, aimed at expanding protections against discrimination in final-expense life insurance policies. This amendment prohibits insurance companies from denying coverage, charging higher premiums, or limiting the benefits of such policies based solely on an applicant's or insured's felony conviction history, except for individuals currently incarcerated due to a felony. Final-expense policies are designed to cover funeral and burial costs upon the policyholder's death, and this legislative change is intended to ensure more equitable access to these policies regardless of felony status. This amendment builds upon existing anti-discrimination provisions within the Illinois insurance code, which prevent insurance carriers from using demographic factors such as race, ethnicity, or religion to determine eligibility or pricing for life insurance policies. It also reinforces previous protections prohibiting discrimination against persons with disabilities, provided any premium differentials are justified by sound actuarial data relating to actual or expected experience associated with the disability. Specific conditions like blindness receive particular attention, where insurers must apply the same actuarial standards used for sighted persons and cannot exclude coverage or charge higher premiums unjustifiably. Additionally, the law ensures that military service members, including those in the U.S. Armed Forces and National Guard, are not subject to discrimination in life insurance coverage decisions purely based on their service status. Furthermore, the amendment restricts insurers from using an individual’s travel habits or expenses to justify discriminatory practices unless such practices are supported by credible actuarial evidence. This provision targets concerns about whether frequent travelers could face higher premiums or denial of coverage without sound statistical rationale. Overall, the legislative update aims to prevent unwarranted disparities in life insurance underwritings, particularly focusing on covering vulnerable populations and preventing financial burdens on the families of deceased policyholders through equitable life insurance access. The reforms reflect ongoing state efforts to align insurance practices with evidence-based risk assessments and promote fairness in policy issuance and premium setting.