CHAPTER 1103. LIFE INSURANCE POLICY BENEFICIARIES - Texas Statutes

INSURANCE CODE

TITLE 7. LIFE INSURANCE AND ANNUITIES

SUBTITLE A. LIFE INSURANCE IN GENERAL

CHAPTER 1103. LIFE INSURANCE POLICY BENEFICIARIES

SUBCHAPTER A. STATUTORY LIFE INSURANCE BENEFICIARIES; INSURABLE

INTEREST

Sec. 1103.001. APPLICABILITY OF SUBCHAPTER. This subchapter

applies only to a life insurance policy issued by a legal reserve

life insurance company.

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

2003.

Sec. 1103.002. INSURABLE INTEREST OF BENEFICIARY. A beneficiary

described by this subchapter who is designated in a life

insurance policy has an insurable interest for the face amount of

the policy and is entitled to collect that amount.

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

2003.

Sec. 1103.003. CORPORATION, JOINT STOCK ASSOCIATION, OR TRUST

ESTATE AS BENEFICIARY. A corporation, a joint stock association,

or a trust estate that is engaging in business for profit may be

designated as a beneficiary in a policy that insures the life of

an officer or stockholder of the corporation, joint stock

association, or trust estate.

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

2003.

Sec. 1103.004. PARTNERSHIP OR PARTNER AS BENEFICIARY. A

partnership or a member of a partnership may be designated as a

beneficiary in a policy that insures the life of a member of the

partnership.

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

2003.

Sec. 1103.005. RELIGIOUS, EDUCATIONAL, ELEEMOSYNARY, CHARITABLE,

OR BENEVOLENT INSTITUTION OR UNDERTAKING AS BENEFICIARY. A

religious, educational, eleemosynary, charitable, or benevolent

institution or undertaking may be designated as a beneficiary in

a policy that insures the life of an individual.

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

2003.

SUBCHAPTER B. DESIGNATION OF BENEFICIARY OR OWNER OF LIFE

INSURANCE POLICY; INSURABLE INTEREST

Sec. 1103.051. APPLICABILITY OF SUBCHAPTER. This subchapter

applies only to a life insurance policy issued by:

(1) a legal reserve life insurance company; or

(2) a mutual assessment life insurance company.

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

2003.

Sec. 1103.052. LIBERAL CONSTRUCTION. This subchapter shall be

liberally construed to implement the purposes of this subchapter.

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

2003.

Sec. 1103.053. INSURABLE INTEREST OF BENEFICIARY, OWNER,

TRANSFEREE, OR ASSIGNEE. (a) Except as provided by Subsection

(b), a beneficiary or owner of a life insurance policy who is

designated in accordance with this subchapter or an entity to

which a life insurance policy or an interest, benefit, right, or

title in a life insurance policy is transferred or assigned in

accordance with this subchapter has, at all times after the

designation, an insurable interest in the life of the individual

who is insured under the policy.

(b) An individual, partnership, association, corporation, or

other legal entity that is directly or indirectly engaged in the

business of burying the dead does not directly or indirectly have

an insurable interest in the life of an individual unless the

interest is established under other applicable statutory law or

under common law.

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

2003.

Amended by:

Acts 2005, 79th Leg., Ch.

728, Sec. 11.0225, eff. September 1, 2005.

Sec. 1103.054. DESIGNATION OF BENEFICIARY OR OWNER IN POLICY

APPLICATION. An individual of legal age may:

(1) apply for a policy insuring the individual's life; and

(2) designate in writing in the application for the policy any

individual, partnership, association, corporation, or other legal

entity as:

(A) a beneficiary of the policy;

(B) an absolute or partial owner of the policy; or

(C) both a beneficiary and an absolute or partial owner of the

policy.

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

2003.

Sec. 1103.055. DESIGNATION OF BENEFICIARY OF POLICY; TRANSFER OR

ASSIGNMENT OF POLICY OR INTEREST. An individual of legal age who

is insured under a life insurance policy may in writing:

(1) in a manner and to the extent permitted by the policy,

designate any individual, partnership, association, corporation,

or other legal entity as a beneficiary of the policy; and

(2) in a manner and to the extent not prohibited by the policy,

transfer or assign to any entity described by Subdivision (1):

(A) the policy; or

(B) an interest, benefit, right, or title in the policy.

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

2003.

Sec. 1103.056. PURCHASE OF OR APPLICATION FOR POLICY BY THIRD

PARTY. An individual of legal age may in a single written

document:

(1) consent to the purchase of or application for an individual

or group life insurance policy by a third party; and

(2) designate or consent to the designation of any individual,

partnership, association, corporation, or other legal entity as:

(A) a beneficiary of the policy;

(B) an absolute or partial owner of the policy; or

(C) both a beneficiary and an absolute or partial owner of the

policy.

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

2003.

SUBCHAPTER C. PAYMENT OF PROCEEDS

Sec. 1103.101. APPLICABILITY OF SUBCHAPTER. This subchapter

applies only to a life insurance policy issued by a legal reserve

life insurance company.

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

2003.

Sec. 1103.102. PAYMENT TO DESIGNATED BENEFICIARY. (a) Except

as provided by Subsection (b) or (c), if an individual obtains a

policy insuring the individual's life, designates in writing a

beneficiary to receive the proceeds of the policy, and files the

written designation with the company, the company shall pay the

proceeds that become due on the death of the insured to the

designated beneficiary.

(b) A company that issues a life insurance policy is not

required to pay the proceeds of the policy to a designated

beneficiary under Subsection (a) if the company receives notice

of an adverse claim to the proceeds from a person who has a bona

fide legal claim to all or part of the proceeds.

(c) A private placement contract issued under Section 1152.110

may provide that:

(1) settlement of that portion of the contract attributable to

separate account assets is subject to the liquidity of those

assets; and

(2) the portion of the contract described by Subdivision (1)

must be settled by the insurer when the separate account assets

are converted to cash under any applicable terms, which may be a

period longer than the two-month period described by Section

1101.011(a).

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

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

737, Sec. 3, eff. September 1, 2007.

Sec. 1103.103. DISCHARGE OF LIABILITY. In the absence of notice

under Section 1103.102(b) received by the company before the date

of payment, a company that issues a life insurance policy is

discharged from all liability under the policy if the company

pays the proceeds of the policy to a designated beneficiary under

Section 1103.102(a).

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

2003.

Sec. 1103.104. INTEREST ON PROCEEDS. (a) Interest on the

proceeds of a life insurance policy accrues from the date the

company that issues the policy receives due proof of loss until

the date the company accepts the claim and offers to pay.

(b) Interest that accrues under this section shall be paid at

the same time that the proceeds of the policy are paid under this

subchapter.

(c) The interest rate under this section is the rate provided in

the policy or, if a rate is not provided in the policy, the rate

at which interest accrues on proceeds that are left on deposit

with the company that issues the policy.

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

2003.

SUBCHAPTER D. FORFEITURE OF BENEFICIARY'S RIGHTS

Sec. 1103.151. FORFEITURE. A beneficiary of a life insurance

policy or contract forfeits the beneficiary's interest in the

policy or contract if the beneficiary is a principal or an

accomplice in wilfully bringing about the death of the insured.

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

2003.

Sec. 1103.152. PAYMENT OF PROCEEDS TO CONTINGENT BENEFICIARY OR

TO RELATIVE. (a) Except as provided by Subsection (b), if a

beneficiary of a life insurance policy or contract forfeits an

interest in the policy or contract under Section 1103.151, a

contingent beneficiary named by the insured in the policy or

contract is entitled to receive the proceeds of the policy or

contract.

(b) A contingent beneficiary is not entitled to receive the

proceeds of a life insurance policy or contract if the contingent

beneficiary forfeits an interest in the policy or contract under

Section 1103.151.

(c) If there is not a contingent beneficiary entitled to receive

the proceeds of a life insurance policy or contract under

Subsection (a), the nearest relative of the insured is entitled

to receive those proceeds.

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

2003.