Texas Life Insurance Law
4.6% of the exam 2 min
The 6 life-only Texas questions: required policy provisions in TIC Chapter 1101 and 28 TAC Chapter 4, beneficiaries, accelerated benefits, group and credit life, replacement and annuity disclosure.
Required provisions in every individual life policy
A Texas life policy must state that the policy, or the policy and application, is the entire contract (TIC 1101.003); that premiums are payable in advance against a receipt signed by a designated officer (1101.004); that there is a grace period of at least one month (1101.005); that it is incontestable after two years in force during the insured's life, except for nonpayment (1101.006); that statements are representations, not warranties, absent fraud (1101.007); and that an understated age adjusts the benefit to what the premium would have bought (1101.008). Death claims must be settled within two months of proof (1101.011).
Loans, reinstatement, backdating and maturity
Cash value policies must offer loans once three full years of premiums are paid, secured only by the policy, and the policy is not voided until the debt reaches the cash value (TIC 1101.009). A lapsed policy that was not surrendered may be reinstated within three years with evidence of insurability and back premiums with interest (28 TAC 4.611). A policy may not be dated more than six months before the application to give a younger age (TIC 1101.054). Lawsuits cannot be limited to less than two years (28 TAC 4.619), and settlement at maturity cannot be less than the face amount plus dividend additions less debt (28 TAC 4.621).
Beneficiaries, accelerated benefits, group and credit life
An insured of legal age may name any person or entity as beneficiary (TIC 1103.055); a beneficiary who wilfully causes the insured's death forfeits, and the contingent beneficiary or nearest relative takes (1103.151-.152). Accelerated term benefits may be paid on a written medical opinion of terminal illness, long-term care illness, or conditions such as AIDS, cancer, organ transplant or heart attack (1111.052). Group life has a 31-day grace period (1131.103), a 31-day conversion right without evidence of insurability (1131.110), and conversion on group termination for people insured five years (1131.111); a noncontributory plan must cover all eligible employees (1131.204). Credit life is term only, may not exceed the debt, and the creditor may not charge more than the insurer's premium (1153.151, .155, .201).
Replacement and annuity disclosure
On every application the agent submits a statement signed by applicant and agent about existing coverage; if a replacement is involved the agent reads the replacement notice, both sign it, and it is left with the applicant (TIC 1114.051). The replacing insurer notifies existing insurers within five business days and keeps the notices at least five years (1114.053); the existing insurer tells the owner about the right to policy information (1114.054). For annuities, if the buyer's guide and disclosure document are not given at or before the application, the contract must allow at least a 15-day free look (28 TAC 4.2311).
Where people lose points
✗ "The grace period on a group life policy is one month, like individual life."
✓ Individual life: at least one month (1101.005). Group life: 31 days (1131.103).
✗ "The insurer can deny a claim because the age was understated."
✓ It adjusts the benefit to what the premium would have bought at the correct age; it does not deny the claim.
✗ "Credit life can be whole life so the borrower keeps coverage after the loan."
✓ Credit life is issued only on a term plan, individual or group (TIC 1153.151).
✗ "Policy loans are available from the first year."
✓ The statute requires them once premiums have been paid for three full years; term policies are exempt.
✗ "The agent sends the replacement notice to the old insurer."
✓ The agent reads and leaves the notice with the applicant; the replacing insurer notifies the old insurer.
Numbers to memorize
| Grace period (individual) | At least 1 month (TIC 1101.005) |
| Incontestability | 2 years (TIC 1101.006) |
| Policy loans | After 3 full years of premiums (TIC 1101.009) |
| Death claim settlement | 2 months (TIC 1101.011) |
| Backdating limit | 6 months (TIC 1101.054) |
| Reinstatement | 3 years (28 TAC 4.611) |
| Group life grace and conversion | 31 days each (TIC 1131.103, .110) |
| Replacement notice to existing insurer | 5 business days (TIC 1114.053) |
| Annuity free look without buyer's guide | 15 days (28 TAC 4.2311) |
Test yourself
No answers here on purpose — retrieving them is the practice. Drill this domain if any of these stall you.
- What makes up the entire contract of a Texas life policy?
- What happens to the death benefit if the insured dies during the grace period?
- Which group members can convert when the whole group policy ends?
- Name three conditions that can qualify for an accelerated term benefit.
- What three things must the agent do with the replacement notice?
Go deeper on these
- Texas required life insurance policy provisions
- Replacing life insurance and annuities in Texas
- Health policy uniform provisions, with the Texas numbers