86R19954 MEW-F
By: Craddick H.B. No. 207
A BILL TO BE ENTITLED
AN ACT
relating to certain disclosures and notices required for certain
life insurance policies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 1101, Insurance Code, is amended by
adding Subchapter E to read as follows:
SUBCHAPTER E. DISCLOSURES AND NOTICES RELATING TO LIFE INSURANCE
POLICIES WITH NON-GUARANTEED CHARGES
Sec. 1101.201. PURPOSE. This subchapter is intended to
provide standards for disclosures relating to changes in certain
non-guaranteed charges of life insurance policies subject to this
subchapter.
Sec. 1101.202. DEFINITIONS. In this subchapter:
(1) "Adverse change" means a change by an insurer in
the insurer's current scale of charges applied to a policy that
increases a premium or charge to a policy owner.
(2) "Current scale of charges" means the scale or
schedule of non-guaranteed charges in effect for a policy during
the period of time immediately before an adverse change to the
policy.
(3) "Non-guaranteed charges" means the scale or
schedule of charges in a policy provision at the time the policy was
issued that may be changed at the insurer's discretion without the
consent or request of the policy owner. The term does not include a
policy loan interest rate charged on a policy loan.
Sec. 1101.203. APPLICABILITY. (a) This subchapter applies
to a life insurance policy issued by an insurer, as defined by
Section 1102.001, that contains non-guaranteed charges that may
change at the discretion of the insurer.
(b) This subchapter does not apply to:
(1) group life insurance without separately
identifiable accounts for insureds;
(2) a life insurance policy in which the insurer
assumes all risk and contractually guarantees a death benefit in
exchange for a guaranteed premium set at the time of the policy's
issuance;
(3) an individual or group annuity contract;
(4) credit life insurance;
(5) a life insurance policy with no illustrated death
benefits on any individual exceeding $10,000;
(6) a bank-owned or corporate-owned life insurance
policy; or
(7) a life insurance policy that does not provide for
cash values or nonforfeiture values.
Sec. 1101.204. DISCLOSURE OF NON-GUARANTEED CHARGE
INCREASE AFTER ISSUANCE OF POLICY. (a) If an insurer increases a
non-guaranteed charge applied to a policy, the insurer must provide
a written notice to the policy owner:
(1) disclosing:
(A) each non-guaranteed charge that has changed;
(B) the new scale of non-guaranteed charges after
the change;
(C) the current scale of charges; and
(D) the guaranteed maximum scale of charges; and
(2) including a prominent display of any adverse
change in the current scale of charges identifying:
(A) the nature of the change;
(B) that the change is adverse or the conditions
under which the change would be adverse;
(C) the age and year at which the policy would
have lapsed if there had not been an adverse change or a change to
payments or coverage; and
(D) the new age and year at which the policy will
lapse if there are no changes to payments or coverage.
(b) The notice under Subsection (a) must include the
insurer's telephone number and the following statement placed
prominently on the front of the notice:
"YOU SHOULD KNOW: This increase may change the value of your
policy and may change how long your policy will last unless you
increase your premium payments or reduce your coverage. Ask your
agent for an illustration that shows the effect of this change on
your policy and about other options that are available to you."
(c) The notice required by Subsection (a) must be given not
later than the 90th day before the date the change is applied.
Sec. 1101.205. DISCLOSURE OF CREDITED INTEREST RATE
DECREASE AFTER ISSUANCE OF POLICY. (a) If an insurer decreases the
credited interest rate paid on a policy's accumulation value, the
insurer must provide in the annual statement a written notice to the
policy owner:
(1) disclosing:
(A) the new current credited interest rate;
(B) the previous credited interest rate;
(C) the decrease in the credited interest rate;
(D) the minimum credited interest rate stated in
the policy; and
(E) the effective date of the change; and
(2) including a prominent display of:
(A) the age and year at which the policy would
have lapsed if there had not been a change to the credited interest
rate or to payments or coverage; and
(B) the new age and year at which the policy will
lapse based on all changes to non-guaranteed charges and the
credited interest rate if there are no changes to payments or
coverage.
(b) The notice under Subsection (a) must include the
insurer's telephone number and the following statement placed
prominently on the front of the notice:
"YOU SHOULD KNOW: This decrease may change the value of your
policy and may change how long your policy will last unless you
increase your premium payments or reduce your coverage. Ask your
agent for an illustration that shows the effect of this change on
your policy and about other options that are available to you."
Sec. 1101.206. ANNUAL ILLUSTRATION. Regardless of whether
any non-guaranteed charges are changed, an insurer that issues a
policy subject to this subchapter must offer to provide to the
policy owner at least annually an illustration. If the insurer has
changed any non-guaranteed charges or the credited interest rate,
the insurer must offer the illustration at no charge.
Sec. 1101.207. RULES. (a) The commissioner may adopt rules
as necessary to implement this subchapter.
(b) The commissioner by rule may exempt certain types of
life insurance policies from one or more of the requirements of this
subchapter.
(c) Section 2001.0045, Government Code, does not apply to
rules adopted under this section.
SECTION 2. Subchapter E, Chapter 1101, Insurance Code, as
added by this Act, applies only to an increase in a cost of
insurance charge or a decrease in a credited interest rate applied
to an insurance policy on or after January 1, 2020.
SECTION 3. This Act takes effect September 1, 2019.