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HB 1488

TO AMEND THE STANDARD NONFORFEITURE LAW FOR LIFE INSURANCE; AND TO REQUIRE AN INSURER TO PAY INTEREST ON DEFERRED PAYMENT OF ANY CASH SURRENDER VALUE UNDER CERTAIN POLICIES.

2025 Regular Session Introduced by Ben Gilmore and 1 co-sponsor

House Bill 1488 mandates interest on deferred cash surrender values for life insurance, enhancing financial protection for policyholders in Arkansas.

Notification that HB1488 is now Act 391
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WeVote Research Nonpartisan
Bill Summary · HB 1488

Summary of House Bill 1488

Bill Number: HB 1488
Title: To Amend the Standard Nonforfeiture Law for Life Insurance; and to Require an Insurer to Pay Interest on Deferred Payment of Any Cash Surrender Value Under Certain Policies.
Status: Now Act 391
Introduced: February 14, 2025
Classification: Bill

Purpose and Intent

House Bill 1488 aims to amend the existing Standard Nonforfeiture Law for life insurance policies in Arkansas. The primary intent of the bill is to enhance consumer protections by ensuring that policyholders receive interest on deferred cash surrender values when they surrender their life insurance policies.

Key Provisions

  1. Deferred Payment of Cash Surrender Value:

    • Insurers are allowed to defer the payment of any cash surrender value for a maximum period of six months after a policyholder demands payment and surrenders the policy.
    • During this deferment period, the death benefit of the policy will remain in full force and effect.

  2. Interest on Deferred Payments:

    • If the insurer does not pay the cash surrender value within 30 days after the demand for surrender, they are required to pay interest on the cash surrender value.
    • The interest rate will be set at the prime rate published in the Wall Street Journal on the day the demand for surrender is made, accruing from the date of surrender until the cash surrender value is fully paid within the six-month period.

Who Would Be Affected

  • Policyholders: Individuals who hold life insurance policies will benefit from the new provisions, as they will be entitled to interest on deferred payments, providing them with additional financial protection.
  • Insurers: Life insurance companies will need to adjust their policies and procedures to comply with the new requirements regarding deferred payments and interest calculations.

Procedural Timeline

  • February 14, 2025: Bill filed.
  • March 6, 2025: Amendment No. 1 adopted; bill ordered engrossed.
  • March 10, 2025: Bill passed in the House and transmitted to the Senate.
  • March 18, 2025: Bill passed in the Senate with amendments.
  • March 25, 2025: Notification that HB 1488 is now Act 391.

Conclusion

House Bill 1488 represents a significant update to the Standard Nonforfeiture Law for life insurance in Arkansas, aiming to provide greater financial security for policyholders by mandating interest payments on deferred cash surrender values. This legislation is expected to enhance consumer confidence in life insurance products and ensure fair treatment of policyholders during the surrender process.

Compiled from official sources — confirm details with the bill’s official record.

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