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Texas Department of Insurance
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Commissioner’s Bulletin # B-0074-98

October 14, 1998

To:   All Insurers Licensed to Write Life Insurance in Texas

Re:   Contestable and Suicide Periods in Converted Policies

The Texas Department of Insurance (TDI) has become aware that some companies writing life insurance in Texas are not complying with Texas law regarding contestable and/or suicide period(s) in converted life insurance policies. The companies are applying new contestable and suicide periods to converted policies based on the converted policy's date of issue. Texas law prohibits the restarting of these periods except in specific limited circumstances. The purpose of this bulletin is to provide direction concerning contestable and suicide periods in converted policies and to remind you that you are responsible for complying with Texas law regarding these periods.

In Texas, except for nonpayment of premiums, life insurance policies become incontestable after they are in force for a maximum of two years (Insurance Code, Articles 3.44(3) and 3.50, Sec. 2 (2) and 28 TAC ' 3.104). This period begins to run: (1) for group policies, from the date of issue of the group life insurance certificate to the certificate holder and (2) for individual policies, from the date of issue of the policy. Moreover, when issuing converted life insurance policies, companies cannot require evidence of insurability (Insurance Code, Article 3.50, Sec. 2(2) and 28 TAC ' 3.118). The effect of these laws is that companies may not apply new contestable and/or suicide period(s) to a converted life insurance policy with respect to the same or a lesser amount of insurance.

There are only two instances when a company may apply contestable and suicide periods to a converted policy. The first occurs when the contestable or suicide period from the original policy has not expired. If an original contestable or suicide period is still in effect at the time of conversion, the company may apply it to the converted policy until the end of the period as set forth in the original policy. The second exception applies when the converted policy provides a greater amount of coverage than the original policy. The company may then apply new contestable and suicide periods only to the increased amount of coverage. Except in these limited instances, TDI will not approve a provision that applies contestable and suicide periods to converted life insurance policies.

If you sell life insurance products eligible for conversion, you must comply with Texas law regarding the restarting of contestable and suicide periods when such policies are converted. You can comply either by issuing a separate conversion policy or by attaching an endorsement to modify the policy consistent with Texas law and the original date of issue and amount of coverage.

Each insurer is hereby directed to comply with Texas law regarding contestability and conversion. Please remind your employees, staff, and agents of these requirements for doing business in Texas. You may view this bulletin on TDI's internet home page at Due to an increased number of complaints/inquiries, TDI will be monitoring compliance closely and may take enforcement action for non-compliance. We will appreciate your cooperation in assuring compliance by your company and its agents.

If you have any questions or concerns, please contact Beth Hill of the Life/Health Division at 512/322-3406.

Ana M. Smith-Daley
Deputy Commissioner
Life/Health Division

For more information, contact: