Senate Bill Report — SHB 2428, Preventing Unintentional Lapses and Cancellations of Life Insurance Policies

Summary

This is the Senate Bill Report on SHB 2428, as of February 16, 2026, for the Senate Committee on Business, Trade & Economic Development. The title is an act relating to preventing unintentional lapses and cancellations of life insurance policies, and the report states the bill passed the House on 2/12/26, 94-0. The brief summary says the bill requires insurers issuing individual life insurance policies to send policyholders and designated third parties a notice of possible lapse in coverage due to nonpayment of premium, and provides requirements for designating a third party to receive such notices. The background describes a grace period of not less than 30 days.

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                            SENATE BILL REPORT
                                 SHB 2428

                                     As of February 16, 2026

Title: An act relating to preventing unintentional lapses and cancellations of life insurance
     policies.

Brief Description: Preventing unintentional lapses and cancellations of life insurance policies.

Sponsors: House Committee on Consumer Protection & Business (originally sponsored by
    Representatives Leavitt, Reeves and Parshley).

Brief History: Passed House: 2/12/26, 94-0.
     Committee Activity: Business, Trade & Economic Development: 2/18/26.


                                     Brief Summary of Bill
           • Requires insurers issuing individual life insurance policies to send to
             policyholders and designated third parties a notice of possible lapse in
             coverage due to nonpayment of premium.
           • Provides requirements for designating a third party to receive such
             notices.


SENATE COMMITTEE ON BUSINESS, TRADE & ECONOMIC DEVELOPMENT

     Staff: John Kim (786-7453)

     Background: Life Insurance. Life insurance is a contract between an insurer and a
     policyholder in which the insurer, in exchange for the payment of premiums, guarantees to
     pay a sum of money to one or more named beneficiaries when the insured person dies.

     Life insurance may be sold in individual or group policies. Different types of life insurance
     products include term life insurance, which lasts for a certain number of years, versus
     permanent life insurance, which includes subtypes of whole, universal, indexed, and




     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                              -1-                                        SHB 2428
     variable life insurance.

     Grace Period. Current law requires all life insurance policies, except for industrial, group,
     and pure endowment policies, to include a provision that the insured is entitled to a grace
     period of not less than 30 days within which the payment of any premium after the first may
     be made. An insurer may charge interest up to 6 percent per annum for the number of days
     of grace elapsing before payment of the premium.

     During the grace period, the policy must continue in force, but if a claim is filed during the
     grace period before overdue or deferred premiums are paid, the amount of such premiums
     with interest may be deducted in any settlement under the policy.

     Summary of Bill: Required Notice of Lapse in Coverage. At least 30 days before the day
     on which coverage under an individual life insurance policy will lapse based on
     nonpayment of the premium, the insurer must send a written notice of possible termination
     of coverage to the policyholder at the policyholder's last known address and a third party
     designated on the account.

     An insurer must obtain and, upon request, demonstrate proof of delivery for each such
     notice sent by the insurer. Proof of delivery may include records sufficient to show that
     notices are sent first-class mail using an intelligent mail barcode, or a certified mail receipt,
     read-receipt for electronic delivery, or tracking confirmation from a shipping service.

     This notice requirement does not apply to group life insurance policies, life insurance
     policies for which payment of premium is due monthly or more frequently, or term life
     insurance policies that have a term of one year or less.

     Disclosure Requirement Regarding Designating a Third Party. At the time of application for
     an individual life insurance policy delivered or issued for delivery in this state, an insurer
     must notify the applicant in writing of the applicant's right to designate a third party to
     receive notice of lapse or termination of the policy based on nonpayment of the premium.

     An applicant may make the designation at the time of application for the policy, or at any
     time the policy is in force, by submitting a written notice to the insurer containing the name
     and address of the third-party designee.

     The insurer must transmit a copy of a notice of lapse or termination of the policy based on
     nonpayment of the premium to the designated third party in addition to the transmission of
     the notice to the policyholder.

     Duties and Liabilities. The act provides that the designation of the third party does not
     create or constitute acceptance of any duty or liability on the part of the third-party designee
     related to informing or not informing the policyholder or any other person about a notice
     received by the third-party designee; making a payment of any premium on behalf of the


Senate Bill Report                              -2-                                         SHB 2428
     policyholder; compensating the policyholder, beneficiary, or any other person in relation to
     a lapse or cancellation of a life insurance policy; or taking any lawful action upon receiving
     a notice.

     The designation also does not create or constitute acceptance of any liability on the part of
     the insurer as to the third-party designee related to a failure to send a notice.

     Applicability. The above requirements apply to life insurance policies issued on or after
     January 1, 2027.

     Appropriation: None.

     Fiscal Note: Available. New fiscal note requested on February 12, 2026.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: The bill takes effect on January 1, 2027.




Senate Bill Report                             -3-                                       SHB 2428


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