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.