By Counts H.B. No. 1356
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to licensing of funeral prearrangement life insurance
1-3 agents and to accelerated life insurance benefits.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 213, Acts of the 54th Legislature,
1-6 Regular Session, 1955 (Article 21.07-1, Vernon's Texas Insurance
1-7 Code), is amended by adding Section 5A to read as follows:
1-8 Sec. 5A. FUNERAL PREARRANGEMENT LIFE INSURANCE AGENT. (a)
1-9 In this section, "funeral prearrangement life insurance agent"
1-10 means a life insurance agent who, subject to the limitations of
1-11 this section, writes only life insurance policies and fixed annuity
1-12 contracts to secure the delivery of funeral services and
1-13 merchandise under prepaid funeral contracts regulated by the Texas
1-14 Department of Banking under Chapter 512, Acts of the 54th
1-15 Legislature, Regular Session, 1955 (Article 548b, Vernon's Texas
1-16 Civil Statutes).
1-17 (b) The commissioner shall issue a limited purpose license
1-18 to act as a funeral prearrangement life insurance agent for an
1-19 authorized legal reserve life insurance company to an applicant
1-20 other than a partnership or corporation after receiving
1-21 certification from the insurance company that the applicant has
1-22 completed a course of study and instruction offered by the
1-23 insurance company and passed without aid a written examination
1-24 administered by the insurance company.
2-1 (c) The commissioner shall authorize a legal reserve life
2-2 insurance company to administer a funeral prearrangement life
2-3 insurance agent examination after the commissioner approves for the
2-4 insurance company a complete outline and explanation of the course
2-5 of study and instruction on life insurance and fixed annuities for
2-6 applicants and the nature and manner of conducting the examination
2-7 for applicants. On or before September 1, 1997, the commissioner
2-8 shall promulgate a uniform examination for applicants fairly
2-9 addressing the information contained in the approved course of
2-10 study and instruction.
2-11 (d) The course of study and instruction shall be for five
2-12 (5) hours and shall include instruction on both the policies to be
2-13 sold and the law relating to funeral prearrangement.
2-14 (e) The commissioner may investigate as necessary the manner
2-15 and method of instruction and examination of each authorized legal
2-16 reserve life insurance company. The commissioner may at the
2-17 commissioner's discretion withdraw from an insurance company the
2-18 authority to offer instruction and administer an examination.
2-19 (f) A funeral prearrangement life insurance agent licensed
2-20 under this section may not:
2-21 (1) act as an agent for an insurance company unless
2-22 the agent acts under the supervision of a person or corporation who
2-23 holds a license to act as a legal reserve life insurance agent for
2-24 that insurance company and who holds or is an authorized
2-25 representative of the holder of a permit from the Texas Department
2-26 of Banking to sell prepaid funeral benefits under Chapter 512, Acts
2-27 of the 54th Legislature, Regular Session, 1955 (Article 548b,
3-1 Vernon's Texas Civil Statutes);
3-2 (2) write any coverage or combination of coverages
3-3 with an initial guaranteed death benefit in excess of $15,000 on
3-4 any life; or
3-5 (3) act as an agent for more than one insurance
3-6 company.
3-7 (g) The commissioner shall stamp "FUNERAL PREARRANGEMENT
3-8 LIFE INSURANCE AGENT LICENSE" on a license issued under this
3-9 section.
3-10 (h) A license issued under this section to act as an agent
3-11 for an insurance company expires when the license holder ceases to
3-12 act as an agent for that insurance company. Within fifteen (15)
3-13 days after the license holder ceases to act as an agent for an
3-14 insurance company, the insurance company shall send written
3-15 notification of the expiration of the license to the commissioner.
3-16 (i) An applicant for or holder of a license issued under
3-17 this section is not subject to the requirements of this article,
3-18 other than the requirements of Sections 5A and 12.
3-19 SECTION 2. Article 3.50-6, Insurance Code, is amended to
3-20 read as follows:
3-21 Art. 3.50-6. PAYMENT OF ACCELERATED LIFE INSURANCE BENEFITS
3-22 [DEATH BENEFIT IN EVENT OF TERMINAL ILLNESS OR INJURY]. (a) In
3-23 this article:
3-24 (1) "Accelerated benefit" means a benefit paid to an
3-25 insured in lieu of a portion of a death benefit.
3-26 (2) "Death benefit" means a benefit payable to a
3-27 beneficiary on the death of an insured.
4-1 (3) "Long-term care illness" means an illness or
4-2 physical condition that results in the inability to perform the
4-3 activities of daily life or the substantial and material duties of
4-4 any occupation.
4-5 (4) "Specified disease" means an illness or physical
4-6 condition that is likely to cause permanent disability or premature
4-7 death, including the following:
4-8 (A) acquired immunodeficiency syndrome (AIDS);
4-9 (B) a malignant tumor;
4-10 (C) a condition that requires an organ
4-11 transplant; and
4-12 (D) a coronary artery disease that results in
4-13 acute infarction or requires surgery.
4-14 (5) "Terminal illness" means an illness or physical
4-15 condition, including a physical injury, that can reasonably be
4-16 expected to result in death within two years.
4-17 (b) An insurance company may pay an accelerated benefit
4-18 under an individual or [a] group term life insurance policy or
4-19 certificate if:
4-20 (1) the company has received a written medical
4-21 opinion, satisfactory to the company, that the insured has a [is
4-22 not expected to continue living for more than 12 months because of]
4-23 terminal illness, a long-term care illness, or a specified disease
4-24 [or injury]; and
4-25 (2) [the amount of the accelerated benefit does not
4-26 exceed the greater of $25,000 or 50 percent of the amount of the
4-27 death benefit payable under the policy or certificate; and]
5-1 [(3)] the amount of the accelerated benefit is
5-2 deducted from the amount of the death benefit payable under the
5-3 policy or certificate and from any amount the insured would
5-4 otherwise be entitled to convert to an individual contract.
5-5 (c) The commissioner may adopt rules to implement this
5-6 article.
5-7 SECTION 3. Article 3.50-6, Insurance Code, as amended by
5-8 this Act, applies only to a policy or contract that is delivered,
5-9 issued for delivery, or renewed on or after September 1, 1997. A
5-10 policy or contract that is delivered, issued for delivery, or
5-11 renewed before September 1, 1997, is governed by the law as it
5-12 existed immediately before that date, and that law is continued in
5-13 effect for that purpose.
5-14 SECTION 4. The importance of this legislation and the
5-15 crowded condition of the calendars in both houses create an
5-16 emergency and an imperative public necessity that the
5-17 constitutional rule requiring bills to be read on three several
5-18 days in each house be suspended, and this rule is hereby suspended,
5-19 and that this Act take effect and be in force from and after its
5-20 passage, and it is so enacted.