An association may issue certain life insurance certificates only with the commissioner’s approval, and it must clearly disclose any benefit reductions or exclusions.
Sec. 887.255. LIFE INSURANCE BENEFIT REDUCTIONS AND EXCLUSIONS. (a) An association may, with the commissioner's approval, issue an insurance certificate that provides for: (1) reduced benefits if the insured: (A) dies or is injured while engaged in: (i) military, naval, or aerial service or aerial flight during peace or war; or (ii) a hazardous occupation specified in the certificate; (B) dies by the insured's own hand, regardless of whether the insured was sane or insane; or (C) dies or is injured by mob violence or legal execution; or (2) reduced or excluded benefits for sickness from certain causes specified in the certificate. (b) The front page of an insurance certificate must call attention to any reduction or exclusion of benefits provided by the certificate. The circumstances or conditions under which the reduction or exclusion applies must be stated plainly in the certificate. (c) If an insurance certificate that provides natural death benefits contains a provision for reducing the greatest death benefit provided by the certificate for a specified insured for a reason other than a reason specified by Subsection (a): (1) the reduced death benefit for the insured must at all times when the reduction is in effect equal or exceed 120 percent of the total premium paid on that certificate by the insured; and (2) the reduction must end before the fifth anniversary of the date the certificate is issued. (d) Subsection (c) does not apply to a life insurance certificate on which the reduction of the death benefit does not apply at the time of the death of the specified insured. (e) If a life insurance certificate provides for an increase of the initial amount of the death benefit for a specified insured one or more times during the first five years of the certificate, the amount of the death benefit for the insured must at all times during the period of the increasing benefit equal at least 120 percent of the premiums paid on that certificate by the insured during the period of the increase. (f) Subsection (e) does not apply to a life insurance certificate that has been in force for more than five years from the date the certificate was issued. (g) Subsections (c)-(f) do not apply to a family group life insurance certificate described by Section 887.402. (h) This section does not apply to health and accident insurance policies. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.