By Shields H.B. No. 3136
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the standard Nonforfeiture benefits for life insurance
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 3.44a, section 2, Insurance Code, is
1-5 amended to read as follows:
1-6 Sec. 2. In the case of policies issued on and after the
1-7 operative date of this Article (as defined in Section 13), no
1-8 policy of life insurance, except as stated in Section 12, shall be
1-9 delivered or issued for delivery in this state unless it shall
1-10 contain in substance the following provisions, or corresponding
1-11 provisions which in the opinion of the State Board of Insurance are
1-12 at least as favorable to the defaulting or surrendering
1-13 policyholder as are the minimum requirements hereinafter specified,
1-14 and are essentially in compliance with Section 11 of this law:
1-15 (1) That, in the event of default in any premium
1-16 payment, the company will grant, upon proper request not later than
1-17 sixty (60) days after the due date of the premium in default, a
1-18 paid-up nonforfeiture benefit on a plan stipulated in the policy,
1-19 effective as of such due date, of such amount as may be hereinafter
1-20 specified. In lieu of such stipulated paid-up nonforfeiture
1-21 benefit, the company may substitute, upon proper request not later
1-22 than 60 days after the due date of the premium in default, an
1-23 actuarially equivalent alternative paid-up nonforfeiture benefit
2-1 which provides a greater amount or longer period of death benefits
2-2 or, if applicable, a greater amount or earlier payment of endowment
2-3 benefits.
2-4 (2) That, upon surrender of the policy within sixty
2-5 (60) days after the due date of any premium payment in default
2-6 after premiums have been paid for at least three (3) full years in
2-7 the case of ordinary insurance or five (5) full years in the case
2-8 of industrial insurance, the company will pay, in lieu of any
2-9 paid-up nonforfeiture benefit, a cash surrender value of such
2-10 amount as may be hereinafter specified.
2-11 (3) That a specified paid-up nonforfeiture benefit
2-12 shall become effective as specified in the policy unless the person
2-13 entitled to make such election elects another available option not
2-14 later than sixty (60) days after the due date of the premium in
2-15 default.
2-16 (4) That, if the policy shall have become paid-up by
2-17 completion of all premium payments or if it is continued under any
2-18 paid-up nonforfeiture benefit which became effective on or after
2-19 the third policy anniversary in the case of ordinary insurance or
2-20 the fifth policy anniversary in the case of industrial insurance,
2-21 the company will pay, upon surrender of the policy within thirty
2-22 (30) days after any policy anniversary, a cash surrender value of
2-23 such amount as may be hereinafter specified.
2-24 (5) In the case of policies which cause on a basis
2-25 guaranteed in the policy unscheduled changes in benefits or
3-1 premiums, or which provide an option for changes in benefits or
3-2 premiums other than a change to a new policy, a statement of the
3-3 mortality table, interest rate, and method used in calculating cash
3-4 surrender values and the paid-up nonforfeiture benefits available
3-5 under the policy. In the case of all other policies, a statement
3-6 of the mortality table and interest rate used in calculating the
3-7 cash surrender values and the paid-up nonforfeiture benefits
3-8 available under the policy, together with a table showing the cash
3-9 surrender value, if any, and paid-up nonforfeiture benefit, if any,
3-10 available under the policy on each policy anniversary either during
3-11 the first twenty (20) policy years or during the term of the
3-12 policy, whichever is shorter, such values and benefits to be
3-13 calculated upon the assumption that there are no dividends or
3-14 paid-up additions credited to the policy and that there is no
3-15 indebtedness to the company on the policy.
3-16 (6) A statement that the cash surrender values and the
3-17 paid-up nonforfeiture benefits available under the policy are not
3-18 less than the minimum values and benefits required by or pursuant
3-19 to the insurance law of the state in which the policy is delivered;
3-20 an explanation of the manner in which the cash surrender values and
3-21 the paid-up nonforfeiture benefits are altered by the existence of
3-22 any paid-up additions credited to the policy or any indebtedness to
3-23 the company on the policy; if a detailed statement of the method of
3-24 computation of the values and benefits shown in the policy is not
3-25 stated therein, a statement that such method of computation has
4-1 been filed with the insurance supervisory official of the State in
4-2 which the policy is delivered; and a statement of the method to be
4-3 used in calculating the cash surrender value and paid-up
4-4 nonforfeiture benefit available under the policy on any policy
4-5 anniversary beyond the last anniversary for which such values and
4-6 benefits are consecutively shown in the policy.
4-7 Any of the foregoing provisions or portions thereof not
4-8 applicable by reason of the plan of insurance may, to the extent
4-9 inapplicable, be omitted from the policy.
4-10 The company shall reserve the right to defer the payment of
4-11 any cash surrender value for a period of five (5) <six (6)> months
4-12 after demand therefor with surrender of the policy.
4-13 SECTION 3. The importance of this legislation and the
4-14 crowded condition of the calendars in both houses create an
4-15 emergency and an imperative public necessity that the
4-16 constitutional rule requiring bills to be read on three several
4-17 days in each house be suspended, and this rule is hereby suspended,
4-18 and that this Act take effect and be in force from and after its
4-19 passage, and it is so enacted.