State RegulationsTX specificDifficulty 2/5
Under the Texas policy loan statute, which condition must be met before a Texas life insurer is required to make a policy loan to the owner of a cash-value life policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 1101.009, a Texas life insurer must make a policy loan once the policy is in force, premiums have been paid for at least 3 full years, and the policy has been properly assigned to the insurer as security; the statutory right does not depend on the owner's purpose for the money or on any prior loan history. The practical consequence is that during the first 3 policy years the insurer may refuse a loan (or grant one only as an accommodation), so a client who expects immediate access to cash value must be told otherwise at the point of sale.
Why the other options are wrong
- A) A prior loan and repayment record is not a condition of the statutory loan right.
- B) 1 year is too short; TIC 1101.009 requires that premiums have been paid for at least 3 full years.
- D) The loan right is unconditional as to purpose; the owner need not show hardship or any particular use for the funds.
Memory hook
Three full years of paid premiums unlocks the loan window.