Bill Text: TX HB207 | 2019-2020 | 86th Legislature | Enrolled
Bill Title: Relating to certain disclosures and notices required for certain life insurance policies.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2019-06-14 - Effective on 9/1/19 [HB207 Detail]
Download: Texas-2019-HB207-Enrolled.html
H.B. No. 207 |
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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; and | ||
(C) 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, if | ||
permitted under your policy. Ask your insurance company for an | ||
illustration, at no cost, that shows the effect of this change on | ||
your policy and discuss with your agent or financial advisor 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. | ||
(d) The notice required by Subsection (a) does not | ||
constitute an illustration, as defined by rules adopted by the | ||
department relating to life insurance illustrations. | ||
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 annually a written notice to the policy owner: | ||
(1) disclosing: | ||
(A) the new current credited interest rate; | ||
(B) the previous credited interest rate; | ||
(C) the minimum credited interest rate stated in | ||
the policy; and | ||
(D) the effective date of the change; and | ||
(2) including a prominent display of 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 | ||
insurance company for an in-force illustration that shows the | ||
effect of this change on your policy and discuss with your agent or | ||
financial advisor other options that are available to you." | ||
(c) Notwithstanding any other provision of this section, | ||
this section does not apply to or require disclosures for a variable | ||
universal or indexed life insurance policy. | ||
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 in-force 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 non-guaranteed | ||
charge applied to an insurance policy on or after January 1, 2020. | ||
Subchapter E, Chapter 1101, Insurance Code, as added by this Act, | ||
applies only to a decrease in a credited interest rate applied to an | ||
insurance policy on or after January 1, 2021. | ||
SECTION 3. This Act takes effect September 1, 2019. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 207 was passed by the House on April | ||
18, 2019, by the following vote: Yeas 146, Nays 1, 2 present, not | ||
voting; and that the House concurred in Senate amendments to H.B. | ||
No. 207 on May 23, 2019, by the following vote: Yeas 140, Nays 0, 1 | ||
present, not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 207 was passed by the Senate, with | ||
amendments, on May 21, 2019, by the following vote: Yeas 31, Nays | ||
0. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: __________________ | ||
Date | ||
__________________ | ||
Governor |