Texas Life Insurance

Life insurance can be an essential tool in planning for your family’s future. If the worst should happen, the benefits can help your loved ones pay for housing, education and other essentials as they get back on their feet. Some life insurance products even help you save money for later. As the industry is regulated at the state level, it’s important to understand life insurance in Texas before you start looking for the right coverage for your family. 

Texas Life Insurance Rules and Specifics

A number of codes govern the insurance industry in Texas. Most regulations are outlined in the Texas Insurance Code and Title 28 of the Texas Administrative Code. Some consumer protection laws are also relevant. Overall, the Texas Department of Insurance oversees the industry. 

Texas has a number of rules to protect life insurance customers:

• Grace period: A customer’s policy can’t be canceled immediately if they miss a payment. Customers have a grace period of 30 days to make outstanding payments before losing their coverage.
• Timely payment: Texas life insurers must begin the settlement process within 15 days of receiving paperwork, and the claim should be paid out within 60 days. If it takes longer than 60 days, the company must pay accrued interest.
• Bankruptcy protection: If the insurer is properly licensed in Texas, policy-holder benefits are protected if the insurance company goes out of business. The protection allows benefits up to a certain amount to be paid. 
• Free look period: Texas insurers provide a free-look period of 10-20 days and must provide a refund if you cancel during the trial period. 

Divorce and Life Insurance

The Texas code contains a Divorce Revocation Statute. This means that if you get divorced, your ex-spouse is automatically removed as your beneficiary. There are two exceptions to this rule:

• If the divorce decree specifically states that they must remain a beneficiary. This is often used as a form of alimony or child support. 
• If your ex-spouse is the trustee for a minor beneficiary. This is usually the case if your children are your beneficiary.

Your former spouse can be re-named as your beneficiary after the divorce is complete. However, you must explicitly state that you want them on the policy by following the procedures of your insurer. If you don’t do anything, they’ll be removed from the policy and any benefits will go to an alternative beneficiary or your estate. 

Life Insurance Resources in Texas

The Texas Department of Insurance is the primary resource for life insurance assistance in the state. The department’s website has a guide to life insurance in Texas, investigates complaints and has an insurance help line where consumers can get their questions answered. 

The Texas Life and Health Insurance Guaranty Association is the organization that provides protection to policyholders if an insurer goes bankrupt. Its website has a range of information about the process involved.