Law:Title 7. Life Insurance And Annuities. Subtitle A. Life Insurance In General from Chapter 1111. Life And Viatical Settlements And Accelerated Term Life Insurance Benefits (Texas)

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Subtitle A. Life Insurance In General

Contents

Chapter 1111. Life And Viatical Settlements And Accelerated Term Life Insurance Benefits

Subchapter A. Life And Viatical Settlements

Section  1111.001.  Definitions.

In this subchapter:

(1)  "Life settlement" means an agreement that is solicited, negotiated, offered, entered into, delivered, or issued for delivery in this state under which a person pays anything of value that is:

(A)  less than the expected death benefit of a policy insuring the life of an individual who does not have a catastrophic or life-threatening illness or condition; and

(B)  paid in return for the policy owner's or certificate holder's assignment, transfer, bequest, devise, or sale of the death benefit under or ownership of the policy.

(2)  "Person" means an individual, corporation, trust, partnership, association, or any other legal entity.

(3)  "Viatical settlement" means an agreement that is solicited, negotiated, offered, entered into, delivered, or issued for delivery in this state under which a person pays anything of value that is:

(A)  less than the expected death benefit of a policy insuring the life of an individual who has a catastrophic or life-threatening illness or condition; and

(B)  paid in return for the policy owner's or certificate holder's assignment, transfer, bequest, devise, or sale of the death benefit under or ownership of the policy.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 2, eff. June 1, 2003.



Section  1111.002.  Purpose.

The purpose of this subchapter is to:

(1)  provide for registration of persons engaged in the business of life or viatical settlements; and

(2)  provide consumer protection for a person who may sell or otherwise transfer the person's life insurance policy.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 2, eff. June 1, 2003.



Section  1111.003.  Rules; Registration And Regulation.

(a) To implement this subchapter, the commissioner shall adopt reasonable rules relating to life settlements and relating to viatical settlements.

(b)  The rules adopted by the commissioner under this section must include rules governing:

(1)  registration of a person engaged in the business of life settlements;

(2)  registration of a person engaged in the business of viatical settlements;

(3)  approval of contract forms;

(4)  disclosure requirements;

(5)  prohibited practices relating to:

(A)  unfair discrimination in the provision of life or viatical settlements; and

(B)  referral fees paid by persons engaged in the business of life or viatical settlements;

(6)  assignment or resale of life insurance policies;

(7)  maintenance of appropriate confidentiality of personal and medical information; and

(8)  the responsibility of a registrant to ensure compliance with this subchapter and rules relating to life or viatical settlements after the registration is revoked, suspended, or otherwise lapses.

(c)  The commissioner may not adopt a rule establishing a price or fee for the sale or purchase of a life settlement. This subsection does not prohibit the commissioner from adopting a rule relating to an unjust price or fee for the sale or purchase of a life settlement.

(d)  The commissioner may not adopt a rule that regulates the actions of an investor providing money to a life or viatical settlement company.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 2, eff. June 1, 2003.



Section  1111.004.  Annual Fee For Registration.

The commissioner may adopt rules requiring payment of an annual fee in connection with registration. The fee may not exceed $250.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 2, eff. June 1, 2003.



Section  1111.005.  Denial, Suspension, Or Revocation Of Registration; Enforcement.

(a) The commissioner may suspend or revoke a registration or deny an application for registration if the commissioner determines that the registrant or applicant, individually or through any officer, director, or shareholder of the registrant or applicant:

(1)  wilfully violated:

(A)  this subchapter;

(B)  an applicable provision of this code or another insurance law of this state; or

(C)  a rule adopted under a law described by Paragraph (A) or (B);

(2)  intentionally made a material misstatement in the application for registration;

(3)  obtained or attempted to obtain registration by fraud or misrepresentation;

(4)  misappropriated, converted to the registrant's or applicant's own use, or illegally withheld money belonging to a party to a life or viatical settlement;

(5)  was guilty of fraudulent or dishonest practices;

(6)  materially misrepresented the terms of business conducted under this subchapter or any other provision of this code or another insurance law of this state;

(7)  made or issued, or caused to be made or issued, a statement materially misrepresenting or making incomplete comparisons regarding the material terms of any business conducted under this subchapter; or

(8)  was convicted of a felony or was convicted of a misdemeanor involving moral turpitude or fraud.

(b)  An applicant or registrant whose registration has been denied, suspended, or revoked under this section may not file another application for registration before the first anniversary of the effective date of the denial, suspension, or revocation or, if judicial review of the denial, suspension, or revocation is sought, the first anniversary of the date of the final court order or decree affirming the action. The commissioner may deny an application filed after that period unless the applicant shows good cause why the denial, suspension, or revocation of the previous registration should not bar the issuance of a new registration.

(c)  In addition to an action taken against a person under Subsection (a) or (b), the commissioner may take against the person any action that the commissioner may take against a person engaged in the business of insurance who violates a statute or rule.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 2, eff. June 1, 2003.



Section 1111.006.  Applicability Of Other Insurance Laws.

The following laws apply to a person engaged in the business of life or viatical settlements:

(1)   Chapters 82, 83, 84, 481, 541, and 701;

(2) Sections 31.002, 32.021, 32.023, 32.041, 38.001, 81.004, 86.001, 86.051, 86.052, 201.004, 401.051, 401.054, 401.151(a), 521.003, 521.004, 543.001(c), 801.056, and 862.052;

(3)  Subchapter A, Chapter 32;

(4)  Subchapter C, Chapter 36;

(5)  Subchapter B, Chapter 404; and

(6)  Subchapter B, Chapter 491.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 2, eff. June 1, 2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 730, Sec. 2F.006, eff. April 1, 2009.



Subchapter B. Accelerated Term Life Insurance Benefits

Section  1111.051.  Definitions.

In this subchapter:

(1)  "Accelerated benefit" means a benefit paid to an insured instead of a portion of a death benefit.

(2)  "Death benefit" means a benefit payable to a beneficiary on the death of an insured.

(3)  "Long-term care illness" means an illness or physical condition that results in the inability to perform the activities of daily life or the substantial and material duties of any occupation.

(4)  "Terminal illness" means an illness or physical condition, including a physical injury, that can reasonably be expected to result in death within not more than two years.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 2, eff. June 1, 2003.



Section  1111.052.  Authority To Pay Accelerated Term Life Benefits.

An insurer may pay an accelerated benefit under an individual or group term life insurance policy or certificate if:

(1)  the insurer has received a written medical opinion, satisfactory to the insurer, that the insured has:

(A)  a terminal illness;

(B)  a long-term care illness; or

(C)  an illness or physical condition that is likely to cause permanent disability or premature death, including:

(i)  acquired immune deficiency syndrome (AIDS);

(ii)  a malignant tumor;

(iii)  a condition that requires an organ transplant; or

(iv)  a coronary artery disease that results in acute infarction or requires surgery; and

(2)  the amount of the accelerated benefit is deducted from:

(A)  the amount of the death benefit payable under the policy or certificate; and

(B)  any amount the insured would otherwise be entitled to convert to an individual contract.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 2, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.302, eff. Sept. 1, 2003.



Section  1111.053.  Rules.

The commissioner may adopt rules to implement this subchapter.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 2, eff. June 1, 2003.


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