HOUSE BILL No. 2189
By Representative Tanner
[ol12](By Request) 2-3
AN ACT relating to insurance; concerning the mandatory reinstatement
of certain life insurance policies in case of mental incapacity of an
Be it enacted by the Legislature of the State of Kansas:
Section 1. (a) The provisions of sections 1 through 8 shall apply to
all individual life insurance policies issued to residents of this state that
are subject to lapsing on and after the effective date of this act, issued by
an insurer authorized to do business in this state.
(b) The provisions of sections 1 through 8 shall not apply to a life
insurance policy that provides nonforfeiture benefits, which would main-
tain the contract for one year.
(c) As used in sections 1 through 8, ``policy'' means an individual life
Sec. 2. (a) A policy shall be entitled to reinstatement under this act
(1) Such policy has been in effect continuously for at least five years
immediately preceding the lapse;
(2) such policy has been without default in the payment of premiums
during such period; and
(3) there is a subsequent unintentional default in premium payments
caused by mental incapacity of the insured.
(b) A policy shall be reinstated within one year from the date of lapse
if such policy meets the requirements of subsection (a), on payment of
arrears of premiums with interest. The rate of interest may not exceed
6% per annum.
Sec. 3. (a) For purposes of this act, ``mental incapacity'' means lack-
ing the ability, based on reasonable medical judgment, to understand and
appreciate the nature and consequences of a decision regarding failure
to pay a premium when due and the ability to reach an informed decision
in the matter.
(b) Mental incapacity must be established by the clinical diagnosis of
a physician licensed in this state and qualified to make the diagnosis.
Sec. 4. (a) A request for reinstatement of coverage under this act and
proof of mental incapacity may be filed with the insurer by:
(1) The insured;
(2) the legal guardian of the insured;
(3) other legal representative of the insured; or
(4) the legal representative of the estate of the insured.
(b) Proof of mental incapacity and an accompanying request for re-
instatement must be made not later than the first anniversary date after
the lapse of a policy eligible for reinstatement.
Sec. 5. (a) After the requirements of section 4 have been satisfied,
an insurer subject to this act shall reinstate, without evidence of insura-
bility, coverage that has lapsed under the circumstances described by
(b) An insurer may require, as a condition of reinstatement, payment
of premiums plus interest owed for the period from the date of initial
lapse to the date of reinstatement.
(c) On reinstatement of the coverage, the initial contractual provi-
sions apply as if coverage had been continuous and without interruption.
Sec. 6. An insurer shall pay the amount of benefits owed under a
policy that is eligible for reinstatement under this act, reduced by the
amount of premiums and interest owed and unpaid on the date on which
the benefits are paid, if there is an uncontroverted claim for benefits that
exceed the amount of premiums and interest owed.
Sec. 7. An insurer is not required to reinstate coverage or pay ben-
efits under this act if the insured first became mentally incapacitated after
the expiration of an applicable grace period contained in the policy.
Sec. 8. (a) Each insurer shall disclose fully to each of its policyhol-
ders, contract holders or covered persons the requirements of this act.
(b) The disclosure shall be forwarded to applicable policyholders,
contract holders or covered persons either:
(1) Within 90 days following a lapse of a policy regulated by this act;
(2) within 90 days after the effective date of this act to each existing
policyholder whose policy is regulated by this act. Disclosure thereafter
on policies issued after the effective date of this act may be made by
including the disclosure information in the policy or in an endorsement
attached to the policy.
(c) Notice will be deemed to be in compliance with this act if mailed
by first-class mail to the last known address of the policyholder or if
contained in the policy form or as an endorsement thereto.
(d) The commissioner of insurance may adopt reasonable rules and
regulations to implement the provisions of this act. Such disclosure shall
be made in the form and manner prescribed by the commissioner of
Sec. 9. This act shall take effect and be in force from and after its
publication in the statute book.