State RegulationsTX specificDifficulty 3/5
Under TIC 1101.051-.056, which of the following provisions may NOT be included in an individual life insurance policy delivered in Texas?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under TIC 1101.055, a life insurance policy delivered in Texas may not contain a provision under which the policy settles at maturity for less than the face amount of the policy; that is one of the prohibited provisions in TIC 1101.051-.056. The subchapter also targets other abusive terms, such as certain shortened limitation periods, retroactive issuance or effect, and prohibited preliminary term arrangements. The three other provisions listed are standard or statutorily authorized rather than prohibited.
Why the other options are wrong
- A) A grace period provision is required by TIC 1101.005, so it is the opposite of a prohibited provision.
- B) An entire-contract provision is not among the provisions prohibited by TIC 1101.051-.056; the prohibited list targets terms such as settlement below face value, certain shortened limitation periods and retroactive issuance.
- C) A policy loan provision is authorized by TIC 1101.009 and is not one of the prohibited provisions.
Memory hook
Maturity must pay the face amount: TIC 1101.055 forbids settling the policy for less.