Bill Text: TX HB3938 | 2015-2016 | 84th Legislature | Comm Sub
Bill Title: Relating to single premium term life insurance offered in connection with certain consumer loans.
Spectrum: Bipartisan Bill
Status: (Engrossed - Dead) 2015-05-27 - Placed on intent calendar [HB3938 Detail]
Download: Texas-2015-HB3938-Comm_Sub.html
By: Longoria (Senate Sponsor - Eltife) | H.B. No. 3938 | |
(In the Senate - Received from the House May 13, 2015; | ||
May 14, 2015, read first time and referred to Committee on Business | ||
and Commerce; May 22, 2015, reported adversely, with favorable | ||
Committee Substitute by the following vote: Yeas 7, Nays 1; | ||
May 22, 2015, sent to printer.) | ||
COMMITTEE SUBSTITUTE FOR H.B. No. 3938 | By: Eltife |
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relating to single premium term life insurance offered in | ||
connection with certain consumer loans. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subchapter I, Chapter 342, Finance Code, is | ||
amended by adding Section 342.4022 to read as follows: | ||
Sec. 342.4022. SINGLE PREMIUM TERM LIFE INSURANCE. (a) On | ||
a loan made under this chapter that is subject to Subchapter E, a | ||
lender: | ||
(1) may, through a properly licensed insurance agent, | ||
offer a borrower single premium term life insurance; | ||
(2) may not require the borrower to accept the | ||
insurance described by Subdivision (1); | ||
(3) shall provide the borrower with the option to pay | ||
the insurance premium from the borrower's own funds or to pay the | ||
premium with a portion of the loan proceeds; and | ||
(4) before completing the transaction, shall provide | ||
to and review with the borrower a disclosure that specifies: | ||
(A) the total dollar amount of the term life | ||
insurance premium, and a comparison between: | ||
(i) the amount of the payment due on the | ||
loan with the additional purchase of the term life insurance | ||
policy; and | ||
(ii) the amount of the payment due on the | ||
loan without the additional purchase of the term life insurance | ||
policy; and | ||
(B) if there is any shared interest or ownership, | ||
including any common third-party ownership, between the insurance | ||
company and the lender, then the lender must disclose the fact of | ||
the shared interest or ownership. | ||
(b) The finance commission by rule shall prescribe the form | ||
and the content of the disclosures required by Subsection (a)(4). | ||
SECTION 2. Section 342.407, Finance Code, is amended to | ||
read as follows: | ||
Sec. 342.407. REQUIREMENTS FOR INCLUDING INSURANCE CHARGE | ||
IN CONTRACT. Insurance for which a charge is included in a loan | ||
contract must be written: | ||
(1) at lawful rates; | ||
(2) in accordance with the Insurance Code; [ |
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(3) by a company authorized to do business in this | ||
state; and | ||
(4) through an insurance agent licensed in accordance | ||
with the Insurance Code, if the included charge is offered under | ||
Section 342.4022 of this code. | ||
SECTION 3. Section 342.412, Finance Code, is amended to | ||
read as follows: | ||
Sec. 342.412. ACTION UNDER SUBCHAPTER NOT SALE OF | ||
INSURANCE. Except for the sale of a single premium term life | ||
insurance policy to a borrower under Section 342.4022, arranging | ||
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authorized by this subchapter is not a sale of insurance. | ||
SECTION 4. Section 342.4022, Finance Code, as added by this | ||
Act, applies only to an insurance policy that is delivered, issued | ||
for delivery, or renewed on or after January 1, 2016. A policy | ||
delivered, issued for delivery, or renewed before January 1, 2016, | ||
is governed by the law as it existed immediately before the | ||
effective date of this Act, and the former law is continued in | ||
effect for that purpose. | ||
SECTION 5. This Act takes effect January 1, 2016. | ||
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