What Are the Life Insurance Laws in California?

Life insurance isn’t something most people want to think about, but it’s not something to be ignored — especially if you’re the breadwinner in a family with minor children.  Even those who don’t have dependents often purchase life insurance to insure their affairs will be settled and final costs covered when they die.

Life insurance can be complicated as there are various kinds of policies and terms in addition to differing rights for the insured depending on which company the policy is purchased from. Life insurance laws are regulated primarily by state legislatures so they may vary depending upon where you live.

California residents can benefit from understanding the state’s life insurance laws and rights of the insured, particularly when it comes to cancellation.

What are Life Insurance Laws in California?

The State Insurance Code of California comprises the Golden State’s life insurance laws. Both consumers and insurance companies are protected by the code in many ways, according to LifeInsurance.org.

Among the code’s key provisions are those that deal with the initial purchase of a life insurance policy and under what terms a policy can be canceled.

At the time a policy is applied for or purchased, California’s life insurance laws require the insurance agent to give the customer “an original or copy of all printed materials used for the presentation to the applicant.” Life insurance agents must also provide prospective customers with a “buyer’s guide” before accepting the insured’s initial premium payment or deposit unless the policy the customer is applying for includes “an unconditional refund provision of at least 10 days.” In that case, the buyer’s guide can be given to the insured with the approved policy.

A buyer’s guide is a publication listing the full terms and conditions of the life insurance policy, according to Answer Financial.

California’s life insurance laws also give consumers at least 10 days to change their minds after purchasing a policy. During those 10 days, if a consumer decides they do not want the policy, it can be canceled and a full refund must be paid, the law says.

Some insurance companies offer more than 10 days to reconsider.

What Do Life Insurance Laws Say About Cancellation?

One of the most important aspects of California’s life insurance laws is the regulation for policy cancellation due to a lack of payment.

In 2013, the law was amended to allow for a 60-day grace period after a missed premium payment before an insurance company can terminate a policy. It says that the insured has no less than 60 days after the policy premium due date in which to make the payment without incurring a penalty or cancellation and the policy shall remain in force during the grace period.

Notice of a pending policy termination for lack of payment must be made “by first-class United States mail within 30 days after a premium is due and unpaid.”

The law pertains to policies purchased after the 2013 amendment was enacted. Policies purchased before then are subject to the law’s previous 30-day grace period.

A 2019 ruling by California’s Court of Appeals affirmed that the 2013 revision is not retroactive.

An insurance company can cancel a policy in the first two years of its existence if it determines the insured lied on their application for coverage. The company must give the insured a 30-day notice of the cancellation.

What Can You Do if Your Policy Was Cancelled?

In the event your life insurance policy is canceled against your wishes, insurance experts recommend getting in touch with the agent or broker as soon as possible to ask if there is any way to have the policy reinstated.

“If you have specific reasons why you did not pay, like a stay in the hospital, illness or death in the family … or maybe you hit some financial problems, explain the circumstances to them and ask them to reconsider,” advises consumer finance website The Balance.

How Can a Life Insurance Lawyer Help?

Dealing with life insurance laws and unwanted policy cancellations can be overwhelming. In those instances, consulting with an experienced lawyer who is familiar with the intricacies of insurance law can be helpful in determining your best course of action. Top Class Actions has laid the groundwork for you by connecting you with an experienced attorney.

Join a Free California Life Insurance Wrongful Termination Lawsuit Investigation

If you believe that a life insurance company wrongfully canceled your life insurance policy due to nonpayment of premium, or if you were the beneficiary of a life insurance policy that was terminated or for which a claim was denied for non-payment of premium, you may have a claim.

To qualify for this investigation, the life insurance policy must have initially been issued in California or the policyholder must currently reside in California.

Get a Free Case Evaluation

This article is not legal advice. It is presented
for informational purposes only.