CJ C.S.H.B. 2910 75(R)

BILL ANALYSIS


JUVENILE JUSTICE & FAMILY ISSUES
C.S.H.B. 2910
By: Delisi
5-9-97
Committee Report (Substituted)


BACKGROUND

Currently, Section 9.301, Family Code, states that if (1) a decree of
divorce or (2) an annulment is rendered  after an insured has designated
the insured's spouse as a beneficiary under a life insurance policy, that
designation is invalid unless (a) the beneficiary is redesignated by the
insured, or (b) the beneficiary is designated to receive the proceeds for
a dependent of the insured.  If (a) and (b) do not apply, the proceeds of
the policy are payable to a named alternative beneficiary.  If there is no
named beneficiary, the proceeds are payable to the insured's estate.
Furthermore, an insurer can be liable for payment of the proceeds to a
former spouse/beneficiary, but only if before payment of these proceeds,
the insurer receives written notice at its home office from an interested
person that the designation of the former spouse/beneficiary is not
effective under the Family Code provision and the insurer has not
interpleaded the proceeds into the registry of the court. On the other
hand, Article 3.48, Insurance Code, states that when a person designates a
beneficiary for a life insurance policy with  any legal reserve life
insurance company, the company issuing such policy shall, unless another
claim can be made to the proceeds, (1) pay the proceeds to the
beneficiary, and (2) the company shall be discharged from all liability
under the policy.  Thus, the Insurance Code clearly states that the
designation of a beneficiary remains, unless otherwise noted by the
insured. In determining the beneficiaries of a life insurance policy in
the case of a divorce decree, the Family Code provision prevails.  The
Department of Insurance has requested assistance through legislation that
would line up the Family Code with the existing Insurance Code provision
which applies to all insurance policies. 

PURPOSE

To amend Section 9.301, Family Code, to line up with Article 3.48,
Insurance Code, to state that the designation of a beneficiary prior to
divorce or annulment remains unless the insured redesignates the
beneficiary following the divorce or annulment.   

SECTION BY SECTION ANALYSIS

Section 1.

Amends Section 9.301, Family Code, by stating that a designation of a
beneficiary prior to divorce or annulment is valid unless the decree
states otherwise. 

Deletes subsections (a)(1), (a)(2), (a)(3), (b), and (c)(1) and (c)(2).
Makes conforming change. 

Section 2. This change in law takes effect Sept. 1, 1997, and only applies
to divorce or annulment rendered on or after the effective date.
Continues the present law for that purpose.  Act is prospective. 

Section 3. Emergency Clause.

  



 COMPARISON OF ORIGINAL TO SUBSTITUTE


The substitute conforms the code section numbers to the number system
passed in SB 334, which recodified that title of the Family Code. 

Section 2, of the substitute makes the effective date September 1, 1997.
The original bill was effective immediately.  The effective date refers to
the date of the decree of divorce or annulment in the substitute.  In the
original, it refers to the insurance policy issuance, delivery, or
renewal.