The bill aims to prevent unintentional lapses and cancellations of life insurance policies by amending existing laws and introducing new provisions. It establishes a mandatory grace period of at least 30 days for premium payments, during which the policy remains in force. Insurers are required to send written notices to policyholders and designated third parties at least 30 days before a policy lapses due to nonpayment. The bill also outlines the proof of delivery requirements for these notices and specifies that certain types of policies, such as group life insurance and those with monthly premium payments, are exempt from these requirements.

Additionally, the bill introduces a new section that allows applicants for individual life insurance policies to designate a third party to receive notifications regarding potential lapses or terminations due to nonpayment. This designation can be made at the time of application or anytime while the policy is active. The bill clarifies that the designation does not impose any liability on the third-party designee or the insurer regarding the notification process. The provisions of this act will apply only to life insurance policies issued on or after January 1, 2027.

Statutes affected:
Original bill: 48.23.030
Substitute bill: 48.23.030
Bill as passed Legislature: 48.23.030