SENATE BILL REPORT

SHB 147

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

Senate Hearing Date(s):March 26, 1987

Majority Report:  Do pass.

      Signed by Senators Moore, Chairman; Bender, Vice Chairman; Bottiger, Metcalf, von Reichbauer.

Senate Staff:Stephanie Yates (786-7416)

                  March 27, 1987

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS, MARCH 26, 1987

BACKGROUND:

Credit life insurance is usually sold on a group basis by a lender and provides that in the event 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 extensively regulating the credit life insurance business.  The original act limited the sale of coverage to loans with a term of not more than five years and in an amount not greater than $10,000.  Those limits have been periodically increased.  In 1983, however, the Legislature removed the dollar limit and left a limit of ten years on the term of the loan eligible for coverage.

SUMMARY:

The ten year coverage limit on group life coverage is repealed.

Fiscal Note:      none requested

Senate Committee - Testified: Jim Byrne, Washington Credit Union League; Mike Medland, CUNA Mutual Insurance Group, Madison, Wisconsin