HB79 Alabama 2011 Session

Summary

Primary Sponsor

Gregory Canfield

Republican

Co-Sponsors

Joe FaustGreg WrenK.L. Brown

Session

Regular Session 2011

Title

Insurance companies, insureds 60 years of age or older or who have terminal or chronic illness required to be notified of options regarding life insurance policy in lieu of allowing policy to lapse, civil penalties, Life Insurance Consumer Disclosure Act

Summary

This bill requires Alabama life insurers to notify insureds 60 or older or with terminal/chronic illness about options to avoid policy lapse, including life settlements and other alternatives.

What This Bill Does

If passed, insurers must send written notices to eligible policy owners when a policy may lapse, when surrender is requested, or when accelerated death benefits are requested (with additional triggers possibly set by the commissioner). The notice must explain that life insurance is part of a broader financial plan and describe alternatives to lapse, including life settlements, accelerated death benefits, and conversion to long-term care policies. The notice language will be developed by the Alabama Commissioner at no cost to insurers and must be in plain language, advising policy owners to consult a financial advisor, insurance agent, broker, or attorney. If an insurer fails to provide the required notice, it could be treated as an unfair trade practice with civil penalties, and the act becomes effective on the first day of the third month after passage and governor approval.

Who It Affects

• Policy owners aged 60 and older or known to be terminally or chronically ill will receive mandated notices about options to avoid lapse and how to use them.
• Insurance companies issuing life insurance policies in Alabama must provide the notices and may face civil penalties for non-compliance.

Key Provisions

• Insurers must provide written notice to eligible policy owners when the policy may lapse, or when the owner requests surrender or accelerated death benefits, with additional triggers possibly prescribed by the commissioner; the notice cannot be sent more than once in 12 months for lapse-related notices.
• The commissioner will develop the required notice at no cost to insurers, and it must be written in lay terms.
• Notice content includes: life insurance as part of a financial plan; description of alternatives to lapse, including life settlements, accelerated death benefits, policy replacement, and other options such as loans or conversions to permanent or long-term care coverage; and a warning that availability depends on circumstances, plus a recommendation to consult a financial professional.
• A violation of the notice requirement is treated as an unfair trade practice with applicable penalties under state law.
• The act is named the Life Insurance Consumer Disclosure Act and becomes effective on the first day of the third month after passage and governor approval.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance Companies