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A BILL TO BE ENTITLED
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AN ACT
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relating to the method of payment of insurance benefits. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 1102, Insurance Code, is amended to read |
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as follows: |
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CHAPTER 1102. PAYMENT OF INSURANCE BENEFITS [IN CURRENCY] |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 1102.001. DEFINITIONS. In this chapter: |
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(1) "Insurance policy" means a policy, certificate, or |
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contract of: |
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(A) life, term, or endowment insurance, |
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including an annuity or pure endowment contract; |
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(B) group life or term insurance, including a |
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group annuity contract; |
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(C) industrial life insurance; |
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(D) accident or health insurance; |
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(E) group accident or health insurance; |
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(F) hospitalization insurance; |
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(G) group hospitalization insurance; |
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(H) medical or surgical insurance; |
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(I) group medical or surgical insurance; or |
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(J) fraternal benefit insurance. |
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(2) "Insurer" means any insurer, including a: |
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(A) life, accident, health, or casualty |
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insurance company; |
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(B) mutual life insurance company; |
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(C) mutual insurance company other than a life |
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insurance company; |
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(D) mutual or natural premium life insurance |
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company; |
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(E) general casualty company; |
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(F) Lloyd's plan or a reciprocal or |
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interinsurance exchange; |
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(G) fraternal benefit society; or |
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(H) group hospital service corporation. |
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(3) "Life insurance policy" means a policy, |
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certificate, or contract of: |
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(A) life, term, or endowment insurance, |
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including an annuity or pure endowment contract; |
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(B) group life or term insurance, including a |
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group annuity contract; |
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(C) industrial life insurance; or |
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(D) fraternal benefit insurance, other than |
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insurance for: |
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(i) benefits for hospital, medical, or |
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nursing expenses resulting from sickness, bodily infirmity, or |
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accident; or |
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(ii) other accident or health insurance. |
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(4) "Retained asset account" means a checking or draft |
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account into which an insurer, on behalf of a beneficiary, deposits |
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proceeds payable under a life insurance policy for withdrawal by |
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the beneficiary at the beneficiary's discretion. |
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Sec. 1102.002. RULES. The commissioner may adopt |
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reasonable rules to accomplish the purposes of this chapter, |
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including rules requiring: |
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(1) appropriate reserves for insurance policies |
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subject to this chapter; or |
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(2) prudent investment of premiums collected from |
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insurance policies subject to this chapter regardless of any other |
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provision of this code related to the investment of money by an |
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insurance company. |
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SUBCHAPTER B. PAYMENT OF BENEFITS IN CURRENCY |
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Sec. 1102.051 [1102.002]. BENEFITS PAYABLE IN CURRENCY. |
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Each benefit payable under an insurance policy delivered, issued, |
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or used in this state by an insurer shall be payable in currency. |
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Sec. 1102.052 [1102.003]. STATEMENT REGARDING VALUE OF |
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FOREIGN CURRENCY. (a) An insurance policy described by Section |
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1102.051 [1102.002] providing that benefits are payable in foreign |
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currency must include a conspicuous statement that the value of the |
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currency denominated in the policy can fluctuate as compared to the |
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value of United States currency. |
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(b) The statement must be: |
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(1) included as part of the policy; or |
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(2) attached to the insurance policy at the time it is |
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issued. |
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Sec. 1102.053 [1102.004]. PREVIOUSLY APPROVED INSURANCE |
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POLICY FORM PAYABLE IN FOREIGN CURRENCY. (a) The commissioner may |
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disapprove or withdraw approval of a previously approved insurance |
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policy form that provides benefits payable in foreign currency if |
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the commissioner determines that the foreign currency has been less |
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stable than United States currency in the previous 20-year period. |
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(b) This section does not require the resubmission for |
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approval of any previously approved insurance policy form unless: |
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(1) withdrawal of approval is authorized under this |
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section or Chapter 1701; or |
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(2) after notice and hearing, the commissioner |
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determines that approval was obtained by improper means, including |
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by misrepresentation, fraud, or a misleading statement or document. |
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[Sec. 1102.005.
RULES. The commissioner may adopt
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reasonable rules to accomplish the purposes of this chapter,
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including rules requiring:
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[(1)
appropriate reserves for insurance policies
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subject to this chapter; or
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[(2)
prudent investment of premiums collected from
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insurance policies subject to this chapter regardless of any other
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provision of this code related to the investment of money by an
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insurance company.] |
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SUBCHAPTER C. RETAINED ASSET ACCOUNTS |
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Sec. 1102.101. RETAINED ASSET ACCOUNT ELECTION. (a) An |
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insurer may not transfer proceeds payable under a life insurance |
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policy to a retained asset account unless the insurer obtains the |
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written consent of the beneficiary or, in the case of a group |
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contract, the policy owner before transferring the proceeds to the |
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account. |
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(b) An insurer may not use a retained asset account as the |
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insurer's default method of payment of proceeds under a life |
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insurance policy. |
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Sec. 1102.102. DISCLOSURE REQUIREMENTS. (a) The claim |
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form for payment of proceeds under a life insurance policy must |
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include a statement, written in plain language and in boldfaced |
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type, disclosing benefit payment options available under the |
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policy, including payment through the use of a retained asset |
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account or by check directly to the claimant. |
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(b) An insurer may not transfer proceeds payable under a |
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life insurance policy to a retained asset account unless the |
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insurer, before transferring the proceeds and in a written document |
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signed by the claimant, discloses to the claimant, or advises the |
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claimant concerning, the following information: |
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(1) a recommendation to consult a tax, investment, or |
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other financial advisor about tax liability and investment options; |
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(2) the initial interest rate for the retained asset |
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account, when and how the interest rate may change, and any |
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dividends and other gains that may be paid or distributed to the |
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account holder; |
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(3) the name and address of the custodian of the |
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retained asset account; |
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(4) any coverage of the retained asset account |
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guaranteed by the Federal Deposit Insurance Corporation and the |
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amount of the coverage; |
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(5) any limitations on withdrawal of funds from the |
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retained asset account, including any minimum or maximum benefit |
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payment amounts; |
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(6) the anticipated duration of any delays that the |
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retained asset account holder might encounter in completing an |
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authorized transaction; |
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(7) any fees for services provided, including a list |
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of the fees and the method of the fee calculation; |
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(8) the nature and frequency with which statements |
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concerning the retained asset account are issued, which must be not |
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less than once annually; |
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(9) that some or all of the benefit may be paid through |
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check, draft, or other instrument; |
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(10) that the entire proceeds are available to the |
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retained asset account holder by the use of a single check, draft, |
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or other instrument; |
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(11) whether the insurer or a related party may earn |
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income from the retained asset account, in addition to any fees |
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charged on the account, from the total gains received on the |
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investment of the balance of funds in the account; |
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(12) the telephone number, address, and other contact |
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information, including website address, to obtain additional |
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information regarding the retained asset account; |
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(13) a description of the insurer's policy regarding |
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retained asset accounts that may become inactive; and |
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(14) any other information prescribed by the |
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commissioner by rule. |
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Sec. 1102.103. INACTIVE ACCOUNTS. Not later than the 30th |
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day after the date a retained asset account becomes inactive, an |
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insurer shall return to the beneficiary the remaining balance of |
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the account. For purposes of this section, a retained asset account |
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is inactive if: |
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(1) for a period of three years, no amount of money is |
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withdrawn from the account; and |
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(2) no affirmative directive on the disposition of the |
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account has been provided to the insurer by the beneficiary. |
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SECTION 2. This Act applies only to a claim made under a |
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life insurance policy on or after September 1, 2011. A claim made |
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before September 1, 2011, is governed by the law as it existed |
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immediately before the effective date of this Act, and that law is |
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continued in effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2011. |