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A BILL TO BE ENTITLED
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AN ACT
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relating to Chapter 425, Subchapter B, Insurance Code, the Standard |
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Valuation Law, by adding Section 425.071 to include lapse rates in |
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the calculation of reserves for secondary guarantees in universal |
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life contracts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter B of Chapter 425, Insurance Code, is |
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amended by adding thereto Section 425.071 to read as follows: |
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§ 425.071. LAPSE RATES IN MINIMUM STANDARD OF VALUATION |
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(a) The minimum standard of valuation under this Subchapter |
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may include lapse rates in the calculation of reserves for a |
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secondary guarantee in universal life contracts issued after |
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December 31, 2006. |
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(b) For purposes of this section, a secondary guarantee |
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refers to specified conditions in a universal life contract that, |
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if satisfied, provide for death benefits to remain in effect |
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regardless of the accumulation value in the contract. |
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(c) Lapse rates authorized by this section may not exceed 2% |
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per year. |
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(d) The commissioner is authorized to adopt rules to |
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implement this section. |
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SECTION 2. This Act takes effect June 1, 2007, if it |
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receives a vote of two-thirds of all the members elected to each |
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house, as provided by Section 39, Article III, Texas Constitution. |
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If this Act does not receive the votes necessary for effect on that |
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date, this Act takes effect September 1, 2007. |