Substitute House Bill 2428 — State of Washington, 69th Legislature, 2026 Regular Session

Summary

This is Substitute House Bill 2428 (H-3437.1), State of Washington, 69th Legislature, 2026 Regular Session, by House Consumer Protection & Business, read first time 02/04/26. The act relates to preventing unintentional lapses and cancellations of life insurance policies and amends RCW 48.23.030. Section 1 keeps the provision for a grace period of one month, but not less than thirty days, and requires an insurer to send a written notice of possible termination of coverage at least 30 days before coverage under an individual life insurance policy will lapse based on nonpayment of the premium. The notice goes to the policyholder and to a third party designated on the account.

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Full text

     H-3437.1

                           SUBSTITUTE HOUSE BILL 2428


     State of Washington         69th Legislature       2026 Regular Session

     By House Consumer Protection & Business (originally       sponsored   by
     Representatives Leavitt, Reeves, and Parshley)

     READ FIRST TIME 02/04/26.




1        AN   ACT  Relating   to   preventing unintentional lapses  and
2    cancellations of life insurance policies; amending RCW 48.23.030;
3    adding a new section to chapter 48.23 RCW; creating a new section;
4    and providing an effective date.


5    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:


 6       Sec. 1. RCW 48.23.030 and 1947 c 79 s .23.03 are each amended to
 7   read as follows:
 8       (1) There shall be a provision that the insured is entitled to a
 9   grace period of one month, but not less than thirty days, within
10   which the payment of any premium after the first may be made, subject
11   at the option of the insurer to an interest charge not in excess of
12   six percent per annum for the number of days of grace elapsing before
13   the payment of the premium, during which period of grace the policy
14   shall continue in force, but in case the policy becomes a claim
15   during the grace period before the overdue premium is paid, or the
16   deferred premiums of the current policy year, if any, are paid, the
17   amount of such premium or premiums with interest thereon may be
18   deducted in any settlement under the policy.
19       (2)(a) Except as provided in subsection (3) of this section, at
20   least 30 days before the day on which coverage under an individual
21   life insurance policy will lapse based on nonpayment of the premium,
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 1   the insurer must send a written notice of possible termination of
 2   coverage to:
 3       (i) The policyholder at the policyholder's last known address;
 4   and
 5       (ii) A third party designated on the account in accordance with
 6   section 2 of this act.
 7       (b) An insurer must obtain and, upon request, demonstrate proof
 8   of delivery for each notice the insurer sends under (a) of this
 9   subsection. Proof of delivery for purposes of this subsection (2)(b)
10   may include records sufficient to show that notices are sent first-
11   class mail using an intelligent mail barcode, or a certified mail
12   receipt,   read-receipt   for   electronic  delivery,  or   tracking
13   confirmation from a shipping service.
14       (3) The requirements in subsection (2) of this section and
15   section 2 of this act do not apply to:
16       (a) Group life insurance policies;
17       (b) Life insurance policies for which payment of premium is due
18   monthly or more frequently;
19       (c) Term life insurance policies that have a term of one year or
20   less.


21       NEW SECTION.   Sec. 2.   A new section is added to chapter 48.23
22   RCW to read as follows:
23       (1)(a) Except as provided in subsection (4) of this section, an
24   insurer that delivers or issues for delivery an individual life
25   insurance policy in this state must notify the applicant for the
26   policy, in writing at the time of application for the policy, of an
27   applicant's right to designate a third party to receive notice of
28   lapse or termination of the policy based on nonpayment of the
29   premium.
30       (b) An applicant may make a designation described in (a) of this
31   subsection at the time of application for the policy, or at any time
32   the policy is in force, by submitting a written notice to the insurer
33   containing the name and address of the third-party designee.
34       (2) In accordance with RCW 48.23.030(2), an insurer must transmit
35   a copy of a notice of lapse or termination of the policy based on
36   nonpayment of the premium to a third party designated in accordance
37   with this section in addition to the transmission of the notice to
38   the policyholder.


                                     p. 2                         SHB 2428
 1       (3)(a) The designation of a third party under this section does
 2   not create or constitute acceptance of any duty or liability on the
 3   part of the third-party designee related to: (i) Informing or not
 4   informing the policyholder or any other person about a notice
 5   received by the third-party designee under this section; (ii) making
 6   a payment of any premium on behalf of the policyholder; (iii)
 7   compensating the policyholder, beneficiary, or any other person in
 8   relation to a lapse or cancellation of a life insurance policy; or
 9   (iv) taking any lawful action upon receiving a notice under this
10   section and RCW 48.23.030(2).
11       (b) The designation of a third party under this section does not
12   create or constitute acceptance of any liability on the part of the
13   insurer as to the third-party designee related to a failure to send a
14   notice as required by this section and RCW 48.23.030(2).
15       (4) This section does not      apply    to   life   insurance   policies
16   identified in RCW 48.23.030(3).


17       NEW SECTION.   Sec. 3.   This act applies prospectively only and
18   not retroactively. It applies to life insurance policies issued on or
19   after the effective date of this section.


20      NEW SECTION.   Sec. 4.   This act takes effect January 1, 2027.

                                   --- END ---




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