SRC-LBB S.B. 1620 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 1620
78R4954 AJA-DBy: Ellis, Rodney
State Affairs
4/8/2003
As Filed


DIGEST AND PURPOSE 

Certain life insurance policies are priced so that, over the life of the
policy, an insured is likely to pay multiples of the death benefit in
premiums for the coverage.  As proposed, S.B. 1620 requires an insurer of
policies with multiples greater than 1.5 over the life of the policy to
give an insured the option of a shorter payment period, after which the
policy becomes paid.  This bill also requires the commissioner of
insurance to determine which payment period options should be given to
insureds at different issue ages. 

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the commissioner of insurance
in SECTION 1 (Section 1101.014, Insurance Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 1101, Subchapter A, Insurance Code, as
effective June 1, 2003, by adding Section 1101.014, as follows: 

Sec. 1101.014.  PAYMENT PERIOD FOR CERTAIN LIFE INSURANCE POLICIES. (a)
Provides that this section applies to an insurer authorized to write life
insurance in this state under Chapter 841 (Life, Health, or Accident
Insurance Companies), 882 (Mutual Life Insurance Companies), 884
(Stipulated Premium Insurance Companies), or 982 (Foreign and Alien
Insurance Companies). 

(b)  Provides that this section applies to any individual or group life
insurance policy, other than a term life insurance policy, issued in this
state, including an industrial insurance policy offered under Chapter 1151
(Industrial Life Insurance). 

(c)  Requires the insurer to also offer the applicant for the policy a
payment period established by the commissioner of insurance (commissioner)
under Subsection (d), for a life insurance policy with an initial face
amount of $15,000 or less on which the total amount of premiums paid under
payment terms offered for the policy, minus cash dividends received under
the policy, could exceed 150 percent of the policy's face value. 
 
(d)  Requires the commissioner by rule to establish periods for the
payment of premiums on a policy described by Subsection (c) at the end of
which the policy is paid up. 

SECTION 2.  Makes application of this Act prospective to January 1, 2004.

SECTION 3.  Effective date:  September 1, 2003.