California Lapse Notice Required
“This legislation will further protect California consumers and many seniors by ensuring that they are provided sufficient notice before their life insurance policy is cancelled,” Jones said in a statement.
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. Furthermore, if an insured individual loses coverage and wants it reinstated, he or she may then 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.
AB 1747 requires that a “pending lapse notice” be sent to the policy owner within 30-days of nonpayment, to provide a warning that the bill has not been paid. The new law will also require that insurers allow a policy owner to name one or more designates to receive a copy of the pending lapse notice so that if the policy owner does not realize the bill has gone unpaid (or is unable to respond, perhaps due to hospitalization or incapacitation), a trusted relative or friend can act.
The law takes effect Jan. 1, 2013
By Bob Graham
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Regarding the statement: “The new law will also require that insurers allow a policy owner to name one or more designates…”
The new law requires “an insurer to give the applicant… the right to designate at least one person…”
“At least one” vs. “one or more” is not a big difference in all, but significant enough for system programming of the minimum requirement.