State RegulationsTX specificDifficulty 1/5
Which statement about the assignment of rights under a Texas group life insurance policy is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under TIC 1131.006, the rights conferred on the insured under a group life policy, such as the right to designate and change the beneficiary and the conversion privilege, may be assigned by the insured, while the policyholder's power over the master contract cannot be used to defeat those rights. Practically, a Texas employee can give a lender or a family member enforceable rights in the coverage, and the employer cannot reassign those rights away.
Why the other options are wrong
- A) is wrong because the policyholder's control of the master policy does not override the rights Chapter 1131 grants to the insured individual.
- C) is wrong because the insurer's approval of an assignee's insurable interest is not the test of validity; a valid assignment plus notice to the insurer is what matters.
- D) is wrong because assignment of the insured's rights is permitted, subject to the terms of the policy and notice to the insurer.
Memory hook
The insured owns the rights; the employer only owns the contract.