            TEE   ATTORNEY           GENERAL
                      OFTEXAS




Honorable 0. P. Lockhart, Chairman
Board of Insurance Commissioners
Austin, Texas
Dear Sir:               Opinion No. O-5425
                        Re: Forms of "Multiple Life" and
                             "Family Group" life insurance
                             policies.
       Your request for opinion has been received and careful-
ly considered by this department, We quote from your request
as follows:
      "A . We transmit to you herewith a typewrit-
   ten form of so-called 'tiltiple Life' insurance
   policy, together with form of application there-
   for and schedule of insured lives to be attached
   thereto, submitted to this Board by Consulting
   Actuary, MO B. Gammlll, to be approved and filed
   by this Board under Article 4749; and a letter
   from Mr, Gammill to our Actuary under date of
   June 5, 1943 explaining to some extent the pro-
   posed use of this form of policy. It is our un-
   derstanding that a typical use of this form of
   policy will be that where certain donors make sub-
   stkantialdonations to such religious or charitable
   or benevolent institutions as churches, lodges,
   etc., some person acting as trustee for the donees
   will at the expense of the donees take out this
   form of multiple life policy to be owned and con-
   trolled by such trustee, for the purpose of re-
   imbursing or rewarding the donors for such dona-
   tions, in the form of endowment policies, or
   their named beneficiaries in the form of life in-
   surance benefits.
      "We have only the original copies of the
   policy and forms and letter transmitted to you
   herewith, and with your opinion given in response
   to this request we ask that you return such forms
   and letter to us.
      "Without the necessity of advlslng whether
   the terms of such policy form comply with the
   requirements of Sections l-11 of Article 4732,
Honorable 0. P. Lockhart, page 2        O-5425


   and with Article 4733, both as amended, will you
   please give us your opinion as to whether the ap-
   proval and filing of such form of policy by this
   Department and its issuance and use by insurance
   companies operating under Chapter 3 of Title 78
   are forbidden by the provisions of Section 6 of
   Article 4764a (Acts 1931, 42nd Leg., 172, Ch.
   101) . In other words Is it a 'group life insur-
   ance policy' within the meaning of that section,
   and can such a form lawfully be issued, assum-
   ing that it meets the requirements of Articles
   4732 and 4733?
       "In this connection we invite your attention
    to the various forms of life insurance which
    are defined and authorized and regulated by Sect-
    tion 1 and the other provisions of,Article 4764a,
    as amended by Acts 1941, 47th Leg., pa 1346, ch.
    610, Section 1, and by H.B. 326, Acts 1943, 48th
    Leg., which ~111 become effective August 10, 1943.
       "B0 This Department has in the past approved
    and filed and authorized the issuance and use of
    forms of life insurance policies by companies
    operating under Chapter 3, Title 78, Insuring
    the lives of all designated members of a family,
    commonly known as 'Family Group Policies'. Please
    advise us whether such practice is forbidden by
    Section 6 of Article 4764a, aforesaid, before and
    ;&rL;,"e effec%ive,date of H. B. 166, Acts 1943,
            ', effective May 15, 1943, adding Section
    12 to Article 4732 and regulating the issuance of
    so-called family group policies.
       We quote from Mr, Gammill's letter, explaining the pro-
posed use of the policy, as follows:
       I!
        . . . . .
       "This form of policy is prepared to meet the
    policy requirements outlined in Articles 47'32and
    4733 of the Texas insurance statutes. It is not
    offered for filing as a group policy form as des-
    cribed in Article 4764a. This form of policy will
    not be written in cases where an employer and em-
    ployee relationship exists or on the lives of mem-
    bers of a labor union as described in Article
    4764a e The policy will never be written on a
    specified group of persons or a fixed percentage
    thereof as is the practice under group in.WranCe.
Honorable 0, P. Lockhart, page 3         O-5425


    It will be issued only to an Owner applicant
    (other than the Insured or Beneficiary) in the
    same manner as ordinary policies are now issued
    in this state on the basis of third part applica-
    tions where such policies are owned by the appli-
    can,tand not controlled by either the Insured or
    Beneficiary. This form of policy is a composite
    of several individual insurances such as would
    be granted under separate policies. As to the
    composite structure of this policy, it is much
    similar to so called Family Group policies now be-
    ing Issued by many companies in this state on
    several forms which have been accepted for fil-
    ing by the Department of Insurance.
       "The primary use of this type of policy is
    to permit the economical handling of small poli-
    cies and insurance amounts on several individual
    lives through a policy issued to an Owner appli-
    cant, usually a Trust Company or other organiza-
    tion authorized to act as trustee, providing bene-
    fits to the several individuals accepted for in-
    surance to repay them for contributions made to
    an organization which transactions and relation-
    ships are covered under a trust agreement not a
    part of the insurance contract.
       1,
        s . . . DII
       We have carefully considered the policy form submitted
by Mr. Gammill, and the statutes referred to by you. Because
of the length of these documents and statutes you have re-
ferred to we deem it unnecessary to quote them. After a full
considera.tionof same it is our opinion that the policy form
submitted under the proposed plan of use of same as outlined
in Mr, Gammill's lette,r,constitutes same a plan of group in-
surance not authorized by law. We therefore answer your first
question in the affirmative.
        With respect to your second question we cannot pass on
the "Family Group Policy" forms heretofore approved by your
department as you did not send us copies of said approved forms.
How ever, it is our opinion that from and after May 22, 1943,
the effective date of House Bill 166, 48th Legislature of Texas,
all "Family Group Policies" must strictly conform to House Bill
166, which reads in part as follows:

       "Be it enacted by the Legislature of the State
           of Texas:
Honorable 0. P. Lockhart, page 4         O-5425


       "Section 1. That Article 4732 of the Revised
    Civil Statutes of Texas of 1925, be amended by add-
    ing thereto Section 12, which Section shall read
    as follows:
       "'Section 12. In all family group policies
    there shall be included on the face of the policy,
    the name and age of each insured;.'thename of the
    beneficiary of each insured, and after the name
    and age of each person insured, in figures, the
    amount which is payable to the payee in the pol-
    icy in case of.death, accident, or illness of such
    insured person, except where policy provides for
    Waiver of Premium only in event of total and per-
    manent disability or death of the payee, regard-
    less of what the maximum amount of said policy is,
    and if there is a provision in said policy for
    payment other than the full amount of said policy,
    such provision shall be clearly stated on the face
    of the policy, and this provision shall apply to
    all such Family Group Life, health and/or accident
    policies sold in this State.'
      "Sec. 2. This law shall be cumulative of
   all laws and parts of laws not in conflict here-
   with, and all laws and parts of laws in conflict
   herewith are hereby repealed.
       'Sec. 3.  There being no law in effect in this
    State governing the method of showing benefits
    payable under family group policies, creates an
    emergency and an imperative public necessity that
    the Constitutional Rule requiring bills to be
    read on three several days In each House be sus-
    pended, and said Rule is hereby suspended, and
    this Act shall take effect and be in force from
    and after its passage, and it is so enacted.
       "Passed the House, April 7, 1943: Yeas 133,
    Nays 0; passed the Senate, May 7, 1943: Yeas 26,
    Nays 0.
       "Approved May 22, 1943.
       "Effective May 22, 1943."
                  (Vernon's 1943 Texas Session Law
                   Service, 48th Legislature, p.
                   639.1
Honorable 0. P. Lockhart, page 5         O-5425


                                Very truly yours
                            ATTORNEY GENERAL OF TEXAS
                                By s/Urn.J. Fanning
                                     Wm. J.'~
                                            Fanning
                                     Assistant

WJF:db:wc

Approved JUL 13, 1943
s/Gerald C. Mann
ATTORNEY GENERAL OF TEXAS
Approved Opinion Committee By s/BwB Chairman
