Print Friendly HOUSE BILL NO. 635 – Life insurance, payments
HOUSE BILL NO. 635
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LIFE INSURANCE - Adds to existing law to provide that life insurers have
the power to hold the proceeds of a life insurance policy upon certain
terms and conditions; to provide for the payment of interest on death
benefits; and to provide the rate of interest.
02/12 House intro - 1st rdg - to printing
02/13 Rpt prt - to Bus
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature Second Regular Session - 2002
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 635
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO LIFE INSURANCE; AMENDING CHAPTER 18, TITLE 41, IDAHO CODE, BY THE
3 ADDITION OF A NEW SECTION 41-1837, IDAHO CODE, TO PROVIDE THAT LIFE INSUR-
4 ERS HAVE THE POWER TO HOLD THE PROCEEDS OF A LIFE INSURANCE POLICY UPON
5 CERTAIN TERMS AND CONDITIONS, TO PROVIDE FOR THE PAYMENT OF INTEREST ON
6 DEATH BENEFITS AND TO PROVIDE THE RATE OF INTEREST.
7 Be It Enacted by the Legislature of the State of Idaho:
8 SECTION 1. That Chapter 18, Title 41, Idaho Code, be, and the same is
9 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
10 ignated as Section 41-1837, Idaho Code, and to read as follows:
11 41-1837. LIFE INSURANCE POLICY SETTLEMENTS -- INTEREST. (1) Every policy
12 of life insurance shall state that a life insurer shall have the power, and
13 the life insurer has the power, to hold under agreement the proceeds of any
14 policy of life insurance of any nature issued by it, upon such terms and
15 restrictions as to revocation by the policyholder and control by beneficiaries
16 and with such exemptions from the claims of creditors of beneficiaries other
17 than the policyholder as set forth in the policy or as agreed to in writing by
18 the insurer and the policyholder. Upon maturity of a policy in the event the
19 policyholder has made no such agreement, the insurer shall have the power to
20 hold the proceeds of the policy under an agreement with the beneficiaries.
21 The insurer shall not be required to segregate funds.
22 (2) Every policy of life insurance shall state that an insurer will, and
23 the insurer shall, pay interest on death benefits payable under the terms of a
24 life insurance policy insuring the life of any person who was a resident of
25 this state at the time of death. Such interest shall begin accruing on the
26 date of death of the insurer or the date the loss becomes effective, at the
27 current fixed interest rate of the insurer's fixed portfolio then paid by the
28 insurer. Benefits payable that have not been tendered to the beneficiary
29 within ninety (90) days of the receipt of proof of death shall accrue inter-
30 est, commencing on the ninety-first day of the receipt of proof of death, at
31 the aforementioned rate plus two percent (2%) per annum.
STATEMENT OF PURPOSE
Under current law insurers have the power to delay payment of
proceeds on life insurance policies. This proposal provides payment
of interest on the benefits payable under the policy, accruing on
the effective date of the loss, if paid within ninety days, at a
fixed rate based on the insurer’s portfolio; and providing interest
at that same rate plus two percent per annum if benefits are not
paid within 90 days.
There is no fiscal impact.
Name: Rep. Wendy Jaquet
STATEMENT OF PURPOSE/FISCAL NOTE H 635