Texas life insurance laws worth knowing
There are certain laws that life insurance companies in Texas must practice to protect policyholders and inform its clients how the policies work.
Free look period
A new policyholder may decide that they no longer require life insurance, and as long as they cancel within 10 days of receiving the policy, a full refund of their initial premium payment is given.
Guaranty Fund protection
When a policyholder makes a payment for their premium, coverage is guaranteed protection by the Texas Life and Health Insurance Guaranty Associations. Should a life insurance company fail, the association guarantees coverage of up to $300,000 in life insurance death benefits, and $100,000 in life insurance cash surrender value.
In the state of Texas, policies have a period of two years from the initial date to be contested. Insurance companies can reject a claim if they come to discover that the policyholder was dishonest during their application.
Time permitted to settle claim
After receiving proof of the policyholder’s death, all Texas-based life insurance companies must settle claims within two months. Interest on claims will build each day from receiving evidence of death.
Grace period for missed payments
Should Texan policyholders miss a payment, a grace period of 31 days is given for the insured to catch up with their payments and bring them back up to date – otherwise the insurance provider will cancel the coverage. In doing so, the policyholder is granted additional time to pay their premiums.