Washington state is requiring life insurers to notify policyholders and a designated third party before coverage lapses due to missed premiums.
Substitute House Bill 2428, passed unanimously by both chambers of the 69th Legislature during the 2026 Regular Session, adds new notification obligations for insurers issuing individual life insurance policies in the state. The House approved the measure 94-0 on February 12, 2026, and the Senate followed with a 48-0 vote on March 4, 2026. The bill was originally sponsored by Rep. Mari Leavitt, Rep. Kristine Reeves, and Rep. Lisa Parshley, and advanced through the House Consumer Protection & Business committee.
The law amends RCW 48.23.030, which currently entitles life insurance policyholders to a grace period of one month, but not less than 30 days, to make a late premium payment. Insurers may charge interest up to six percent per annum during the grace period, and the policy remains in force throughout. If a claim arises during the grace period before the overdue premium is paid, the insurer may deduct the amount of such premium or premiums with interest from any settlement under the policy.
On top of this existing framework, the new law requires insurers to send a written notice of possible termination of coverage at least 30 days before an individual life insurance policy lapses for nonpayment. That notice must go to two recipients: the policyholder at their last known address, and a third party designated on the account.
The third-party designee system is the centerpiece of the legislation. At the time of application, insurers must inform applicants in writing of their right to designate a third party to receive a copy of any lapse or termination notice based on nonpayment of the premium. Applicants can make this designation at application or at any point while the policy remains in force, by submitting a written notice to the insurer containing the name and address of the third-party designee.
Insurers are also on the hook for documenting that these notices were actually sent. The law requires insurers to obtain and, upon request, demonstrate proof of delivery. Acceptable forms include records showing notices were sent via first-class mail using an intelligent mail barcode, certified mail receipts, read-receipts for electronic delivery, or tracking confirmation from a shipping service.
The legislation is careful to draw boundaries around who bears responsibility and who does not. A third-party designee takes on no duty or liability by virtue of being designated. They are not obligated to inform the policyholder or any other person about a notice received, pay premiums on the policyholder's behalf, compensate the policyholder, beneficiary, or any other person in connection with a lapse or cancellation, or take any lawful action upon receiving a notice. The insurer, likewise, assumes no liability to the third-party designee in relation to a failure to send a notice as required under the act.
Not every life insurance product falls under the new requirements. The law exempts group life insurance policies, policies where premiums are due monthly or more frequently, and term life insurance policies with a term of one year or less.
The act applies prospectively only and not retroactively. It covers life insurance policies issued on or after its effective date of January 1, 2027.
