28 Tex. Admin. Code § 3.5106 - Prohibited Provisions and Practices
(a)
The policy or certificate of insurance shall not contain provisions which would
encourage misrepresentation or are unjust, unfair, inequitable, misleading,
deceptive, or contrary to law or to the public policy of this state. A policy,
certificate of insurance, notice of proposed insurance, application for
insurance, endorsement, and rider filed with the commissioner shall be presumed
to be unjust, unfair, inequitable, misleading, deceptive, or to encourage
misrepresentation unless:
(1) printed
material is in 10-point type;
(2)
each policy or certificate of insurance contains provisions substantially as
follows.
(A) Grace period. A grace period of
31 days shall be granted to the policyholder or premium payor for the payment
of each premium falling due after the first premium. During the grace period,
the coverage shall continue in force unless the policyholder or premium payor
shall have given the insurer written notice of discontinuance in advance of the
date of discontinuance and in accordance with the terms of the policy. If the
insured shall die during the grace period, the overdue premium may be deducted
in any settlement made under the policy.
(B) Entire contract. The policy and any
application shall constitute the entire contract between the parties. (This
requirement is an optional provision for certificates of insurance.)
(C) Representations by insureds. In the
absence of fraud, all statements made by the policyholders or the persons
insured shall be deemed representations and not warranties.
(D) Incontestability.
(i) For individual coverage, the policy shall
be incontestable after it has been in force during the lifetime of the insured
for two years from its date, except for nonpayment of premium. No material
misstatement made by the applicant in the application for the policy shall be
used to contest the validity of the policy, during the contestable period,
unless the misstatement is contained in a written statement signed by the
applicant, and a copy of the statement is furnished to the applicant or to his
beneficiary. Companies may elect to provide an additional statement to clarify
that fraudulent misstatements regarding credit disability coverage may be
contested without regard to the two-year time limitation.
(ii) For group coverage, the validity of the
policy shall not be contested by the insurer, except for nonpayment of
premiums, after it has been in force for two years from its date of issue. No
statement made by any person insured under the policy relating to his
insurability shall be used in contesting the validity of the insurance with
respect to which such statement was made after such insurance has been in force
prior to the contest for a period of two years during such person's lifetime
and unless it is contained in a written instrument signed by him, a copy of
which instrument has been furnished to such person or to his beneficiary.
Companies may elect to provide an additional statement to clarify that
fraudulent misstatements regarding credit disability which are made by the
persons insured under the policy coverage may be contested without regard to
the two-year time limitation.
(E) Misstatement of age. If the age of the
debtor has been misstated, and according to the correct age the debtor would
not have been eligible for insurance coverage, the company shall specify the
method of adjustment to be used. If coverage is inadvertently issued to a
debtor who correctly stated his age and his age exceeds the eligibility age,
the insurer has the right, within 90 days of the effective date of coverage, to
terminate the coverage and refund the full charge for insurance, provided such
termination is accomplished and the appropriate refund is made prior to the
incurred date of a claim; otherwise, the coverage remains in full
force.
(F) Death benefit claims.
When a policy shall become a claim by the death of the insured, settlement
shall be made upon receipt of or not later than two months after receipt of due
proof of death and the right of the claimant to the proceeds.
(G) Notice of disability claims. Written
notice of a claim must be given to the insurer within 20 days after the
occurrence or commencement of any loss covered by the policy, or as soon as is
reasonably possible.
(H) Disability
claim forms. The insurer will furnish to the person making claim, or to the
policyholder for delivery to such person, such forms as are usually furnished
by it for filing proof of loss. If such forms are not furnished before the
expiration of 15 days after the insurer receives notice of any claim under the
policy, the person making such claim shall be deemed to have complied with the
requirements of the policy as to proof of loss upon submitting, within the time
fixed in the policy for filing proof of loss, written proof of the occurrence,
character, and extent of the loss for which claim is made.
(I) Proofs of loss (disability). Written
proof of loss must be furnished to the insurer within 90 days after the
commencement of the period for which the insurer is liable. Subsequent written
proofs of the continuation of such disability must be furnished to the insurer
at such intervals as the insurer may reasonably require. Failure to furnish
proof within such time shall not invalidate or reduce any claim if it was not
reasonably possible to furnish proof within such time, provided proof is
furnished as soon as reasonably possible; but in no event, except in the
absence of legal capacity of the claimant, later than one year from the time
proof is otherwise required.
(J)
Disability claim payments. Benefits payable under the policy for any loss other
than loss for which the policy provides any periodic payment will be paid upon
receipt of due written proof of such loss. Subject to due written proof of
loss, all accrued benefits payable for loss for which the policy provides
periodic payment shall be paid _____ (insert period for payment as provided in
the policy) during the continuance of the period for which the insurer is
liable, and any balance remaining unpaid at the termination of such period
shall be paid after receipt of due written proof.
(K) Physical examinations and autopsy. The
insurer, at its own expense, shall have the right and opportunity to examine
the person of the insured when and as often as it may reasonably require during
the pendency of a claim hereunder and to make an autopsy in case of death where
it is not forbidden by law.
(L)
Legal action. Policy provisions related to legal action must comply with the
statutes applicable to the policy.
(b) No provisions in an individual policy or
group certificate of insurance pertaining to underwriting rules, conditions of
eligibility or issuance, or maximum amounts or terms of insurance may, except
as provided in subsection (a)(2)(D) or (E) of this section, be used as the
basis for termination or reduction of coverage or the denial of claims.
(1) If the policy or certificate of insurance
contains limitations on the maximum amount or term of insurance, the form shall
state that if coverage is issued in excess of those limits, the insurer has the
right, within 90 days of the effective date of coverage, to reduce the excess
coverage and refund the charge for the excess insurance, provided such
adjustment is accomplished and the refund is made prior to the incurred date of
a claim; otherwise, the coverage remains in force as originally
issued.
(2) A policy or certificate
of insurance issued in connection with open-end transactions may contain
provisions limiting the maximum amount of insurance which may become effective
thereunder, and may contain provisions for automatic termination of coverage
upon the attainment of a specific age.
(c) No credit accident and health insurance
policy or certificate may contain a provision which allows an elimination
period or waiting period of less than 14 days before disability coverage shall
become payable.
Notes
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