BILL NUMBER: AB 1747	AMENDED
	BILL TEXT

	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, 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  and  that
 provides that where the premium owed is paid fully within
the grace period  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 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   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  insured
  policy owner  , 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 
 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  insured   policy owner , 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  
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  include
  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  insured  
policy owner  annually of the right to change the written
designation or designate one or more persons. The  insured
  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  insured   policy owner  and
to the person or persons designated pursuant to subdivision (a), at
the address provided by the  insured   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 
insured   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  insured   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.