BILL ANALYSIS �
AB 1747
Page 1
ASSEMBLY THIRD READING
AB 1747 (Feuer)
As Amended May 9, 2012
Majority vote
INSURANCE 8-3
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|Ayes:|Solorio, Bradford, | | |
| |Carter, Feuer, Hayashi, | | |
| |Skinner, Torres, | | |
| |Wieckowski | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Beth Gaines, Miller, | | |
| |Olsen | | |
| | | | |
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SUMMARY : Establishes notice requirements, reinstatement
options, and a grace period for premium payment for life
insurance policies. Specifically, this bill :
1)Requires individual and group life insurance policies to
provide a 60 day grace period for payment of premium before
terminating the policy if the premium is fully paid within the
grace period.
2)Requires insurers to mail a notice of pending lapse and
termination at least 30 days prior to the termination of an
individual or group life insurance policy for non-payment of
premium.
3)Requires life insurers to provide an applicant for an
individual life insurance policy with the form to designate
additional persons to receive notices of lapse or termination.
4)Requires a life insurer to annually notify an insured of the
right to make or change a designation.
5)Provides that an insured may change the designation at any
time.
6)Requires individual life insurance policies to include a
provision allowing reinstatement of a lapsed policy within
AB 1747
Page 2
five months with payment of past due premium if the insured
can demonstrate cognitive impairment or loss of functional
capacity.
7)Conforms existing notice requirements for assignees of life
insurance policies to the notice requirements in this bill.
EXISTING LAW :
1)Requires a notice of cancellation be mailed at least 20 days
prior to cancelling an automobile insurance policy.
2)Requires a 60 day grace period for payment of premium for
individual variable life insurance policies.
FISCAL EFFECT : Unknown
COMMENTS : According to the author, the bill provides consumer
safeguards from which people who have purchased life insurance
coverage, especially seniors, would benefit. Under existing
law, individuals can easily lose the critical protection of life
insurance if a single premium is accidentally missed (even if
they have been paying premiums on time for many years). If an
insured individual loses coverage and wants it reinstated, he or
she may have to undergo a new physical exam and be underwritten
again, risking a significantly more expensive, possibly
unaffordable premium if his or her health has changed in the
years since purchasing the policy. Therefore, the protections
provided by this bill are intended to make sure that
policyholders have sufficient warning that their premium may
lapse due to nonpayment.
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086
FN: 0003612