Representative James A. Dunnigan proposes the following substitute bill:


1     
INSURANCE POLICY NOTIFICATION AMENDMENTS

2     
2021 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Wayne A. Harper

5     
House Sponsor: Steve Eliason

6     

7     LONG TITLE
8     General Description:
9          This bill amends provisions regarding life insurance policy notifications.
10     Highlighted Provisions:
11          This bill:
12          ▸     requires an insurer of life insurance to send a notice to a designated third party
13     before terminating coverage;
14          ▸     requires an insurer of life insurance who sends a notice of termination of coverage
15     to obtain and, upon request, demonstrate proof of delivery for the notice of
16     termination of coverage; and
17          ▸     makes technical and conforming changes.
18     Money Appropriated in this Bill:
19          None
20     Other Special Clauses:
21          None
22     Utah Code Sections Affected:
23     AMENDS:
24          31A-22-402, as last amended by Laws of Utah 2002, Chapter 308
25          31A-22-430, as enacted by Laws of Utah 2020, Chapter 32

26     

27     Be it enacted by the Legislature of the state of Utah:
28          Section 1. Section 31A-22-402 is amended to read:
29          31A-22-402. Grace period.
30          (1) (a) Every life insurance policy other than a group policy shall contain a provision
31     entitling the policyholder to a grace period within which the payment of any premium may be
32     made after the first payment of any premium.
33          (b) During the grace period described in Subsection (1)(a), the policy continues in full
34     force.
35          (2) The grace period required by Subsection (1) may not be less than:
36          (a) 31 days; or
37          (b) four weeks for policies whose premiums are payable more frequently than monthly.
38          (3) The insurer may impose an interest charge during the grace period not in excess of
39     the interest rate:
40          (a) set by the policy for policy loans; or
41          (b) in the absence of a provision described in Subsection (3)(a), a rate set by the
42     commissioner by rule.
43          (4) If a claim arises under the policy during the grace period, an insurer may deduct
44     from the policy proceeds:
45          (a) the amount of any premium due or overdue;
46          (b) interest at the rate provided in this section; and
47          (c) any deferred installment of the annual premium.
48          (5) (a) [The] At least 30 days before the day on which the insurer terminates coverage,
49     the insurer shall send written notice of termination of coverage to:
50          [(a) to] (i) the policyholder's last-known address; and
51          [(b) at least 30 days before the date that the coverage is terminated.]
52          (ii) a third party designated in accordance with Section 31A-22-430.
53          (b) An insurer shall obtain and, upon request, demonstrate proof of delivery for a
54     notice the insurer sends under Subsection (5)(a).
55          Section 2. Section 31A-22-430 is amended to read:
56          31A-22-430. Policy notification.

57          (1) (a) An insurer that delivers or issues for delivery an individual life insurance policy
58     in this state shall notify the applicant for the policy, in writing at the time of application for the
59     policy, of an applicant's right to designate a third party to receive notice of lapse or cancellation
60     of the policy based on nonpayment of premium.
61          (b) An applicant may make a designation described in Subsection (1)(a) at the time of
62     application for the policy, or at any time the policy is in force, by submitting a written notice to
63     the insurer containing the name and address of the third-party designee.
64          (2) [An] In accordance with Subsection 31A-22-402(5), an insurer shall transmit a
65     copy of a notice of lapse or cancellation of the policy based on nonpayment of premium to a
66     third party designated in accordance with this section in addition to the transmission of the
67     notice of lapse or cancellation of the policy to the policyholder.
68          (3) The designation of a third party under this section does not constitute acceptance of
69     any liability on the part of the third party or insurer for a service provided to the policyholder.