Bill would require insurers to notify third‑party designees to prevent unintentional life‑policy lapses
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Summary
Substitute House Bill 2428 would require insurers issuing individual life policies to send written notice at least 30 days before a lapse to the policyholder and any designated third party, obtain proof of delivery, and include a right to designate a trusted third party; supporters include the Office of Insurance Commissioner, AARP, and caregiving advocates; staff estimates $54,000 in implementation costs and an effective date of Jan. 1, 2027.
The committee heard Substitute House Bill 2428, which would require insurers that issue individual life insurance policies to send a written notice at least 30 days before coverage lapses for nonpayment to the policyholder at the last known address and to any designated third‑party designee. The insurer must obtain proof of delivery, which may include delivery confirmation for mailed notices or read receipts for electronic delivery. The requirement excludes group life, policies with premiums due monthly or more frequently, and term life policies with a term of one year or less.
Sponsor Marie Lovett described the bill as a constituent‑driven measure designed to prevent devastating unintentional lapses that can leave grieving families without financial protection. "This bill allows third party designees when you have an individual or a member of your family who may have dementia...so that I'll get a notification that it's time to pay and make sure I promptly do that on her behalf," she said.
Representatives of the Office of the Insurance Commissioner testified in support, saying the notice could prevent unintended lapses that are particularly harmful for older policyholders or those experiencing cognitive decline. Consumer advocates including AARP and the WBBA also testified in strong support, describing how advance notice to caregivers can preserve coverage and protect family financial stability.
The American Council of Life Insurers testified as 'other' rather than outright support, noting that companies operating nationally will face refile and compliance costs when Washington diverges from national standards; staff and sponsor said the bill language was negotiated and that the implementation timeline was addressed. Staff noted an estimated operating cost of $54,000 in the current biennium to implement the bill and said the notice requirement applies to policies issued on or after 01/01/2027.
What happens next: public testimony concluded and the committee did not take a recorded vote. Sponsors and several stakeholders said they had worked to resolve technical issues, while industry cautioned about filing and compliance costs.