Bill Text: CA SB1320 | 2021-2022 | Regular Session | Amended

California Senate Bill 1320 (Prior Session Legislation)

Bill Title: Life insurance: nonpayment premium notice: lapse.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2022-04-18 - From committee with author's amendments. Read second time and amended. Re-referred to Com. on INS. [SB1320 Detail]

Download: California-2021-SB1320-Amended.html

Amended IN Senate April 18, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill

No. 1320

Introduced by Senator Jones

February 18, 2022

An act to ~~amend Sections 10113.71 and 10113.72 of~~ add Section 10113.73 to the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL'S DIGEST

SB 1320, as amended, Jones. Life insurance: nonpayment premium notice: lapse.

Existing law generally regulates classes of insurance, including life insurance. Existing law requires a life insurance policy, including an individual or group policy, issued or delivered in this state to contain a provision for a grace period of not less than 60 days from the premium due date and to provide that the policy remains in force during that grace period.

Existing law requires an insurer to give an applicant for an individual life insurance policy the right to designate at least one person, in addition to the applicant, to receive notice of lapse or termination of a policy for nonpayment of premium. Existing law prohibits a notice of pending lapse and termination of an individual life insurance policy from being effective unless mailed by the insurer to the named policy owner and their designee at least 30 days before the effective date of termination if termination is for nonpayment of premium.

This bill would clarify that these requirements apply to a life insurance policy issued or delivered in this state on or after January 1, 2013. The bill would specify that the 60-day grace period begins the first day after the due date if the premium is unpaid.
This bill would prohibit an insurer from being liable for failure to comply with the these requirements, unless failure to comply with these provisions results in an alleged policy lapse.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 10113.73 is added to the Insurance Code, to read:

10113.73.
(a) No insurer shall be liable for failure to meet any requirement of Section 10113.71 or 10113.72 unless an alleged policy lapse occurred as a result of that failure.
(b) The provisions in this section shall apply to all policies to which Section 10113.71 or 10113.72 are applicable.

SECTION 1.Section 10113.71 of the Insurance Code is amended to read:
10113.71.
(a)A life insurance policy issued or delivered in this state on or after January 1, 2013, shall contain a provision for a grace period of not less than 60 days from the premium due date. The 60-day grace period shall begin the first day after the due date if the premium is unpaid, and shall not run concurrently with the period of paid coverage. The provision shall provide that the policy shall remain in force during the grace period.
(b)(1)A notice of pending lapse and termination of a life insurance policy shall not be effective unless mailed by the insurer to the named policy owner, a designee named pursuant to Section 10113.72 for an individual life insurance policy, and a known assignee or other person having an interest in the individual life insurance policy, at least 30 days prior to the effective date of termination if termination is for nonpayment of premium.
~~(2)This subdivision does not apply to nonrenewal.~~
(3)Notice shall be given to the policy owner and to the designee by first-class United States mail within 30 days after a premium is due and unpaid. However, notices made to assignees pursuant to this section may be done electronically with the consent of the assignee.
~~(c)For purposes of this section, a life insurance policy includes, but is not limited to, an individual life insurance policy and a group life insurance policy, except where otherwise provided.~~
SEC. 2.Section 10113.72 of the Insurance Code is amended to read:
10113.72.
(a)An individual life insurance policy shall not be issued or delivered in this state until the applicant has been given the right to designate at least one person, in addition to the applicant, to receive notice of lapse or termination of a policy for nonpayment of premium. The insurer shall provide each applicant with a form to make the designation. That form shall provide the opportunity for the applicant to submit the name, address, and telephone number of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy for nonpayment of premium.
(b)The insurer shall notify the policy owner annually of the right to change the written designation or designate one or more persons. The policy owner may change the designation more often if the policy owner chooses to do so.
(c)An individual life insurance policy shall not lapse or be terminated for nonpayment of premium unless the insurer, at least 30 days before the effective date of the lapse or termination, gives notice to the policy owner and, if the policy owner has made a designation pursuant to subdivision (a), to the person designated pursuant to subdivision (a), at the address provided by the policy owner for purposes of receiving notice of lapse or termination. Notice shall be given by first-class United States mail within 30 days after a premium is due and unpaid.
~~(d)This section applies only to an individual life insurance policy that is issued or delivered in this state on or after January 1, 2013, the original effective date of this section.~~