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A BILL TO BE ENTITLED
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AN ACT
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relating to certain disclosures and notices required for certain |
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life insurance policies. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 1101, Insurance Code, is amended by |
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adding Subchapter E to read as follows: |
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SUBCHAPTER E. DISCLOSURES AND NOTICES RELATING TO LIFE INSURANCE |
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POLICIES WITH NON-GUARANTEED CHARGES |
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Sec. 1101.201. PURPOSE. This subchapter is intended to |
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provide standards for disclosures relating to changes in certain |
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non-guaranteed charges of life insurance policies subject to this |
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subchapter. |
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Sec. 1101.202. DEFINITIONS. In this subchapter: |
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(1) "Adverse change" means a change by an insurer in |
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the insurer's current scale of charges applied to a policy that |
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increases a premium or charge to a policy owner. |
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(2) "Current scale of charges" means the scale or |
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schedule of non-guaranteed charges in effect for a policy during |
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the period of time immediately before an adverse change to the |
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policy. |
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(3) "Non-guaranteed charges" means the scale or |
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schedule of charges in a policy provision at the time the policy was |
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issued that may be changed at the insurer's discretion without the |
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consent or request of the policy owner. The term does not include a |
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policy loan interest rate charged on a policy loan. |
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Sec. 1101.203. APPLICABILITY. (a) This subchapter applies |
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to a life insurance policy issued by an insurer, as defined by |
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Section 1102.001, that contains non-guaranteed charges that may |
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change at the discretion of the insurer. |
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(b) This subchapter does not apply to: |
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(1) group life insurance without separately |
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identifiable accounts for insureds; |
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(2) a life insurance policy in which the insurer |
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assumes all risk and contractually guarantees a death benefit in |
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exchange for a guaranteed premium set at the time of the policy's |
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issuance; |
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(3) an individual or group annuity contract; |
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(4) credit life insurance; |
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(5) a life insurance policy with no illustrated death |
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benefits on any individual exceeding $10,000; |
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(6) a bank-owned or corporate-owned life insurance |
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policy; or |
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(7) a life insurance policy that does not provide for |
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cash values or nonforfeiture values. |
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Sec. 1101.204. DISCLOSURE OF NON-GUARANTEED CHARGE |
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INCREASE AFTER ISSUANCE OF POLICY. (a) If an insurer increases a |
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non-guaranteed charge applied to a policy, the insurer must provide |
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a written notice to the policy owner: |
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(1) disclosing: |
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(A) each non-guaranteed charge that has changed; |
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(B) the new scale of non-guaranteed charges after |
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the change; |
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(C) the current scale of charges; and |
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(D) the guaranteed maximum scale of charges; and |
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(2) including a prominent display of any adverse |
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change in the current scale of charges identifying: |
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(A) the nature of the change; |
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(B) that the change is adverse or the conditions |
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under which the change would be adverse; |
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(C) the age and year at which the policy would |
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have lapsed if there had not been an adverse change or a change to |
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payments or coverage; and |
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(D) the new age and year at which the policy will |
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lapse if there are no changes to payments or coverage. |
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(b) The notice under Subsection (a) must include the |
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insurer's telephone number and the following statement placed |
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prominently on the front of the notice: |
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"YOU SHOULD KNOW: This increase may change the value of your |
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policy and may change how long your policy will last unless you |
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increase your premium payments or reduce your coverage. Ask your |
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agent for an illustration that shows the effect of this change on |
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your policy and about other options that are available to you." |
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(c) The notice required by Subsection (a) must be given not |
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later than the 90th day before the date the change is applied. |
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Sec. 1101.205. DISCLOSURE OF CREDITED INTEREST RATE |
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DECREASE AFTER ISSUANCE OF POLICY. (a) If an insurer decreases the |
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credited interest rate paid on a policy's accumulation value, the |
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insurer must provide in the annual statement a written notice to the |
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policy owner: |
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(1) disclosing: |
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(A) the new current credited interest rate; |
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(B) the previous credited interest rate; |
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(C) the decrease in the credited interest rate; |
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(D) the minimum credited interest rate stated in |
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the policy; and |
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(E) the effective date of the change; and |
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(2) including a prominent display of: |
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(A) the age and year at which the policy would |
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have lapsed if there had not been a change to the credited interest |
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rate or to payments or coverage; and |
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(B) the new age and year at which the policy will |
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lapse based on all changes to non-guaranteed charges and the |
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credited interest rate if there are no changes to payments or |
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coverage. |
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(b) The notice under Subsection (a) must include the |
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insurer's telephone number and the following statement placed |
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prominently on the front of the notice: |
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"YOU SHOULD KNOW: This decrease may change the value of your |
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policy and may change how long your policy will last unless you |
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increase your premium payments or reduce your coverage. Ask your |
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agent for an illustration that shows the effect of this change on |
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your policy and about other options that are available to you." |
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Sec. 1101.206. ANNUAL ILLUSTRATION. Regardless of whether |
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any non-guaranteed charges are changed, an insurer that issues a |
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policy subject to this subchapter must offer to provide to the |
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policy owner at least annually an illustration. If the insurer has |
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changed any non-guaranteed charges or the credited interest rate, |
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the insurer must offer the illustration at no charge. |
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Sec. 1101.207. RULES. (a) The commissioner may adopt rules |
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as necessary to implement this subchapter. |
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(b) The commissioner by rule may exempt certain types of |
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life insurance policies from one or more of the requirements of this |
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subchapter. |
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(c) Section 2001.0045, Government Code, does not apply to |
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rules adopted under this section. |
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SECTION 2. Subchapter E, Chapter 1101, Insurance Code, as |
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added by this Act, applies only to an increase in a cost of |
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insurance charge or a decrease in a credited interest rate applied |
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to an insurance policy on or after January 1, 2020. |
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SECTION 3. This Act takes effect September 1, 2019. |