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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. APPLICABILITY. (a) This subchapter applies |
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to a universal life insurance policy issued by an insurer, as |
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defined by Section 1102.001. |
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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 premium schedule set at the time of the policy's |
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issuance; or |
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(3) a bank-owned or corporate-owned life insurance |
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policy. |
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Sec. 1101.203. DEFINITION. In this subchapter, "cost of |
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insurance charge" means a charge applied by an insurer to a policy |
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based on the current schedule of mortality rates. The term does not |
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include an expense charge or any credited interest paid on the |
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accumulation value of a policy. |
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Sec. 1101.204. DISCLOSURE OF COST OF INSURANCE CHARGE |
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INCREASE AFTER ISSUANCE OF POLICY. (a) If an insurer increases the |
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cost of insurance charge applied to a policy, the insurer must |
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provide a written notice to the policy owner disclosing: |
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(1) the percentage increase in the cost of insurance |
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charge; |
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(2) the maximum cost of insurance charge stated in the |
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policy; |
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(3) the effective date of the change; |
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(4) a comparison of the change to the current and |
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maximum cost of insurance charges; and |
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(5) the options available to the policy owner under |
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the policy. |
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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 will change the value of your |
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policy and change how long your policy will last. Ask your agent for |
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an illustration that shows the effect of this change on your |
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policy." |
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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) Except as provided by |
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Subsection (d), if an insurer decreases the credited interest rate |
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paid on a policy's accumulation value, the insurer must provide a |
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written notice to the policy owner disclosing: |
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(1) the percentage decrease in the credited interest |
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rate; |
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(2) the minimum credited interest rate stated in the |
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policy; |
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(3) the effective date of the change; |
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(4) a comparison of the change to the current and |
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minimum credited interest rate; and |
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(5) the options available to the policy owner under |
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the policy. |
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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 will change the value of your |
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policy and change how long your policy will last. Ask your agent for |
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an illustration that shows the effect of this change on your |
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policy." |
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(c) If notice is required under Subsection (a), the notice |
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must be given on the next anniversary of the date of issuance of the |
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policy. |
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(d) If an insurer changes the credited interest rate paid on |
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a policy's accumulation value more than once during a policy year, |
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the insurer is required to provide the notice under Subsection (a) |
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only if, after taking into account all changes made to the credited |
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interest rate during the policy year, the changes result in an |
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overall decrease in the credited interest rate. |
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Sec. 1101.206. ANNUAL ILLUSTRATION OF CHARGES. Regardless |
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of whether any non-guaranteed charges are changed, an insurer that |
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issues a policy subject to this subchapter must provide to the |
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policy owner at least annually an illustration containing charges |
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specified by the commissioner by rule. |
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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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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. |