2005 Texas Insurance Code CHAPTER 1111. LIFE AND VIATICAL SETTLEMENTS AND ACCELERATED TERM LIFE INSURANCE BENEFITS

INSURANCE CODE

CHAPTER 1111. LIFE AND VIATICAL SETTLEMENTS AND ACCELERATED TERM 
LIFE INSURANCE BENEFITS

SUBCHAPTER A. LIFE AND VIATICAL SETTLEMENTS


	§ 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, § 2, eff. June 1, 2003.           


	§ 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, § 2, eff. June 1, 2003.           


	§ 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, § 2, eff. June 1, 2003.           


	§ 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, § 2, eff. June 1, 2003.           


	§ 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, § 2, eff. June 1, 2003.           


	§ 1111.006. APPLICABILITY OF OTHER INSURANCE LAWS.  The 
following laws apply to a person engaged in the business of life or 
viatical settlements:
		(1)  Articles 1.10, 1.10D, 1.19, and 21.21;                                   
		(2)  Chapters 82, 83, and 84;                                                 
		(3)  Sections 31.002, 32.001, 32.002, 32.003, 32.021, 
32.023, 32.041, 38.001, 81.004, 801.056, and 862.052;  and
		(4)  Subchapter C, Chapter 36.                                                

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

SUBCHAPTER B. ACCELERATED TERM LIFE INSURANCE BENEFITS


	§ 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, § 2, eff. June 1, 2003.           


	§ 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, § 2, eff. June 1, 2003.  
Amended by Acts 2003, 78th Leg., ch. 1276, § 10A.302, eff. Sept. 
1, 2003.


	§ 1111.053. RULES.  The commissioner may adopt rules to 
implement this subchapter.

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