Not legal advice. This page summarizes Texas statutes as published on the Legislature's official site when we checked them on November 1, 2026. Laws change and every claim turns on its own facts and policy language.
What is different in Texas
Two things set Texas apart. First, the Legislature wrote specific day counts into the Insurance Code and made them apply to life insurers, so a beneficiary can measure the insurer’s progress against a statute rather than a vague “reasonable time.” Second, missing those counts has a price: interest at 18% a year as damages, plus attorney’s fees. Few states attach a number that high to a late death benefit.
The contestability window
Texas requires individual life policies to say they become incontestable once they have been in force for two years from the issue date during the insured’s lifetime. Nonpayment of premium is the main exception, and a policy may also keep the right to contest for breaking war-time military or naval service conditions (§ 1101.006).
Chapter 705 adds its own layer. A clause that voids a policy for a wrong answer on the application does nothing unless the wrong answer was material to the risk or contributed to the event insured against, and that is a jury question (§ 705.004). If the insurer wants to rely on the falsehood, it must say so in writing within 90 days after it discovers it (§ 705.005). For a policy on a Texas resident, once the second policy anniversary has passed with premiums paid, the insurer generally cannot use a misstatement at all unless it had already notified the insured that it intended to rescind, or it proves the misstatement was both material and made on purpose (§ 705.104). Absent fraud, what the insured said in the application counts as a representation, not a warranty (§ 1101.007).
The Texas Supreme Court has long required more. To avoid a policy over an application misstatement, an insurer must plead and prove five things: the representation, its falsity, the insurer’s reliance, the insured’s intent to deceive and materiality. In 2023 the court held that § 705.051 did not displace that rule, and that intent to deceive is required “whether the policy is contestable or not.” American National Ins. Co. v. Arce, No. 21-0843 (Tex. Apr. 28, 2023), reaffirming the elements set out in Mayes v. Massachusetts Mutual Life Ins. Co., 608 S.W.2d 612 (Tex. 1980).
Grace period
Every premium after the first gets a grace period of at least one month, and the coverage stays in force during it. If the insured dies in that month, the insurer may subtract the unpaid premium from the benefit (§ 1101.005).
If a Texas policy lapsed, ask the insurer for copies of every premium and lapse notice it says it sent, with the mailing dates and addresses used.
Claim clock under chapter 542
Here is the sequence the Prompt Payment of Claims Act sets for a death claim:
- 15 days after notice of the claim: acknowledge it, start the investigation and ask for whatever forms and records the insurer reasonably believes it needs (§ 542.055).
- 15 business days after receiving everything requested: tell the claimant in writing whether the claim is accepted or rejected. A rejection must give reasons. If the insurer needs more time, it must say why within that window, and it then has 45 days from that notice to decide (§ 542.056).
- 5 business days after accepting: pay (§ 542.057).
- 60 days: a delay longer than 60 days after the insurer receives all items exposes it to statutory damages (§ 542.058(a)).
A separate rule addresses competing claimants. When a life insurer receives notice of a bona fide adverse claim, it must, within 90 days after receiving all the items it needs, either pay or file a court action and deposit the money with the court. Missing that 90-day mark brings the same damages (§ 542.058(c)). Until then, the adverse-claim notice lets the insurer hold off paying the named beneficiary (§§ 1103.102-.103).
The damages under § 542.060 are interest on the claim at 18% a year plus reasonable attorney’s fees. The chapter says these remedies are in addition to any others (§ 542.061).
Separately, the policy itself must promise payment within two months once proof of death and of the claimant’s right to the money reach the insurer (§ 1101.011), and ordinary interest on the proceeds runs from receipt of due proof of loss until the insurer accepts the claim and offers to pay, at the policy rate or the insurer’s deposit rate (§ 1103.104).
Unfair settlement practices and bad faith
Chapter 541 lets a beneficiary sue over listed unfair settlement practices, such as not trying in good faith to settle once liability is reasonably clear, failing to explain a denial promptly, failing to affirm or deny coverage within a reasonable time, and refusing to pay without a reasonable investigation (§ 541.060). A successful plaintiff may recover actual damages, costs and attorney’s fees, and up to three times actual damages if the conduct was knowing (§ 541.152). Written notice must go to the insurer no later than the 61st day before suit is filed (§ 541.154), and the claim generally must be brought within two years (§ 541.162).
Chapter 542, subchapter A, contains a separate list of unfair claim settlement practices enforced by the Department of Insurance.
Texas also recognizes a common-law duty of good faith and fair dealing. In Universe Life Insurance Co. v. Giles, 950 S.W.2d 48 (Tex. 1997), a health insurance case, the Texas Supreme Court held that an insurer breaches that duty by denying or delaying payment of a claim when it knew or should have known that it was reasonably clear the claim was covered, the same line drawn by the unfair settlement practices statute. The court upheld the jury’s bad-faith finding and the mental anguish award but threw out punitive damages, which require proof of an extreme risk of harm. Giles was a health insurance case; how it applies to a particular life claim depends on the facts.
When the beneficiary caused the death
A beneficiary who, as a principal or accomplice, willfully brought about the insured’s death loses the right to the proceeds. The money goes to the contingent beneficiary; failing that, to the insured’s nearest relative (§§ 1103.151-.152).
Time to sue
A life policy may not set a deadline to sue shorter than two years after the claim accrues (§ 1101.053).
A former spouse still named on the policy
Texas Family Code 9.301 deals with life insurance directly. If a decree of divorce or annulment is rendered after the insured named the spouse as beneficiary under a policy then in force, the designation of the former spouse is not effective unless the decree names the former spouse as beneficiary, the insured names the former spouse again after the decree, or the former spouse is named to take in trust for, or for the benefit of, a child or dependent of either former spouse. The proceeds go to the named alternate beneficiary, or to the insured’s estate if there is none.
An insurer that pays the ex is liable to the right person only if, before paying, it received written notice at its home office from an interested person that the designation is not effective, and it did not deposit the proceeds with a court. Section 9.302 covers retirement plans separately. For employer coverage under ERISA, see Egelhoff.
Worked example
Suppose an insured dies 20 months after the policy was issued. The beneficiary reports the death on March 2. By March 17 the insurer must acknowledge the claim and send its requests. The beneficiary returns the claim form, certified death certificate and medical authorization, and the insurer has all of them on April 6. Because the death fell inside the two-year window, the insurer orders medical records. To stretch past 15 business days, it must notify the beneficiary of its reasons by about April 27; it then has 45 days from that notice to decide. If it accepts on June 1, payment is due within 5 business days. If payment slips past 60 days from April 6 (about June 5) without a lawful extension, 18% damages and fees come into play.
Making a complaint
If a life insurer is not following these rules, you can file a complaint with the Texas Department of Insurance, which handles complaints against insurers, agents and adjusters and lists life and annuity as its own complaint category: Get help with an insurance complaint (TDI). A complaint is not a lawsuit and does not stop any deadline to sue from running.
Not legal advice. This page summarizes general rules and the specific statutes cited. Your policy's wording, the state whose law applies, and whether the coverage came through an employer can all change the result. See the disclaimer and editorial policy.