State RegulationsTX specificDifficulty 2/5
A Texas insured executes a written assignment of his group life ownership rights, but no notice of the assignment reaches the insurer before his death, and the insurer pays the named beneficiary. Which statement is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 1131.006, an assignment of the insured's rights is effective between the parties, but the insurer is entitled to administer the policy according to its own records; until written notice of the assignment is received at its home office, the insurer may pay the beneficiary of record and be discharged. Practically, a Texas assignee who wants protection should deliver the assignment to the insurer and obtain written acknowledgment immediately, rather than relying on the document alone.
Why the other options are wrong
- A) is wrong because there is no requirement to record a private assignment with the department; the requirement is notice to the insurer.
- B) is wrong because an insurer that pays the beneficiary of record without notice of a competing claim is not required to pay the proceeds twice.
- D) is wrong because the competing claims are resolved between the claimants; the insurer's contract obligation is satisfied by the proper payment.
Memory hook
Assign in writing, then tell the home office.