Texas Licensing and Marketing Law
10.8% of the exam 3 min
The 14-question core of the Texas law section: the commissioner, kinds of insurers, agent licensing and temporary licenses, continuing education, unfair practices, prompt claim payment, fraud reporting and the guaranty association.
Who regulates, and what kind of company you represent
The Commissioner of Insurance runs the Texas Department of Insurance and enforces the code (TIC 31.021). The governor appoints the commissioner with the senate's consent for a two-year term ending February 1 of odd-numbered years (TIC 31.022). The commissioner may suspend an authorization for up to one year, order a cease and desist, assess administrative penalties of up to $25,000 per violation, and issue emergency cease and desist orders ex parte (TIC 82.052, 84.022, 83.051). An insurer needs a certificate of authority before it acts as an insurer (TIC 801.051). A domestic insurer is organized in Texas, a foreign one in another state, and an alien one in another country; Pearson VUE's Spanish exam calls alien insurers 'internacionales' and foreign ones 'extranjeras'.
Getting licensed: the regular and temporary license
Selling life, accident and health insurance, annuities or HMO memberships requires the general life, accident and health license (TIC 4054.051); the life agent license covers life and annuities only. A temporary license needs no exam, requires a sponsor certifying it is considering the applicant for appointment, lasts 180 days, and lets the applicant act from the eighth day if no denial arrives (TIC 4001.152-.155). A temporary licensee may not take commissions on sales to themselves, relatives, or anyone who was their employer or employee in the past six months (TIC 4001.157). A license alone does not allow selling: an insurer must appoint the agent (TIC 4001.201). Licenses run two years and expire on the holder's birthday (TIC 4003.001).
Keeping the license: CE, reporting and discipline
Agents complete 24 hours of continuing education per license period, 3 of them in ethics, with at least half in a classroom or approved classroom-equivalent setting (TIC 4004.051, .053, .054); 20 years of continuous licensing exempts an agent (TIC 4004.052). An agent must report a change of mailing address, a felony conviction and any regulator's administrative action (TIC 4001.252). Grounds for denial or discipline include wilful violations, material misstatements on the application, fraud in obtaining a license, misappropriating money that belongs to insurers or insureds, and misrepresenting policies (TIC 4005.101). Commissions may be paid only to licensed agents, though renewals earned while licensed may continue (TIC 4005.053).
Marketing, claims, fraud and the guaranty association
TIC Chapter 541 lists unfair practices: misrepresentation and twisting (541.051), false advertising including the Internet (541.052), defamation of an insurer (541.053), boycott, coercion and intimidation (541.054), rebating (541.056) and unfair discrimination (541.057, 544.002). Promotional items worth $25 or less are not rebates (541.058). Insurers must acknowledge a claim within 15 days, decide within 15 business days of receiving what they need, and pay within 5 business days, or owe 18% interest plus attorney's fees (TIC 542.055-.060). Anyone who suspects insurance fraud reports it in writing to TDI's fraud unit within 30 days (TIC 701.051). The guaranty association covers up to $300,000 in death benefits, $100,000 in cash value, $250,000 in annuities and $500,000 for health benefit plans (TIC 463.204).
Where people lose points
✗ "A temporary license lasts 90 days."
✓ The current statute, TIC 4001.155, says 180 days. Many older books still print 90.
✗ "A foreign insurer is one from another country."
✓ Foreign means another U.S. state; alien means another country. On the Spanish exam, 'extranjera' is another state and 'internacional' is another country.
✗ "Paying a client's first premium from my own commission is a discount, not a rebate."
✓ Any valuable consideration not in the policy, given to induce the sale, is a rebate, whoever pays for it.
✗ "Insurers have 15 days to pay after accepting a claim."
✓ 15 days is the acknowledgment deadline and 15 business days the decision deadline; payment is due within 5 business days of accepting.
✗ "Once licensed, I can sell for any insurer."
✓ Each insurer must appoint you before you transact business for it (TIC 4001.201).
Numbers to memorize
| Commissioner's term | 2 years, appointed by the governor (TIC 31.022) |
| Maximum administrative penalty | $25,000 per violation (TIC 84.022) |
| Longest suspension | 1 year (TIC 82.052) |
| Temporary license | 180 days, no exam (TIC 4001.152, .155) |
| Continuing education | 24 hours, 3 ethics, 50% classroom (TIC 4004) |
| Promotional gift limit | $25 (TIC 541.058) |
| Claim acknowledgment | 15 days (TIC 542.055) |
| Accept or reject | 15 business days (TIC 542.056) |
| Fraud report | Within 30 days, in writing (TIC 701.051) |
| Guaranty: life death benefit | $300,000 (TIC 463.204) |
Test yourself
No answers here on purpose — retrieving them is the practice. Drill this domain if any of these stall you.
- Who appoints the Texas Commissioner of Insurance, and for how long?
- Name the three events an individual agent must report to TDI.
- On which sales may a temporary licensee not earn a commission?
- Put the prompt-payment deadlines in order: acknowledge, decide, pay.
- Which part of a variable annuity does the guaranty association not cover, and why?
Go deeper on these
- Texas agent licensing: temporary license, appointment and renewal
- Texas unfair practices: rebating, twisting, defamation and discrimination
- Texas continuing education for life and health agents
- Texas Life and Health Insurance Guaranty Association limits