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Texas Insurance Code - Section 463.254. Life Or Health Insurance Policies Or Contracts

Legal Research Home > Texas Lawyer > Insurance Code > Texas Insurance Code - Section 463.254. Life Or Health Insurance Policies Or Contracts

§ 463.254. LIFE OR HEALTH INSURANCE POLICIES OR 
CONTRACTS.  (a) This section applies only when the association is 
taking an action under Section 463.252(b)(2) or 463.253 with 
respect to a life or health insurance policy or contract.
	(b)  The association, in accordance with Subsections (c) and 
(d), as applicable, shall ensure payment of benefits identical to 
the benefits that would have been payable under the policy or 
contract of the insurer, at premiums identical to the premiums that 
would have been applicable under that policy or contract, except 
for terms of conversion and renewability.
	(c)  For a group policy or contract, the association shall 
ensure payment of benefits under Subsection (b) for claims incurred 
before the later of:
		(1)  the earlier of the next renewal date under the 
policy or contract or the 45th day after the date the association 
becomes obligated with respect to the policy or contract;  or
		(2)  the 30th day after the date the association 
becomes obligated with respect to the policy or contract.
	(d)  For an individual policy, the association shall ensure 
payment of benefits under Subsection (b) for claims incurred before 
the later of:
		(1)  the earlier of the next renewal date under the 
policy, if any, or the first anniversary of the date the association 
becomes obligated with respect to the policy;  or
		(2)  the 30th day after the date the association 
becomes obligated with respect to the policy.
	(e)  The association shall diligently attempt to provide 
each known insured or group policyholder with notice before the 
30th day before the date the benefits are terminated.
	(f)  As provided by Subsections (g)-(i), the association 
shall make substitute coverage available on an individual basis to:
		(1)  each known insured under an individual policy, or 
the owner if other than the insured;  and 
		(2)  each individual who:                                                     
			(A)  was formerly insured under a group policy or 
contract;  and           
			(B)  is not eligible for replacement group 
coverage.                       
	(g)  Substitute coverage is available for an individual 
policy under Subsection (f) only if the insured or owner was 
entitled under law or the terminated policy to continue an 
individual policy in force until a specified age or for a specified 
period during which the insurer:
		(1)  was not entitled to unilaterally change a 
provision of the policy;  or 
		(2)  was entitled only to change a premium by class.                          
	(h)  Substitute coverage is available for a group policy or 
contract under Subsection (f) only if the formerly insured 
individual was entitled under law or the terminated policy or 
contract to convert group coverage to individual coverage.
	(i)  To provide substitute coverage under Subsection (f), 
the association may offer to reissue the terminated coverage or 
issue an alternative policy.  The association shall offer the 
reissued or alternative policy without requiring evidence of 
insurability.  The reissued or alternative policy may not provide 
for a waiting period or exclusion that would not have applied under 
the terminated policy.  The association may reinsure a reissued or 
alternative policy.

Added by Acts 2005, 79th Leg., ch. 727, § 1, eff. April 1, 2007.           

Last modified: August 10, 2007