Honorable0. P. Lockhart,Chairman OpinionNo. O-4521
Board of InsuranceCommissioners Re: Whetherthe combinedpolicy
Austin,Texas                     of The AmericanHospitaland Life
                                 InsuranceCompanyprovidesfor pay-
                                 ment of any life insurancebenefits,
Dear Sir:                        and can be classeda8 life insurance?

         Your letter of March 31, 1942, requestingthe opinionof this
department,reads as follows:

          "EuclosedIs specimen,combinationpolicy of the Ameri-
     csn Hospitaland Life InsuranceCompanyof San Antonio,Texas.

        "We inviteyour attentionespeciallyto the first three
    paragraphsin bold face type on the front page, and Part III
    'AllPremiumsReturnedIn Event of Death' on page three there-
    of.

         "This'Departmenthas heretoforeruled consistentlythat
    policiesof this nature.constitute life insuranceinsofaras
    they providefor payment'ofany benefitscontingentupon the
    cessationof human life under Article4716. Because soms
    questionhas been raisedas to the correctnessof our ruling
    as appliedto this particularpolicy we ask you to advise us
    whetheror not it does providefor paymentof any life insur-
    ante benefitsand whether it can thereforebe classedas life
    Insurance.
             "

          The statutesof Texas do not definethe tern)"life insurance"
but merely defineswhat shall be deemeda life, accidentor health in-.
5urancecompany. For the purpose of supervisionby the InsuranceDepart-
meat, all of such companies,descrlbedare placed under the supervision
of the Life InsuranceCommissioner, thus dividingthe duties as distln-
gulshedfrom fire and casualtyinsurancebusinesssupervisedby the Fire
and CasualtyInsuranceConunissioners.

         We quote from Cooley'sBriefs on Insurance,Vol. 1, Second
Edition,page 27:

        "A contractof insuranceis an agreementby which one
    party for a consideratioq, which is usuallypaid in money,
    either in one sum or at differenttimes duringthe continu-
    awe of the risk, promisesto make a certainpaymentof
Honorable0. P. Lochhart,page 2 (O-4521)



    money, on the destructionor injuryof somethingin which
    the other party has an interest. In fire and marine in-
    surance,the thing insuredis property;in life or acci-
    dent lneurance,it la the life or the health of a person.
    All that is requisiteto constitutesuch a contractla
    the paymentof the consideration by the one and the prom-
    ise of the other to pay the amountof the insuranceupon
    the happeningof injuryto the subjectby the contingency
    contemplatedin the contract,"

          In the Cyclopediaof InsuranceLax by~couch,Vol. 1, par. 34,
we find life insurancedefinedin the abeenceof a statuteas a contract
"dependentupon human life, wherebyone for a stipulatedconslderationj
customarilycalleda'premium,agreesto pay anothera certainsum of
money upon the happeningof a given contingency,
                                              usually death, or upon
the terminationof a specifiedperiod."

          As early as 1691, the SupremeCourt of this'state,in an adopted
opinion,found in SupremeCouncilof AmericanLegion of Honor v. Larmour,
16 S.W. 633, recognizeda life insurancecontractin substantially  the
same languageas quotedfrom the foregoingauthorities,and we quote from
the opinion:
         ". . . an agreement,in consideration of a specified
    sum in the aggregate,or at statedinterval6of time dur-
    ing the contract,to make a paymentin money upon the de-
    structionor Injury of somethingin which the insuredhas
    an interest. Propertyis the subjectof fire and marine
    insurance. Life, healthand soundnessof the person con-
    stitutes,usually,the subject-matter  of life and acci-
    dent insursnce. This questio+e fully consideredand
    decidedin Commonwealthvi Weatherbee,105 Mass. 160~
    State v. Association,~lSNeb. 291, 25 N. W. Rep.<,;@;,+d  _
    Farmerv. State, 6$1Tex. 276,7 S. W. Rep. 220. . . ."' ;.

           In defininga "life insurancecompany",Arti& 47i6,Revised
Civil Statutes, providesthat such a companyshallbe deemed a corpora-
tion doing businessunder any charterinvolvingthe paymentof money
or other thing of value; conditionedon the continuanceor cessation
of human ldfe, or involvingan insurance,guaranty,contractor pledge
for the payment of endowmentsor annuities. Thus, in characterizing
the businessof and definingsuch companies,the Legislaturehas accepted
and closelyfollowedthegeneral definitionlaid down by Cooley and nu-
merous other authoritivetext writersand court decisionsin a majority
of the states.

          The specimencontractsubmitted,providesthat in the event
of death of the contractholder from any causewhile insured.thereuuder
the companywill immediately,upon receipt,ofdue proof of death and
.




Honorable0. P. Lockhart,page 3 (C-4521)



of the interestsof the claimant,pay to the designatedbeneficiarys
amount equal to the sum of all the premiumpayments,without interest,
which have been made on the contracti

          The contractform in questionundoubtedlycontainsfeatures
providingfor the paymentof life benefitsunder the above authorities;
To say, however,t@at such policy I8 or la not classedas a life insur-
ance contractwould be, strictlyspeaking,overlookingits,accidentand
health features. We are not aware of any statutein Texas, relating
to the InsuranceDepartment,as would requireor make it necessaryfor
your Departmenttomdeterminewhetheror not with certainty,the character
of the insurancecontractsubmittedis one of life Insuranceas against
its being classedas an accidentand healthpolicy. By reason of its
accidentand healthprovisions,we are inclinedto view the policy form
as a combinedlife, accidentand health insurancecontract.

          It is, therefore,the opinionof this departmentthat the GFl-51
policy form of The AmericanHospital& Life InsuranceCompanyof San
Antonio,Texas, providesfor the paymentof liferinsurancebenefitsand
shouldbe classedas a combinedlife, accidentand health insurancecon-
tract since it is not exclusivelya contractof life insurance.

                                               Yours very truly

                                          ATTORNEYGENFLMLOF TFJ#E



                                          By s/ Wm. J. R. King
                                                     Assistant

wMK:m:IM

AppRovH)APR 23, 1942
s/   Zollle   C. Steakley
Acting ATTORNEYQ%NRRALOFTEXAS


APPROVEDOPINIONCCMMI!lTgg
                        BYBWR CRAIRMAN
