Texas Insurance Code 1110.004 – Maximum Interest Rate On Policy Loans
(a) In this section, “published monthly average” means:
(1) Moody’s Corporate Bond Yield Average–Monthly Average Corporates as published by Moody’s Investors Service, Inc., or a successor to that corporation; or
(2) if the rate described by Subdivision (1) is no longer published, a substantially similar average established by rule of the commissioner.
(b) A life insurance policy must include a provision for an interest rate on a policy loan that:
(1) does not exceed 10 percent a year; or
(2) is an adjustable maximum interest rate established from time to time by the life insurer as permitted by law and does not exceed the lesser of:
(A) 15 percent a year; or
(B) the greater of:
(i) the published monthly average for the calendar month that ended two months before the date on which the rate is determined; or
(ii) the rate used to compute the cash surrender values under the life insurance policy during the applicable period plus one percent per year.
Terms Used In Texas Insurance Code 1110.004
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Month: means a calendar month. See Texas Government Code 312.011
- Rule: includes regulation. See Texas Government Code 311.005
- Year: means 12 consecutive months. See Texas Government Code 311.005
(c) This section also applies to the interest rate charged, on reinstatement of a policy loan, for the period during and after a lapse of the life insurance policy.