H.B. No. 1865

INTER VIVOS PAYMENT OF LIFE INSURANCE BENEFITS TO TERMINALLY ILL PERSONS

Effective Date: September 1, 1997

AN ACT

relating to payment of accelerated life insurance benefits.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1.  Article 3.50-6, Insurance Code, is amended to read as follows:

Art. 3.50-6.  PAYMENT OF ACCELERATED LIFE INSURANCE BENEFITS [DEATH BENEFIT IN EVENT OF TERMINAL ILLNESS OR INJURY]. (a)  In this article:

(1)  "Accelerated benefit" means a benefit paid to an insured in lieu 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)  "Specified disease" means an illness or physical condition that is likely to cause permanent disability or premature death, including the following:

(A)  acquired immunodeficiency syndrome (AIDS);

(B)  a malignant tumor;

(C)  a condition that requires an organ transplant; and

(D)  a coronary artery disease that results in acute infarction or requires surgery.

(5)  "Terminal illness" means an illness or physical condition, including a physical injury, that can reasonably be expected to result in death in two years or less.

(b)  An insurance company may pay an accelerated benefit under an individual or [a] group term life insurance policy or certificate if:

(1)  the company has received a written medical opinion, satisfactory to the company, that the insured has a [is not expected to continue living for more than 12 months because of] terminal illness, a long-term care illness, or a specified disease [or injury]; and

(2)  [the amount of the accelerated benefit does not exceed the greater of $25,000 or 50 percent of the amount of the death benefit payable under the policy or certificate; and

[(3)]  the amount of the accelerated benefit is deducted from the amount of the death benefit payable under the policy or certificate and from any amount the insured would otherwise be entitled to convert to an individual contract.

(c)  The commissioner may adopt rules to implement this article.

SECTION 2.  This Act takes effect on September 1, 1997, and applies only to a policy or contract that is delivered, issued for delivery, or renewed on or after that date. A policy or contract that is delivered, issued for delivery, or renewed before the effective date of this Act is governed by the law as it existed immediately before that date, and that law is continued in effect for that purpose.

SECTION 3.  The importance of this legislation and the crowded condition of the calendars in both houses create an emergency and an imperative public necessity that the constitutional rule requiring bills to be read on three several days in each house be suspended, and this rule is hereby suspended.


Courtesy of Glenn M. Karisch, Ikard & Golden, P. C., Austin, Texas. This page was last revised on May 28, 1997.