By Janek H.B. No. 2550
76R143 PB-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to life insurance coverage for spouses under certain group
1-3 life insurance policies.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 1, Article 3.50, Insurance Code, is
1-6 amended to read as follows:
1-7 Sec. 1. DEFINITIONS. (a) No policy of group life insurance
1-8 shall be delivered in this state unless it conforms to one of the
1-9 policies described under this section.
1-10 (b) [following descriptions: (1)] A policy may be issued to
1-11 an employer, or to the trustees of a fund established by an
1-12 employer, which employer or trustees shall be deemed the
1-13 policyholder, to insure employees of the employer for the benefit
1-14 of persons other than the employer, subject to the following
1-15 requirements:
1-16 (1) [(a)] The employees eligible for insurance under
1-17 the policy shall be all of the employees of the employer, or all of
1-18 any class or classes thereof determined by conditions pertaining to
1-19 their employment. The policy may provide that the term "employees"
1-20 shall include the employees of one or more subsidiary corporations,
1-21 and the employees, individual proprietors, and partners of one or
1-22 more affiliated corporations, proprietors or partnerships if the
1-23 business of the employer and of such affiliated corporations,
1-24 proprietors or partnerships is under common control through stock
2-1 ownership, contract, or otherwise. The policy may provide that the
2-2 term "employees" shall include the individual proprietor or
2-3 partners if the employer is an individual proprietor or a
2-4 partnership. The policy may provide that the term "employees"
2-5 shall include retired employees.
2-6 (2) [(b)] The premium for the policy shall be paid by
2-7 the policyholder, either wholly from the employer's fund or funds
2-8 contributed by him, or partly from such funds and partly from
2-9 funds contributed by the insured employees. No policy may be
2-10 issued on which the entire premium is to be derived from funds
2-11 contributed by the insured employees. A policy on which part of
2-12 the premium is to be derived from funds contributed by the insured
2-13 employees may be placed in force only if at least seventy-five
2-14 percent (75%) of the then eligible employees, excluding any as to
2-15 whom evidence of individual insurability is not satisfactory to the
2-16 insurer, elect to make the required contributions. A policy on
2-17 which no part of the premium is to be derived from funds
2-18 contributed by the insured employees must insure all eligible
2-19 employees, or all except any as to whom evidence of individual
2-20 insurability is not satisfactory to the insurer.
2-21 (3) [(c)] The policy must cover at least ten (10)
2-22 employees at date of issue.
2-23 (4) [(d)] The amounts of insurance under the policy
2-24 must be based upon some plan precluding individual selection either
2-25 by the employees or by the employer or trustees. No policy may be
2-26 issued which provides insurance on any employee which together with
2-27 any other insurance under any group life insurance policies issued
3-1 to the employer or to the trustees of a fund established by the
3-2 employer exceeds Two Hundred Fifty Thousand Dollars ($250,000.00),
3-3 unless seven hundred percent of the annual compensation of such
3-4 employee from his employer or employers exceeds Two Hundred Fifty
3-5 Thousand Dollars ($250,000.00), in which event all such term
3-6 insurance shall not exceed seven hundred percent of such annual
3-7 compensation, except that this limitation shall not apply to group
3-8 insurance on other than the term plan where such insurance is to be
3-9 used to fund the benefits under a pension or profit sharing plan
3-10 and the amount of such insurance does not exceed that required to
3-11 provide at normal retirement date the pension specified by the
3-12 plan, and except that a group policy which is issued by the same or
3-13 another carrier to replace another group policy may provide term
3-14 insurance not to exceed the amounts provided by the policy which it
3-15 replaces, or the amounts provided above, whichever are greater.
3-16 (c) [(2)] A policy may be issued to a labor union, which
3-17 shall be deemed the employer and policyholder, to insure the
3-18 members of such union who are actively engaged in the same
3-19 occupation and who shall be deemed to be the employees of such
3-20 union within the meaning of this Article.
3-21 (d) [(3)] A policy may be issued to any association of
3-22 employees of the United States Government or any subdivision
3-23 thereof, provided the majority of the members of such association
3-24 are residents of this state, an association of public employees, an
3-25 incorporated city, town or village, an independent school district,
3-26 common school district, state colleges or universities, any
3-27 association of state employees, any association of state, county
4-1 and city, town or village employees, and any association of any
4-2 combination of state, county or city, town or village employees and
4-3 any department of the state government which employer or
4-4 association shall be deemed the policyholder to insure the
4-5 employees of any such incorporated city, town or village, of any
4-6 such independent school district, of any common school district, of
4-7 any such state college or university, of any such department of the
4-8 state government, members of any association of state, county or
4-9 city, town or village or of the United States Government or any
4-10 subdivision thereof, provided the majority of such employees reside
4-11 in this state, employees for the benefit of persons other than the
4-12 policyholder subject to the following requirements:
4-13 (1) [(a)] The persons eligible for insurance under the
4-14 policy shall be all of the employees of the employer or if the
4-15 policyholder is an association, all of the members of the
4-16 association.
4-17 (2) [(b)] The premium for a policy issued to any
4-18 policyholder authorized to be such policyholder under this
4-19 subsection [Subsection (3) of Section 1, Article 3.50, Texas
4-20 Insurance Code,] may be paid in whole or in part from funds
4-21 contributed by the employer, or in whole or in part from funds
4-22 contributed by the persons insured under said policy; or in whole
4-23 or in part from funds contributed by the insured employees who are
4-24 members of such association of employees; provided, however, that
4-25 any monies or credits received by or allowed to the policyholder
4-26 pursuant to any participation agreement contained in or issued in
4-27 connection with the policy shall be applied to the payment of
5-1 future premiums and to the pro rata abatement of the insured
5-2 employees' contribution therefor; and provided further, that the
5-3 employer may deduct from the employees' salaries the employees'
5-4 contributions for the premiums when authorized in writing by the
5-5 respective employees so to do. Such policy may be placed in force
5-6 only if at least 75% of the eligible employees or if an association
5-7 of employees is the policyholder, 75% of the eligible members of
5-8 said association, excluding any as to whom evidence of individual
5-9 insurability is not satisfactory to the insurer, elect to make the
5-10 required premium contributions and become insured thereunder. Any
5-11 group policies heretofore issued to any of the groups named in this
5-12 subsection [Section 1(3) above] and in existence on the effective
5-13 date of this Act shall continue in force even though the number of
5-14 employees or members insured thereunder is less than 75% of the
5-15 eligible employees or members on the effective date of this Act.
5-16 (3) [(c)] The policy must cover at least ten (10)
5-17 employees at date of issue, or if an association of employees is
5-18 the policyholder, ten (10) members of said association at date of
5-19 issue.
5-20 (4) [(d)] The term employees as used herein in
5-21 addition to its usual meaning shall include elective and appointive
5-22 officials of the state.
5-23 (e) [(4)] A policy may be issued to a creditor, who shall be
5-24 deemed the policyholder, to insure debtors of the creditor, subject
5-25 to the following requirements:
5-26 (1) [(a)] The debtors eligible for insurance under the
5-27 policy shall all be members of a group of persons numbering not
6-1 less than fifty (50) at all times, who become borrowers, or
6-2 purchasers of securities, merchandise or other property, under
6-3 agreement to repay the sum borrowed or to pay the balance of the
6-4 price of the securities, merchandise or other property purchased,
6-5 to the extent of their respective indebtedness, but not to exceed
6-6 Fifty Thousand Dollars ($50,000.00) on any one life or not to
6-7 exceed One Hundred Twenty-Five Thousand Dollars ($125,000.00) on
6-8 any one life if the indebtedness is secured by a first lien on real
6-9 estate; provided, however, the face amount of any loan or loan
6-10 commitment, totally or partially executed, made to a debtor for
6-11 educational purposes or to a debtor with seasonal income by a
6-12 creditor in good faith for general agricultural or horticultural
6-13 purposes, secured or unsecured, where the debtor becomes personally
6-14 liable for the payment of such loan, may be so insured in an
6-15 initial amount of such insurance not to exceed the total amount
6-16 repayable under the contract of indebtedness and, when such
6-17 indebtedness is repayable in substantially equal installments, the
6-18 amount of insurance shall at no time exceed the scheduled or actual
6-19 amount of unpaid indebtedness, whichever is greater, and such
6-20 insurance on such credit commitments not exceeding one year in
6-21 duration may be written up to the amount of the loan commitment on
6-22 a nondecreasing or level term plan, but such insurance shall not
6-23 exceed One Hundred Thousand Dollars ($100,000.00) on any one life.
6-24 (2) [(b)] The premium for the policy shall be paid by
6-25 the policyholder, either from the creditor's funds or from charges
6-26 collected from the insured debtors, or both.
6-27 (3) [(c)] The insurance issued shall not include
7-1 annuities or endowment insurance.
7-2 (4) [(d)] The insurance shall be payable to the
7-3 policyholder. Such payment shall reduce or extinguish the unpaid
7-4 indebtedness of the debtor to the extent of such payment; provided
7-5 that in the case of a debtor for educational purposes or of a
7-6 debtor with seasonal income, under a loan or loan commitment for
7-7 general agricultural or horticultural purposes of the type
7-8 described in Subdivision (1) of this subsection [paragraph (a)],
7-9 the insurance in excess of the indebtedness to the creditor, if
7-10 any, shall be payable to the estate of the debtor or under the
7-11 provision of a facility of payment clause.
7-12 (f) [(5)] A policy may be issued to the trustees of a fund
7-13 established by two or more employers in the same industry or by one
7-14 or more labor unions, or to the trustees of a fund established by
7-15 one or more employers in the same industry and one or more labor
7-16 unions, or by one or more employers and one or more labor unions
7-17 whose members are in the same or related occupations or trades,
7-18 which trustees shall be deemed the policyholder, to insure
7-19 employees of the employers or members of the unions for the benefit
7-20 of persons other than the employers or the union, subject to the
7-21 following requirements:
7-22 (1) [(a)] The persons eligible for insurance shall be
7-23 all of the employees of the employers and the employees of the
7-24 trade association of such employers or all of the members of the
7-25 union, or all of any class or classes thereof determined by
7-26 conditions pertaining to their employment, or to membership in the
7-27 unions, or both. The policy may provide that the term "employees"
8-1 shall include retired employees, and the individual proprietor or
8-2 partners if an employer is an individual proprietor or a
8-3 partnership. No director of a corporate employer shall be eligible
8-4 for insurance under the policy unless such person is otherwise
8-5 eligible as a bona fide employee of the corporation by performing
8-6 services other than the usual duties of a director. No individual
8-7 proprietor or partner shall be eligible for insurance under the
8-8 policy unless he is actively engaged in and devotes a substantial
8-9 part of his time to the conduct of the business of the proprietor
8-10 or partnership. The policy may provide that the term "employees"
8-11 shall include the trustees or their employees, or both, if their
8-12 duties are principally connected with such trusteeship.
8-13 (2) [(b)] The premium for the policy shall be paid by
8-14 the trustees wholly from funds contributed by the employer or
8-15 employers of the insured persons, or by the union or unions, or by
8-16 both, or, partly from such funds and partly from funds contributed
8-17 by the insured persons, except that in no event shall the
8-18 contribution by an insured person toward the cost of his insurance
8-19 exceed forty cents per thousand per month. A policy on which part
8-20 of the premium is to be derived from funds contributed by the
8-21 insured persons specifically for their insurance may be placed in
8-22 force only if at least seventy-five percent (75%) of the then
8-23 eligible persons of each participating employer unit, excluding any
8-24 as to whom evidence of insurability is not satisfactory to the
8-25 insurer, elect to make the required contributions. A policy on
8-26 which no part of the premium is to be derived from funds
8-27 contributed by the insured persons specifically for their insurance
9-1 must insure all eligible persons, or all except any as to whom
9-2 evidence of individual insurability is not satisfactory to the
9-3 insurer. The policy may provide that a participating employer or
9-4 labor union may pay the premium directly to the insurer for the
9-5 policy issued to the trustee, and in that event, the employer or
9-6 labor union becomes the premium payor for the insured employees or
9-7 union members for that employer unit.
9-8 (3) [(c)] The policy must cover at date of issue at
9-9 least one hundred (100) persons; unless the policy is issued to the
9-10 trustees of a fund established by employers which have assumed
9-11 obligations through a collective bargaining agreement and are
9-12 participating in the fund either pursuant to those obligations with
9-13 regard to one or more classes of their employees which are
9-14 encompassed in the collective bargaining agreement or as a method
9-15 of providing insurance benefits for other classes of their
9-16 employees, or unless the policy is issued to the trustees of a fund
9-17 established by one or more labor unions.
9-18 (4) [(d)] The amounts of insurance under the policy
9-19 must be based upon some plan precluding individual selection either
9-20 by the insured persons or by the policyholder or employer. No
9-21 policy may be issued which provides term insurance on any person
9-22 which together with any other term insurance under any group life
9-23 insurance policy or policies issued to trustees or employers
9-24 exceeds Two Hundred Fifty Thousand Dollars ($250,000.00), unless
9-25 seven hundred percent of the annual compensation of such employee
9-26 from his employer or employers exceeds Two Hundred Fifty Thousand
9-27 Dollars ($250,000.00), in which event all such term insurance shall
10-1 not exceed seven hundred percent of such annual compensation.
10-2 (5) [(e)] The limitation as to amount of group
10-3 insurance on any person shall not apply to group insurance on other
10-4 than the term plan where such insurance is to be used to fund the
10-5 benefits under a pension plan and the amount of such insurance does
10-6 not exceed that required to provide at normal retirement date the
10-7 pension specified by the plan, and except that a group policy which
10-8 is issued by the same or another carrier to replace another group
10-9 policy may provide term insurance not to exceed the amount provided
10-10 by the policy which it replaces, or the amounts provided above
10-11 whichever is greater.
10-12 (6) [(f)] No policy may be issued:
10-13 (A) [(i)] to insure employees of any employer
10-14 whose eligibility to participate in the fund as an employer arises
10-15 out of considerations directly related to the employer being a
10-16 commercial correspondent or business client or patron of another
10-17 employer (regardless of whether such other employer is or is not
10-18 participating in the fund); or
10-19 (B) [(ii)] to insure employees of any employer
10-20 which is not located in this state, unless the majority of the
10-21 employers whose employees are to be insured are located in this
10-22 state, or unless the policy is issued to the trustees of a fund
10-23 established by one or more labor unions.
10-24 (g) [(5A)] A policy may be issued to an association or trust
10-25 for a group of individuals for the payment of future funeral
10-26 expenses.
10-27 (h) [(6)] A policy may be issued to cover any other group
11-1 subject to the following requirements:
11-2 (1) [(a)] No such group life insurance policy shall be
11-3 delivered in this state unless the Commissioner of Insurance finds
11-4 that:
11-5 (A) [(i)] the issuance of such group policy is
11-6 not contrary to the best interest of the public;
11-7 (B) [(ii)] the issuance of the group policy
11-8 would result in economies of acquisition or administration; and
11-9 (C) [(iii)] the benefits are reasonable in
11-10 relation to the premiums charged.
11-11 (2) [(b)] No such group life insurance coverage may be
11-12 offered in this state by an insurer under a policy issued in
11-13 another state unless this state or another state having
11-14 requirements substantially similar to those contained in
11-15 Subdivision (1) of this subsection [Paragraph (a) of Subdivision
11-16 (6)] has made a determination that such requirements have been
11-17 met.
11-18 (3) [(c)] The premium for the policy shall be paid
11-19 either from the policyholder's funds or from funds contributed by
11-20 the covered person or from both.
11-21 (4) [(d)] Notwithstanding other provisions of law, an
11-22 employer may insure the lives of its officers, directors,
11-23 employees, and retirees under this subdivision for the purpose of
11-24 and in an amount necessary to provide funds to offset fringe
11-25 benefit-related liabilities. Evidence of the purpose of the policy
11-26 shall be submitted to the Commissioner of Insurance. A policy
11-27 issued for such purpose shall not diminish other life insurance
12-1 benefits if any are offered or provided by such employer. The
12-2 provisions of Subdivisions 5 through 10 of Section 2 of this
12-3 article shall not apply to such policies.
12-4 (i) [(7)] No policy of wholesale, franchise or employee life
12-5 insurance, as hereinafter defined, shall be issued or delivered in
12-6 this state unless it conforms to the following requirements:
12-7 (1) [(a)] Wholesale, franchise or employee life
12-8 insurance is hereby defined as: a term life insurance plan under
12-9 which a number of individual term life insurance policies are
12-10 issued at special rates to a selected group. A special rate is any
12-11 rate lower than the rate shown in the issuing insurance company's
12-12 manual for individually issued policies of the same type and to
12-13 insureds of the same class.
12-14 (2) [(b)] Wholesale, franchise or employee life
12-15 insurance may be issued to:
12-16 (A) [(1)] the employees of a common employer or
12-17 employers, covering at date of issue not less than five employees;
12-18 (B) [or (2)] the members of a labor union or
12-19 unions covering at date of issue not less than five members; or
12-20 (C) [(3)] the members of a credit union or
12-21 credit unions covering at date of issue not less than five (5)
12-22 members.
12-23 (3) [(c)] The premium for the policy shall be paid
12-24 either wholly from funds contributed by the employer or employers
12-25 of the insured persons, or by the union or unions or by both, or
12-26 partly from such funds and partly from funds contributed by the
12-27 insured person, except that in no event shall the contribution by
13-1 an insured person toward the cost of his insurance exceed forty
13-2 cents per thousand per month.
13-3 (4) [(d)] No policy may be issued on a wholesale,
13-4 franchise or employee life insurance basis which, together with any
13-5 other term life insurance policy or policies issued on a wholesale,
13-6 franchise, employee life insurance or group basis, provides term
13-7 life insurance coverage for an amount in excess of Two Hundred
13-8 Fifty Thousand Dollars ($250,000.00), unless seven hundred percent
13-9 of the annual compensation of such employee from his employer or
13-10 employers exceeds Two Hundred Fifty Thousand Dollars ($250,000.00),
13-11 in which event all such term insurance shall not exceed seven
13-12 hundred percent of such annual compensation. An individual
13-13 application shall be taken for each such policy and the insurer
13-14 shall be entitled to rely upon the applicant's statements as to
13-15 applicant's other similar coverage upon his life.
13-16 (5) [(e)] Each such policy of insurance shall contain
13-17 a provision [substantially as follows: A provision] that if the
13-18 insurance on an insured person ceases because of termination of
13-19 employment or of membership in the union, such person shall be
13-20 entitled to have issued to him by the insurer, without evidence of
13-21 insurability an individual policy of life insurance without
13-22 disability or other supplementary benefits, provided application
13-23 for the individual policy shall be made, and the first premium paid
13-24 to the insurer, within thirty-one (31) days after such termination.
13-25 (6) [(f)] Each such policy may contain any provision
13-26 substantially as follows:
13-27 (A) a [(1) A] provision that the policy is
14-1 renewable at the option of the insurer only;
14-2 (B) a [(2) A] provision for termination of
14-3 coverage by the insurer upon termination of employment by the
14-4 insured employee; and
14-5 (C) a [(3) A] provision requiring a person
14-6 eligible for insurance to furnish evidence of individual
14-7 insurability satisfactory to the insurer as condition to coverage.
14-8 (7) [(g)] The limitation as to amount of group and
14-9 wholesale, franchise or employee life insurance on any person shall
14-10 not apply to group insurance on other than the term plan where such
14-11 insurance is to be used to fund benefits under a pension plan and
14-12 the amount of such insurance does not exceed that required to
14-13 provide at normal retirement date the pension specified by the
14-14 plan, and except that a group policy which is issued by the same or
14-15 another carrier to replace another group policy may provide term
14-16 insurance not to exceed the amounts provided by the policy which it
14-17 replaces, or the amounts provided above, whichever are greater.
14-18 (8) [(h)] Nothing contained in this subsection
14-19 [Subsection (7)] shall in any manner alter, impair or invalidate:
14-20 (A) [(1)] any policy heretofore issued prior to
14-21 the effective date of this Act;
14-22 (B) [nor (2)] any such plan heretofore placed in
14-23 force and effect provided such prior plan was at date of issue
14-24 legal and valid; or
14-25 (C) [nor (3)] any policy issued on a salary
14-26 savings franchise plan, bank deduction plan, pre-authorized check
14-27 plan or similar plan of premium collection.
15-1 (j) [(7A)] A policy may be issued to a principal, or if such
15-2 principal is a life or life and accident or life, accident and
15-3 health insurer, by or to such principal, covering when issued not
15-4 less than ten (10) agents of the principal, subject to the
15-5 following requirements:
15-6 (1) [(a)] As used in this section, the term "agents"
15-7 shall be deemed to include general agents, subagents and salesmen.
15-8 (2) [(b)] The agents eligible for insurance under the
15-9 policy shall be those who are under contract to render personal
15-10 services for the principal for a commission or other fixed or
15-11 ascertainable compensation.
15-12 (3) [(c)] The premium for the policy shall be paid
15-13 either wholly by the principal or partly from funds contributed by
15-14 the principal and partly from funds contributed by the insured
15-15 agents. A policy on which no part of the premium is to be derived
15-16 from funds contributed by the insured agents must insure all of the
15-17 eligible agents or all of any class or classes thereof determined
15-18 by conditions pertaining to the services to be rendered by the
15-19 agents to the principal. A policy on which part of the premium is
15-20 to be derived from funds contributed by the insured agents must
15-21 cover at issue at least seventy-five percent (75%) of the eligible
15-22 agents or at least seventy-five percent (75%) of any class or
15-23 classes thereof determined by conditions pertaining to the services
15-24 to be rendered by the agents; provided, however, that the benefits
15-25 may be extended to other classes of agents as seventy-five percent
15-26 (75%) thereof express the desire to be covered.
15-27 (4) [(d)] The amounts of insurance under the policy
16-1 must be based upon some plan precluding individual selection either
16-2 by the principal or by the agents. No policy may be issued which
16-3 provides term insurance on any agent which together with any other
16-4 term insurance under any group life insurance policy or policies
16-5 issued to the principal exceeds Two Hundred Fifty Thousand Dollars
16-6 ($250,000.00), unless seven hundred percent of the annual
16-7 commissions or other fixed or ascertainable compensation of such
16-8 agent from the principal exceeds Two Hundred Fifty Thousand Dollars
16-9 ($250,000.00), in which event all such term insurance shall not
16-10 exceed seven hundred percent of such annual commissions or other
16-11 fixed or ascertainable compensation.
16-12 (5) [(e)] The insurance shall be for the benefit of
16-13 persons other than the principal.
16-14 (k) [(8)] A policy may be issued to the Veterans Land Board
16-15 of the State of Texas, who shall be deemed the policyholder to
16-16 insure persons purchasing land under the Texas Veterans Land
16-17 Program as provided in Subchapter I, Chapter 161, Natural Resources
16-18 Code.
16-19 (l) [(9)] Any policy of group term life insurance may be
16-20 extended, in the form of group term life insurance only, to insure
16-21 the spouse and minor children, natural or adopted, of an insured
16-22 employee, provided the policy constitutes a part of the employee
16-23 benefit program established for the benefit of employees of the
16-24 United States government or any subdivision thereof, and provided
16-25 further, that the spouse or children of other employees covered by
16-26 the same employee benefit program in other states of the United
16-27 States are or may be covered by group term life insurance, subject
17-1 to the following requirements:
17-2 (1) [(a)] The premiums for the group term life
17-3 insurance shall be paid by the policyholder from funds solely
17-4 contributed by the insured employee.
17-5 (2) [(b)] The amounts of insurance under the policy
17-6 must be based upon some plan precluding individual selection either
17-7 by the insured employee or by the policyholder, provided that:
17-8 (A) group term life insurance upon the life of a
17-9 spouse may [shall] not exceed the [lesser of]
17-10 [(1) Ten Thousand Dollars ($10,000.00) or (2) one-half
17-11 of the] amount of insurance on the life of the insured employee
17-12 under the group policy; and
17-13 (B) [provided that] group term life insurance on
17-14 the life of any minor child may [shall] not exceed Two Thousand
17-15 Dollars ($2,000.00).
17-16 (3) [(c)] Upon termination of the group term life
17-17 insurance with respect to the spouse of any insured employee by
17-18 reason of such person's termination of employment or death, or
17-19 termination of the group contract, the spouse insured pursuant to
17-20 this section shall have the same conversion rights as to the group
17-21 term life insurance on his or her life as is provided for the
17-22 insured employee.
17-23 (4) [(d)] Only one certificate need be issued for
17-24 delivery to an insured employee if a statement concerning any
17-25 dependent's coverage is included in such certificate.
17-26 (m) [(10)] A policy of group life insurance may be issued to
17-27 a nonprofit service, civic, fraternal, or community organization or
18-1 association which has had an active existence for at least two
18-2 years, has a constitution or bylaws, was formed for purposes other
18-3 than obtaining insurance, and which association shall be deemed the
18-4 policyholder to insure members and employees of such association
18-5 for the benefit of persons other than the association or any of its
18-6 officers, subject to the following requirements:
18-7 (1) [(a)] The persons eligible for insurance shall be
18-8 all the members of the association, or all of any class thereof
18-9 determined by conditions pertaining to membership in the
18-10 association.
18-11 (2) [(b)] The amounts of insurance under the policy
18-12 shall be based upon some plan precluding individual selection
18-13 either by the insured members or by the association.
18-14 (3) [(c)] The premium for the policy shall be paid by
18-15 the policyholder from the policyholder's own funds or from funds
18-16 contributed by the employees or members specifically for their
18-17 insurance, or from both. The policy may provide that the premium
18-18 may be paid directly to the insurer by individual employees or
18-19 members from their own funds, and in that event, the respective
18-20 employees or members become the premium payor for that particular
18-21 certificate.
18-22 (4) [(d)] The policy shall cover at least twenty-five
18-23 (25) persons at date of issue.
18-24 SECTION 2. Section 1, Article 3.51-4A, Insurance Code, is
18-25 amended to read as follows:
18-26 Sec. 1. (a) Insurance under any group term life insurance
18-27 policy issued and delivered pursuant to the laws of the State of
19-1 Texas, except a policy issued and delivered to a creditor pursuant
19-2 to Section 1(e), [1(4) of] Article 3.50, [of the Texas] Insurance
19-3 Code, or [pursuant to] any other law of the State of Texas
19-4 providing for credit life insurance, may be extended to cover:
19-5 (1) the spouse of the insured; and
19-6 (2) [,] the children of the insured who are:
19-7 (A) under 21 years of age, natural or adopted;
19-8 or
19-9 (B) [, and the children] over 21 years of age,
19-10 natural or adopted, and who are:
19-11 (i) enrolled as full-time students at an
19-12 educational institution; or
19-13 (ii) [are] physically or mentally disabled
19-14 and [who are] under the supervision of the parents.
19-15 (b) The[, of each insured thereunder, provided that the]
19-16 amounts of insurance under a [the] policy subject to Subsection
19-17 (a) of this section must be [are] based on some plan precluding
19-18 individual selection either by the insured or the policyholder.
19-19 (c) The[, and provided further that the] amount of the
19-20 [such] insurance on the life of the spouse may not exceed an amount
19-21 equal to the amount of insurance on the insured. The amount of
19-22 insurance on the life of [or] a child may [shall] not exceed
19-23 one-half of the amount of insurance on the life of the [aforesaid]
19-24 insured [under said policy].
19-25 SECTION 3. Articles 3.50 and 3.51-4A, Insurance Code, as
19-26 amended by this Act, apply only to a group life insurance policy
19-27 that is delivered, issued for delivery, or renewed on or after
20-1 January 1, 2000. A policy that is delivered, issued for delivery,
20-2 or renewed before January 1, 2000, is governed by the law as it
20-3 existed immediately before the effective date of this Act, and that
20-4 law is continued in effect for this purpose.
20-5 SECTION 4. The importance of this legislation and the
20-6 crowded condition of the calendars in both houses create an
20-7 emergency and an imperative public necessity that the
20-8 constitutional rule requiring bills to be read on three several
20-9 days in each house be suspended, and this rule is hereby suspended.