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TEXAS - Insurable Interest Laws

As of August 1, 2007
Most recent legislation changes:  June 1, 2003

§ 1103.001.  Applicability of Subchapter

This subchapter applies only to a life insurance policy issued by a legal reserve life insurance company.

§ 1103.002.  Insurable Interest of Beneficiary

A beneficiary described by this subchapter who is designated in a life insurance policy has an insurable interest for the face amount of the policy and is entitled to collect that amount.

§ 1103.003.  Corporation, Joint Stock Association, or Trust Estate as Beneficiary

A corporation, a joint stock association, or a trust estate that is engaging in business for profit may be designated as a beneficiary in a policy that insures the life of an officer or stockholder of the corporation, joint stock association, or trust estate.

§ 1103.004.  Partnership or Partner as Beneficiary

A partnership or a member of a partnership may be designated as a beneficiary in a policy that insures the life of a member of the partnership.

§ 1103.005.  Religious, Educational, Eleemosynary, Charitable, or Benevolent Institution or Undertaking as Beneficiary

A religious, educational, eleemosynary, charitable, or benevolent institution or undertaking may be designated as a beneficiary in a policy that insures the life of an individual.

§ 1103.051.  Applicability of Subchapter

   This subchapter applies only to a life insurance policy issued by:
 
   (1) a legal reserve life insurance company; or
 
   (2) a mutual assessment life insurance company.§ 1103.052.  Liberal Construction

This subchapter shall be liberally construed to implement the purposes of this subchapter.

§ 1103.052.  Liberal Construction

This subchapter shall be liberally construed to implement the purposes of this subchapter.

§ 1103.053.  Insurable Interest of Beneficiary, Owner, Transferee, or Assignee

    (a) Except as provided by Subsection (b), a beneficiary or owner of a life insurance policy who is designated in accordance with this subchapter or an entity to which a life insurance policy or an interest, benefit, right, or title in a life insurance policy is transferred or assigned in accordance with this subchapter has, at all times after the designation, an insurable interest in the life of the individual who is insured under the policy.
 
   (b) An individual, partnership, association, corporation, or other legal entity that is directly or indirectly engaged in the business of burying the dead does not directly or indirectly have an insurable interest in the life of an individual unless the interest is established under other applicable statutory law or under common law.

§ 1103.054.  Designation of Beneficiary or Owner in Policy Application

 An individual of legal age may:
 
   (1) apply for a policy insuring the individual's life; and
 
   (2) designate in writing in the application for the policy any individual, partnership, association, corporation, or other legal entity as:
 
     (A) a beneficiary of the policy;
 
     (B) an absolute or partial owner of the policy; or
 
     (C) both a beneficiary and an absolute or partial owner of the policy.

§ 1103.055.  Designation of Beneficiary of Policy; Transfer or Assignment of Policy or Interest

An individual of legal age who is insured under a life insurance policy may in writing:
 
   (1) in a manner and to the extent permitted by the policy, designate any individual, partnership, association, corporation, or other legal entity as a beneficiary of the policy; and

   (2) in a manner and to the extent not prohibited by the policy, transfer or assign to any entity described by Subdivision (1):
 
     (A) the policy; or
 
     (B) an interest, benefit, right, or title in the policy.

§ 1103.056.  Purchase of or Application for Policy by Third Party

An individual of legal age may in a single written document:
 
   (1) consent to the purchase of or application for an individual or group life insurance policy by a third party; and
 
   (2) designate or consent to the designation of any individual, partnership, association, corporation, or other legal entity as:
 
     (A) a beneficiary of the policy;
 
     (B) an absolute or partial owner of the policy; or
 
     (C) both a beneficiary and an absolute or partial owner of the policy.
 

This information does not constitute legal advice by the Insurance Barometer LLC and should not be relied upon as such. Every effort has been made to provide correct and accurate information but the reader should verify state laws prior to implementing an insurance program.