1. (a) These sections apply to all life insurance contracts, annuity contracts, or annuity riders attached to a life insurance contract, with all the characteristics enumerated in paragraphs (1)-(3) of this subsection, as follows:

   1. (1) there is at least one duration determined from the date of issue, at which the contract contains more than one specific amount which might be the cash surrender value at such duration;
   2. (2) the contract contains a provision for a surrender charge if the contract is surrendered, and a provision under which the insurer is required to waive the surrender charge or a portion of it under certain conditions as specified in the contract; and
   3. (3) the maximum amount payable as the guaranteed cash surrender value, specified in the contract, would be paid when the surrender charge or a specified portion of it must be waived; and a lesser amount would be payable when the insurance company is not obligated to waive any part of the surrender charge.
2. (b) These types of contracts may provide for the accumulation of policyholder funds over a specific term bearing rates of interest comparable to interest rates available for investment opportunities, or may provide for the waiver of surrender charges in the event of disability or confinement in a hospital or nursing home.
3. (c) These sections do not apply to a life insurance or annuity contract or an annuity rider attached to a life insurance contract merely because it provides for a larger amount to be payable as a death benefit than the amount to be payable as a guaranteed cash surrender benefit, if surrender should occur on that same date.

Source Note:The provisions of this §3.1201 adopted to be effective April 27, 1984, 9 TexReg 2084; amended to be effective March 3, 1995, 20 TexReg 1146.