Life Insurance Laws in Washington State
Life insurance in Washington State is regulated by Title 48 of the Washington Code. The law mandates certain protections for consumers as well as rules for how life insurance companies must operate. Additionally, certain protections from creditors are outlined under section 48.18.410 and 48.18.430 of the Revised Code of Washington.
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Death Benefit Settlement
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Washington mandates that all life insurance companies pay interest on death benefit proceeds from the date of death of the insured until the death benefit is paid out to the beneficiary. This means that when you file your claim, and receive money from the insurer, it will mostly likely have some amount of interest added to it, even if it is small.
Misrepresentation
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You cannot misrepresent yourself on a life insurance application. Most misrepresentations must be discovered within the first two years of the policy. If the misrepresentation was material (i.e. it affects whether you would have received an offer for life insurance from the life insurance company), then this can be cause for policy termination. A misstatement of age may be discovered at any time (the two year time limit does not apply to age), and this will cause your benefits to be adjusted to reflect your actual age.
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Creditor Protection
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Creditors are not allowed to take the proceeds of a life insurance policy in Washington. The beneficiary's interest in "proceeds and avails" of the policy are wholly exempt from any creditor collection action. This means that if you are sued, your creditors cannot take the death benefit and proceeds of the policy away from you or your family.
Guaranty Association
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Washington protects policyholders from insurer insolvency through the Washington Life & Disability Insurance Guaranty Association. This association provides a guarantee on the death benefits you will receive from an insurer as well as the cash value of any cash value policy. Specifically, as of February 2011, you are guaranteed to receive $500,000 of death benefit and $500,000 of cash value if an insurer becomes insolvent and cannot pay its claims.
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