Texas Statutes and Rules Common to Life and Health — practice questions

25% of the exam ≈20 real questions 21 free questions here

The commissioner, licensing, temporary licenses, appointments, continuing education, unfair practices and the guaranty association: 20 of the 80 scored questions, a quarter of the Life Agent exam.

Where people lose points

• A temporary license lasts 180 days, needs no exam, and cannot be renewed; older books still say 90.
• The temporary licensee must finish 40 hours of sponsor training within 30 days of applying.
• CE is 24 hours per license period, 3 of them ethics; a shortfall costs $50 an hour, up to $500.
• Alien means another country; the Spanish exam calls it 'internacional', and 'extranjera' means another state.

Questions and answers, explained

All 10 questions above, with the correct answer and why it is correct. Everything here is on texas statutes and rules common to life and health.

1. Who appoints the Texas Commissioner of Insurance, and how long is the term?

   • ATexas voters, in a statewide election held every four years
   • BThe governor, with the advice and consent of the senate, for a two-year termCorrect
   • CThe attorney general, to serve with no fixed term
   • DThe Texas legislature, by joint resolution, for a four-year term

   Why: Under TIC 31.022 the governor appoints the commissioner with the advice and consent of the senate, and the term is two years, expiring February 1 of each odd-numbered year. The commissioner is not elected; some states elect their insurance commissioner, which is why the election distractor sounds plausible.

   Reference TIC 31.022 — Texas outline I.A.1

2. Besides revoking an authorization, the commissioner may suspend it. What is the longest suspension TIC Chapter 82 allows?

   • AOne yearCorrect
   • BSix months
   • CTwo years
   • DFive years

   Why: TIC 82.052 lets the commissioner suspend an authorization for a specified time not to exceed one year, order the holder to cease and desist, assess an administrative penalty, order restitution, or combine those sanctions.

   Reference TIC 82.052 — Texas outline I.A.4

3. What must an insurance company obtain from the Texas Department of Insurance before it may act as an insurer in Texas?

   • AAn appointment
   • BAn agent's license
   • CA certificate of authorityCorrect
   • DA certificate of insurance

   Why: Under TIC Chapter 801 the department approves an application and issues, under its seal, a certificate of authority to act as an insurer. Agents are licensed and appointed; insurers hold a certificate of authority. A certificate of insurance is the document a group member receives.

   Reference TIC 801.051 — Texas outline I.B.1

4. Which kind of insurer is owned by its policyholders, who may receive dividends as a return of excess premium?

   • AAn alien insurer
   • BA stock insurer
   • CA reciprocal exchange managed by an attorney-in-fact for its subscribers
   • DA mutual insurerCorrect

   Why: A mutual insurer is owned by its policyholders and typically issues participating policies whose dividends are a return of premium, not taxable income. A stock insurer is owned by shareholders who receive dividends from profits. A reciprocal is a different structure in which subscribers insure one another through an attorney-in-fact.

   Reference TIC 547.001, 801.001 — Texas outline I.B.4

5. Lucía holds a Texas temporary license. On which sale is she prohibited from receiving a commission?

   • AA policy on a customer she met at a community fair
   • BA policy on the owner of the bakery where she worked until four months agoCorrect
   • CA policy on a stranger referred by her supervising agent
   • DA policy on a neighbor she met only after getting the license

   Why: TIC 4001.157 bars a temporary license holder from receiving a commission on a policy covering herself, a relative, or anyone who is or within the past six months was her employer or her employee. Her employer of four months ago falls inside the six-month window.

   Reference TIC 4001.157 — Texas outline I.E.1

6. Of the continuing education a Texas agent completes each license period, how many hours must be in ethics?

   • ASix hours
   • BNone; ethics is optional
   • COne hour
   • DThree hoursCorrect

   Why: TIC 4004.054 requires every individual licensee to complete three hours of continuing education in ethics during each renewal period. Those hours count toward the 24-hour total.

   Reference TIC 4004.054 — Texas outline I.C.4

7. A Texas agent's license period ended without her completing all required continuing education. What does TIC 4004.055 say about renewal?

   • AThe license is permanently revoked with no way to reapply
   • BShe must retake and pass the licensing exam before the department will consider renewal
   • CRenewal is barred unless she finishes within 90 days after the period ends and pays any fineCorrect
   • DIt renews automatically, and the missing hours simply carry over into the next two-year period

   Why: TIC 4004.055 bars renewal when the licensee fails to complete the continuing education by the 90th day after the licensing period ends or fails to pay an applicable fine. Finishing the hours late is not a defense to discipline for the failure to complete them on time.

   Reference TIC 4004.055 — Texas outline I.C.6

8. An applicant intentionally leaves a prior fraud conviction off her Texas license application, and the department discovers it. Under TIC 4005.101, this is a ground to:

   • AIssue the license on probation, since an omission on an application only calls for a warning
   • BDeny the application, because she intentionally made a material misstatement in itCorrect
   • CRefer the matter to her future insurer to decide
   • DIssue the license, since only convictions within the past year matter

   Why: TIC 4005.101(b)(2) and (3) make intentionally making a material misstatement in the license application, and obtaining or attempting to obtain a license by fraud or misrepresentation, grounds for denial or discipline.

   Reference TIC 4005.101 — Texas outline I.C.6-7

9. An agent who no longer holds a Texas license continues to receive renewal commissions on policies he sold while licensed. Under TIC 4005.053, the insurer:

   • AMay pay them only if he passes the exam again
   • BMay keep paying them, because deferred commissions earned while licensed are not barredCorrect
   • CMust pay them to the state until he becomes licensed again
   • DMust stop all payments on the day his license lapses, including renewals already earned

   Why: TIC 4005.053(b) states that the licensing requirement does not prevent paying, or accepting, a renewal or other deferred commission solely because the person no longer holds an agent license.

   Reference TIC 4005.053(b) — Texas outline I.E.1

10. An agent tells prospects that a competing insurer is 'about to go bankrupt,' knowing it is false, to win their business. This unfair practice is:

    • ADefamation of an insurerCorrect
    • BBoycott, coercion or intimidation
    • CRebating
    • DUnfair discrimination

    Why: TIC 541.053 makes it unfair to make or circulate a statement that is false, maliciously critical of or derogatory to an insurer's financial condition and calculated to injure a person in the business of insurance, whether oral or written.

    Reference TIC 541.053 — Texas outline I.D.1.d

Topics inside this domain

• Texas life agent license rules: applying, renewing and appointments

Drill other domains

• Types of Life Policies and Annuities (18.75%)
• Life Policy Riders, Provisions, Options and Exclusions (18.75%)
• Application, Underwriting, Policy Delivery and Contract Law (15%)
• Retirement and Other Insurance Concepts (10%)
• Texas Statutes and Rules — Life Insurance Only (12.5%)

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