H-4710.1          _______________________________________________

                            SUBSTITUTE HOUSE BILL 2775

                  _______________________________________________

State of Washington              52nd Legislature             1992 Regular Session

By House Committee on Financial Institutions & Insurance (originally sponsored by Representatives Dellwo, Broback and Paris)

Read first time 02/07/92.  Regulating interest paid on death benefits by insurers.

     AN ACT Relating to life insurance and annuities; amending RCW 48.23.300; and providing an effective date.

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

     Sec. 1.  RCW 48.23.300 and 1985 c 264 s 23 are each amended to read as follows:

(1) Any life insurer shall have the power to hold under agreement the proceeds of any policy issued by it, upon such terms and restrictions as to revocation by the policyholder and control by beneficiaries, and with such exemptions from the claims of creditors of beneficiaries other than the policyholder as set forth in the policy or as agreed to in writing by the insurer and the policyholder.  Upon maturity of a policy in the event the policyholder has made no such agreement, the insurer shall have the power to hold the proceeds of the policy under an agreement with the beneficiaries.  The insurer shall not be required to segregate funds so held but may hold them as part of its general assets.

(2) An insurer shall pay interest on death benefits payable under the terms of a life insurance policy insuring the life of any person who was a resident of this state at the time of death.  Such interest shall accrue commencing on the date of death at the larger of:  (a) The rate then paid by the insurer on other withdrawable policy proceeds left with the company((, but not less than eight percent)); or (b) average bill rate for ninety-day United States treasury bills as determined at the first bill market auction conducted during the month immediately preceding the date on which interest shall begin to accrue.  Benefits payable that have not been tendered to the beneficiary within ninety days of the receipt of proof of death shall accrue interest, commencing on the ninety-first day, at the aforementioned rate plus three percent.  This section applies to death of insureds that occur on or after ((September 1, 1985)) July 1, 1992.

NEW SECTION. Sec. 2.      This act shall take effect July 1, 1992.