BILL NUMBER: AB 1747	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 7, 2012
	AMENDED IN ASSEMBLY  MAY 9, 2012
	AMENDED IN ASSEMBLY  APRIL 26, 2012

INTRODUCED BY   Assembly Member Feuer

                        FEBRUARY 17, 2012

   An act to amend Section 10173.2 of, and to add Sections 10113.71
and 10113.72 to, the Insurance Code, relating to life insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1747, as amended, Feuer. Life insurance: nonpayment premium
lapse: notice.
   Existing law requires that life insurance policies contain certain
provisions, including, but not limited to, an individual life
insurance policy notice of the right to cancel a policy. Existing law
requires life insurers to provide certain notices to individual life
insurance policyholders, including, but not limited to, a notice of
premium increases.
   This bill would require that every life insurance policy issued or
delivered in this state contain a provision for a grace period of
not less than 60 days from the premium due date that provides that
where the premium owed is paid fully within the grace period the
policy remains in  force and a provision that gives 
 force. The bill would   also require an insurer to
give  the applicant  for an individual live 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. The bill would require an insurer to provide
each applicant with a form, as specified, to make the designation and
to notify the insured annually of the right to change the
designation. The bill would prohibit a notice of pending lapse and
termination from being effective unless mailed by the insurer to the
named insured, a named designee, and a known assignee or other person
having an interest in the policy at least 30 days prior to the
effective date of termination if termination is for nonpayment of
premium. The bill would also make conforming changes.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 10113.71 is added to the Insurance Code, to
read:
   10113.71.  (a) Every life insurance policy issued or delivered in
this state shall contain a provision for a grace period of not less
than 60 days from the premium due date. The provision shall provide
that if the premium owed is fully paid within the grace period the
policy shall remain in force.
   (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 insured, a designee named pursuant to Section 10113.72,
and a known assignee or other person having an interest in the
policy, at least 30 days prior to the effective date of termination
if termination is for nonpayment of premium.
   (2) This subdivision shall not apply to nonrenewal.
   (3) Notice shall be given to the insured and to the designee by
first-class United States mail  , postage prepaid, not less
than   within  30 days after a premium is due and
unpaid. However, notices made to assignees pursuant to this section
may be done electronically with 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 is added to the Insurance Code, 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 include 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 insured annually of the right to
change the written designation or designate one or more persons. The
insured may change the designation more often if he or she chooses to
do so.
   (c) No individual life insurance policy shall lapse or be
terminated for nonpayment of premium unless the insurer, at least 30
days prior to the effective date of the lapse or termination, gives
notice to the insured and to the person or persons designated
pursuant to subdivision (a), at the address provided by the insured
for purposes of receiving notice of lapse or termination. Notice
shall be given by first-class United States mail  , postage
prepaid, not less than   within  30 days after a
premium is due and unpaid. 
   (d) Each individual life insurance policy shall include a
provision that, in the event of lapse, provides for reinstatement of
coverage, if the insurer is provided with proof of the insured's
cognitive impairment or the loss of functional capacity. This option
shall be available to the insured if requested within five months
after termination and shall allow for the collection of a past due
premium, where appropriate. The standard of proof of cognitive
impairment or loss of functional capacity shall not be more stringent
than the benefit eligibility criteria on cognitive impairment or the
loss of functional capacity contained in the policy. 
  SEC. 3.  Section 10173.2 of the Insurance Code is amended to read:
   10173.2.  When a policy of life insurance is, after the effective
date of this section, assigned in writing as security for an
indebtedness, the insurer shall, in any case in which it has received
written notice of the name and address of the assignee, mail to the
assignee a written notice, postage prepaid and addressed to the
assignee's address filed with the insurer, not less than 30 days
prior to the final lapse of the policy, each time the insured has
failed or refused to transmit a premium payment to the insurer before
the commencement of the policy's grace period or before the notice
is mailed. The insurer shall give that notice to the assignee in the
proper case while the assignment remains in effect, unless the
assignee has notified the insurer in writing that the notice is
waived. The insurer shall be permitted to charge the insured directly
or against the policy the reasonable cost of complying with this
section, but in no event to exceed two dollars and fifty cents
($2.50) for each notice.
   As used in this section, "final lapse of the policy" means the
date after which the policy will not be reinstated by the insurer
without requiring evidence of insurability or written application.