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Insurance Code
Proposed Chapters
80C57(2) AJA

80C57(2) AJA

 

CHAPTER 1112. CERTAIN GUARANTEES IN LIFE INSURANCE POLICIES

Revised Law

Sec. 1112.001.  CERTAIN GUARANTEES NOT PROHIBITED. Section 841.253 does not prohibit the issuance of a life insurance policy that guarantees, by coupons or otherwise, definite payments or reductions in premiums. (V.T.I.C. Art. 3.11 (part).)

Source Law

Art. 3.11.  Section 841.253 of this code does not prohibit the issuance of life insurance policies guaranteeing, by coupons or otherwise, definite payments or reductions in premiums,  .

Revised Law

Sec. 1112.002.  CERTAIN GUARANTEES CONSTITUTE DEFINITE CONTRACT BENEFIT; VALUATION OF BENEFIT. (a) Except as provided by Subsection (e), a guarantee described by Section 1112.001 that is in a policy or coupon issued after September 5, 1955, [[[the effective date of this Act (Ch. 363, Acts 54th Leg., R.S., 1955)]]] shall be treated as a definite contract benefit and valued according to this section and the reserve requirements of Chapter 425 [[[V.T.I.C. Ch. 3]]].

(b)  Except as provided by Subsection (c), for a policy or coupon issued before the date determined under Section 1105.002(a) or (b), as applicable to the company, a contract benefit described by Subsection (a) shall be valued using the reserve valuation net premium for the benefits that is a uniform percentage of the gross premiums.

(c)  A policy described by Subsection (b) that contains a contract benefit described by Subsection (a) may be valued on a basis that provides for not more than one year preliminary term insurance.

(d)  For a policy or coupon issued on or after the date determined under Section 1105.002(a) or (b), as applicable to the company, a contract benefit described by Subsection (a) shall be valued using the commissioners reserve valuation method described by Section 425.064 [[[V.T.I.C. Art. 3.28]]].

(e)  A provision of this section relating to reserves does not apply to a policy issued before September 7, 1955. (V.T.I.C. Art. 3.11 (part).)

Source Law

Art. 3.11.  but any such guarantee contained in policies or coupons issued after the effective date of this Act shall be treated as a definite contract benefit and so valued according to the reserve requirements of this Chapter using in the case of policies or coupons issued before the date determined under Section 1105.002(a) or (b) of this code, as applicable to the company, reserve valuation net premium for such benefits which is a uniform percentage of the gross premiums, provided that any policy containing such a contract benefit may be valued on a basis which provides for not more than one (1) year preliminary term insurance, and using in the case of policies or coupons issued on or after the date determined under Section 1105.002(a) or (b) of this code, as applicable to the company, the commissioners reserve valuation method as defined in Article 3.28. Nothing in this Section with respect to reserves shall apply to any policy issued prior to September 7, 1955.

Revisor's Note

(1)  V.T.I.C. Article 3.11 refers to a policy or coupon issued after "the effective date of this Act." The applicable provisions of V.T.I.C. Article 3.11 were added by Chapter 363, Acts of the 54th Legislature, Regular Session, 1955, which took effect September 5, 1955. The revised law is drafted accordingly.

(2)  V.T.I.C. Article 3.11 refers to valuation of certain benefits in a life insurance policy "according to the reserve requirements of this Chapter," meaning V.T.I.C. Chapter 3. V.T.I.C. Chapter 3 is revised in various places in this code. The reserve requirements for life insurers were revised in 2005 as Chapter 425 of this code. The revised law is drafted accordingly.

(3)  V.T.I.C. Article 3.11 refers to "the commissioners reserve valuation method as defined in [V.T.I.C.] Article 3.28." The portion of Article 3.28 that describes the commissioners reserve valuation method was revised in 2005 as Section 425.064 of this code. The revised law is drafted accordingly.

TLC: Insurance Code Proposed Chapters
This web page is published by the Texas Legislative Council and was last updated November 18, 2006.