(a) A reinsurance agreement authorized by Section 884.502 for the direct reinsurance of life insurance policies or a combination of life and
accident or health insurance policies must contain provisions that comply with this
(b) If the legal reserve life insurance company is the reinsurer and issues an assumption
certificate providing whole life coverage for the life benefit, the policyholder is
not entitled to receive the policyholder's individual reserve in cash by surrendering
the assumption certificate.
(c) If the reserves and premium under the stipulated premium policy are inadequate
to provide whole life coverage under the legal reserve assumption certificate and
a term coverage assumption is made available, each affected policyholder must be allowed
(1) payment in cash of the amount of the individual reserve, reduced by the deficiency
reserve, if any, to the policyholder on surrender of the policy;
(2) an assumption certificate of another stipulated premium company engaging in the
business of insurance under this chapter; or
(3) the legal reserve life insurance company's assumption certificate for term coverage
that is renewable for the life of the insured without evidence of insurability and
the rate for which is based on the legal reserve table selected by the assuming company
at the attained age of the insured on the date of the renewal increased by an appropriate
(d) To exercise the option described by Subsection (c)(1) the policyholder must request
that option not later than the 60th day after the date that the notice of the options
available to the policyholder is mailed. A policyholder is entitled to exercise the option under Subsection (c)(2) or (3)
not later than the 60th day after the date the assumption certificate of the legal
reserve life insurance company is mailed to the policyholder.
(e) If the legal reserve life insurance company makes term coverage available, the
company shall use each policyholder's individual reserve, less the amount of the deficiency,
if any, as:
(1) a reserve credit to permit the legal reserve assumption certificate to be backdated
to the earliest date the reserve credit allows; or
(2) an annuity to reduce the required premium during the initial period of the term
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