By:  Thompson                                                     H.B. No. 1525



A BILL TO BE ENTITLED

AN ACT

relating to certain small face amount life insurance policies.                
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Chapter 1101, Insurance Code, as effective June 
1, 2003, is amended by adding Subchapter E to read as follows:

SUBCHAPTER E.  DISCLOSURE REQUIREMENTS FOR SMALL FACE AMOUNT LIFE 
INSURANCE POLICIES
	Sec. 1101.201.  DEFINITION.  In this subchapter, "small face 
amount policy" means a life insurance policy with an initial face 
amount of $15,000 or less.
	Sec. 1101.202.  APPLICABILITY; EXEMPTIONS.  (a)  This 
subchapter applies to each insurer authorized to write life 
insurance under Chapter 841, 882, 884, or 982.  This subchapter does 
not apply to an insurer operating under Chapter 881, 885, 886, 887, 
or 888 or an insurer exempt under Section 887.102.
	(b)  Except as provided by Subsection (c), this subchapter 
applies to any individual or group life insurance policy issued in 
this state, including an industrial insurance policy offered under 
Chapter 1151.
	(c)  This subchapter does not apply to:                                 
		(1)  variable life insurance;                                          
		(2)  individual and group annuity contracts;                           
		(3)  credit life insurance;                                            
		(4)  an individual or group life insurance policy 
issued to members of an employer group or other authorized group in 
which:
			(A)  each plan of coverage is selected by the 
employer or other group representative;
			(B)  some portion of the premium is paid by the 
group or through payroll deduction; and
			(C)  group underwriting or simplified 
underwriting is applied; or   
		(5)  a policy or certificate for which an illustration 
is provided under the requirements adopted under 28 T.A.C. Section 
21.2201 et seq.
	Sec. 1101.203.  DISCLOSURE REQUIREMENTS.  (a)  An insurer 
subject to this subchapter shall provide disclosure if at any point 
in time over the term of the policy the cumulative premiums paid may 
exceed the face amount of the policy at that point in time.  The 
required disclosure shall be provided to the policy owner or 
certificate holder no later than at the time the policy or 
certificate is delivered.  The disclosure shall not be attached to 
the policy, but may be delivered with the policy.
	(b)  If, for a particular policy form, the cumulative 
premiums may exceed the face amount of the policy for some 
demographic or benefit combination but not for all combinations, 
the insurer may elect to provide the disclosure:
		(1)  only in those circumstances in which the premiums 
may exceed the face amount of the policy; or
		(2)  for all demographic and benefit combinations.                     
	Sec. 1101.204.  INSURER DUTIES.  An insurer, including the 
agent of the insurer, that issues a small face amount policy shall 
provide information to policyholders on request regarding the 
disclosure required by Section 1101.203.
	Sec. 1101.205.  RULES.  The commissioner may adopt, by rule, 
minimum requirements for the disclosure statement required under 
Section 1101.203.  In adopting rules under this section, the 
commissioner may consider any model regulations proposed by the 
National Association of Insurance Commissioners.
	SECTION 2.  This Act takes effect September 1, 2003, and 
applies only to an insurance policy that is delivered on or after 
that date.  A policy that is delivered before September 1, 2003, is 
governed by the law as it existed immediately before the effective 
date of this Act, and that law is continued in effect for that 
purpose.