BILL NUMBER: AB 1747	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 20, 2012
	PASSED THE ASSEMBLY  AUGUST 22, 2012
	AMENDED IN SENATE  AUGUST 14, 2012
	AMENDED IN SENATE  JUNE 19, 2012
	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, 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 and that the policy
remains in force during the 60-day grace period. The bill would also
require an insurer to give the 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. The bill would require an
insurer to provide each applicant with a form, as specified, to make
the designation and to notify the policy owner 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 policy owner, a named designee 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. The bill would also make
conforming changes.


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 60-day grace period 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 shall 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 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 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 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 policy owner and to the person or persons 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.
  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 policy owner
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 policy owner
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.