Lesson 8: Texas Rules – Life Insurance Only
Free Look Period
Minimum 10 days to review and cancel a new life insurance policy for a full refund.
Replacement Rules
- Notice of replacement must be provided to applicant and insurer.
- Comparison disclosure required: benefits, premiums, limitations.
- Prevents "twisting" through transparency.
Policy Loan Provisions
Permitted in whole life/permanent policies. Interest rates must be disclosed.
Suicide Clause
If suicide occurs within 2 years, benefits may be denied (premiums refunded).
Grace Period & Reinstatement
- Grace period: usually 31 days after missed payment.
- Reinstatement up to 3 years, with insurability and premium repayment.
Beneficiary Rules
- Beneficiaries can be persons, trusts, or estates.
- Can be changed anytime unless marked irrevocable.
Texas-Specific Notes
Agents must explain replacement policies clearly and provide all required notices.
Flashcards
What is the free look period in Texas?
At least 10 days to cancel a policy for a full refund.
What must happen when a life policy is being replaced?
Agent must give a notice of replacement and compare new vs. old policy.
Can life insurance policies be used for loans?
Yes, if they have cash value.
What does the suicide clause do?
Limits benefits if suicide occurs within the first 2 years.
How long is the grace period for missed premiums?
Typically 31 days.
What is required to reinstate a lapsed policy?
Proof of insurability and back payment of premiums.
Who can be named as a beneficiary?
Anyone – individuals, trusts, or estates.
Can the policyowner change the beneficiary?
Yes, unless the beneficiary is irrevocable.