| 1 | 1 | | By: Longoria H.B. No. 3448 |
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| 2 | 2 | | |
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| 3 | 3 | | |
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| 4 | 4 | | A BILL TO BE ENTITLED |
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| 5 | 5 | | AN ACT |
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| 6 | 6 | | relating to single premium term life insurance offered in |
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| 7 | 7 | | connection with certain consumer loans. |
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| 8 | 8 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 9 | 9 | | SECTION 1. Subchapter I, Chapter 342, Finance Code, is |
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| 10 | 10 | | amended by adding Section 342.4022 to read as follows: |
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| 11 | 11 | | Sec. 342.4022. SINGLE PREMIUM TERM LIFE INSURANCE. (a) On |
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| 12 | 12 | | a loan made under this chapter that is subject to Subchapter E, a |
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| 13 | 13 | | lender: |
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| 14 | 14 | | (1) may, through a properly licensed insurance agent, |
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| 15 | 15 | | offer a borrower single premium term life insurance; |
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| 16 | 16 | | (2) may not require the borrower to accept the |
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| 17 | 17 | | insurance described by Subdivision (1); |
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| 18 | 18 | | (3) shall provide the borrower with the option to pay |
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| 19 | 19 | | the insurance premium from the borrower's own funds or to pay the |
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| 20 | 20 | | premium with a portion of the loan proceeds; and |
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| 21 | 21 | | (4) before completing the transaction, shall provide |
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| 22 | 22 | | to and review with the borrower a disclosure that specifies: |
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| 23 | 23 | | (A) the total dollar amount of the term life |
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| 24 | 24 | | insurance premium, and a comparison between: |
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| 25 | 25 | | (i) the amount of the payment due on the |
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| 26 | 26 | | loan with the additional purchase of the term life insurance |
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| 27 | 27 | | policy; and |
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| 28 | 28 | | (ii) the amount of the payment due on the |
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| 29 | 29 | | loan without the additional purchase of the term life insurance |
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| 30 | 30 | | policy; and |
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| 31 | 31 | | (B) if there is any shared interest or ownership, |
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| 32 | 32 | | including any common third-party ownership, between the insurance |
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| 33 | 33 | | company and the lender, then the lender must disclose the fact of |
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| 34 | 34 | | the shared interest or ownership. |
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| 35 | 35 | | (b) The finance commission by rule shall prescribe the form |
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| 36 | 36 | | and the content of the disclosures required by Subsection (a)(4). |
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| 37 | 37 | | SECTION 2. Section 342.407, Finance Code, is amended to |
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| 38 | 38 | | read as follows: |
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| 39 | 39 | | Sec. 342.407. REQUIREMENTS FOR INCLUDING INSURANCE CHARGE |
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| 40 | 40 | | IN CONTRACT. Insurance for which a charge is included in a loan |
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| 41 | 41 | | contract must be written: |
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| 42 | 42 | | (1) at lawful rates; |
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| 43 | 43 | | (2) in accordance with the Insurance Code; [and] |
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| 44 | 44 | | (3) by a company authorized to do business in this |
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| 45 | 45 | | state; and |
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| 46 | 46 | | (4) through an insurance agent licensed in accordance |
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| 47 | 47 | | with the Insurance Code, if the included charge is offered under |
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| 48 | 48 | | Section 342.4022 of this code. |
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| 49 | 49 | | SECTION 3. Section 342.412, Finance Code, is amended to |
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| 50 | 50 | | read as follows: |
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| 51 | 51 | | Sec. 342.412. ACTION UNDER SUBCHAPTER NOT SALE OF |
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| 52 | 52 | | INSURANCE. Except for the sale of a single premium term life |
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| 53 | 53 | | insurance policy to a borrower under Section 342.4022, arranging |
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| 54 | 54 | | [Arranging] for insurance or collecting an identifiable charge as |
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| 55 | 55 | | authorized by this subchapter is not a sale of insurance. |
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| 56 | 56 | | SECTION 4. Section 342.4022, Finance Code, as added by this |
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| 57 | 57 | | Act, applies only to an insurance policy that is delivered, issued |
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| 58 | 58 | | for delivery, or renewed on or after January 1, 2018. A policy |
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| 59 | 59 | | delivered, issued for delivery, or renewed before January 1, 2018, |
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| 60 | 60 | | is governed by the law as it existed immediately before the |
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| 61 | 61 | | effective date of this Act, and the former law is continued in |
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| 62 | 62 | | effect for that purpose. |
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| 63 | 63 | | SECTION 5. This Act takes effect January 1, 2018. |
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