FINAL BILL REPORT

SHB 147

                                  C 130 L 87

BYHouse Committee on Financial Institutions & Insurance (originally sponsored by Representatives Lux, Winsley, Nutley, Chandler, Day, P. King, Dellwo and Zellinsky)

Revising provisions relating to credit insurance.

House Committe on Financial Institutions & Insurance

Senate Committee on Financial Institutions

SYNOPSIS AS ENACTED

BACKGROUND:

Credit life insurance is usually sold on a group basis by a lender and provides that in the event that the borrower dies, any remaining indebtedness will be cancelled.  In most instances, credit life insurance is optional with the borrower.  If the borrower chooses to purchase the coverage, an additional fee is charged to the loan account.  In some instances, the coverage is provided without charge to the borrower; the lender pays for the coverage to protect itself from the risk of default on the loan.

In 1961, the legislature adopted an act regulating the credit life insurance business.  The original act limited the sale of coverage to loans with a term of no more than five years and in an amount no greater than $10,000.  That limit was periodically increased, and in 1983, the legislature removed the dollar limit and left only a limit on the term of the loan eligible for coverage - ten years.

SUMMARY:

The ten-year coverage limit on group life coverage is repealed; group coverage may be provided for a period greater than ten years.

VOTES ON FINAL PASSAGE:

      House 93   0

      Senate    45     0

EFFECTIVE:July 26, 1987