State RegulationsTX specificDifficulty 3/5
A life insurance company organized under Texas law issues a policy in another state to a resident of that state, and the policy contains a provision that the Texas prohibited-provision rules forbid. Do the Texas prohibited-provision rules apply to that policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under TIC 1101.051, the prohibited-provision rules apply to a life insurance policy that is issued or delivered in Texas and also to a policy issued by a life insurance company organized under the laws of Texas, wherever it is delivered; a prohibited provision in such a policy is void regardless of the applicant's consent. The practical consequence is that a Texas-domiciled insurer must police the content of its forms in every jurisdiction it writes in, not only the forms it files for Texas delivery.
Why the other options are wrong
- A) Delivery in Texas is only one of the two triggers; a Texas-organized company's policies are covered wherever they are delivered.
- C) Applicability does not depend on the insured later becoming a Texas resident.
- D) Another state's law does not displace the Texas prohibition for a policy issued by a Texas-organized insurer.
Memory hook
A Texas insurer carries Texas policy-content rules wherever its policies land.