Life Insurance Requirements

Life insurance policies are required to have certain provisions.  To begin with, all life insurance policy forms have to be approved by the Texas Department of Insurance.

Texas Insurance Code, Section 1101.004 requires that all policies allow a grace period of at least a month.

Section 1101.003 requires that the submitted application be part of the life insurance contract.

Section 1101.006 requires the policy to contain a provision that the policy is incontestable after two years, except for non-payment of premiums.  This provision severely limits an insurance company’s ability to contest coverage.

Section 1101.003 is one of the more important provisions.  This provision states that all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties.  This distinction means the insurer must show a false statement was material and was made with intent to deceive, before the insurer can assert the insured’s misstatement as a basis for denying benefits.

Section 1101.008 states that if the insured’s age is misstated, the amount payable will be adjusted based on the correct age.

Pursuant to Section 1101.010, a life insurance policy must contain certain nonforfeiture provisions.

Section 1101.011 requires a life insurance policy claim to be paid within two months after the life insurance company receives the information needed to pay the claim.

There are several other provisions that are required by the Texas Insurance Code that do not arise very often.  What is important to know that whenever a life insurance claim is denied by a life insurance company, that the legal advise of a lawyer experienced with dealing with life insurance claims be consulted.  Do not just accept the denial of benefits without seeking legal advise.