Texas Life & Health insurance license practice exam
Free Texas-specific practice questions with every answer explained, written against the current Texas exam outline. Practice test, practice questions, exam simulator: one page, the real thing.
Free Texas Life & Health practice questions
Answer each question, then check it to see why every option is right or wrong. No account needed.
A Texas resident general lines life and health agent lets a license renewal date pass without completing the required continuing education or paying the renewal fee. Under Texas rules, what is the agent's standing during this lapse?
A. This is tempting because some professions allow open grace periods, but a lapsed Texas insurance license is not active, and continuing to transact business on it is prohibited.
B. Correct An expired Texas license confers no authority to transact insurance, and the department allows reinstatement within a statutory window before full relicensing is required.
C. Temporary licenses exist for specific situations such as a deceased agent's business, but expiration does not auto-convert a regular license into a sponsored temporary one.
D. This sounds reasonable but is wrong, because an expired license suspends all agent authority, not merely the ability to start new applications.
An expired Texas agent license carries no authority to transact insurance. Texas allows reinstatement within a defined late window, after which the agent must relicense as a new applicant.
A Texas life agent persuades a policyholder to drop an existing whole life policy and buy a new one by making misleading comparisons that overstate the old policy's costs. Under the Texas Insurance Code unfair trade practice provisions, which prohibited practice has the agent committed?
A. Rebating is returning part of the premium or another inducement of value to the buyer; here the agent gave no inducement, so this misidentifies a different prohibited practice.
B. Defamation targets a competitor's financial standing or reputation; the agent misled the client about an existing policy, not about a rival insurer, so this label does not fit.
C. Correct Twisting is inducing a replacement through misrepresentation or misleading comparison, which is exactly the conduct described and is prohibited under the Texas unfair trade practice rules.
D. Coercion involves boycott, intimidation, or restraint of trade; the agent used misleading statements rather than force, so coercion describes a separate violation.
Twisting is using misrepresentation or misleading comparisons to convince a policyholder to replace existing coverage. Texas treats it as a prohibited unfair trade practice, distinct from rebating, coercion, and defamation.
A Texas-licensed life agent receives written notice that the Commissioner of Insurance intends to revoke the agent's license for repeated misrepresentation. Under Texas enforcement procedure, what right does the agent have before the license can be revoked?
A. Immediate surrender skips the required hearing; revocation cannot take effect until the agent has had the chance to contest the charges first.
B. Insurance licensing is regulated by the state, not federal courts, so this misstates which authority hears the matter under Texas procedure.
C. This ignores the statutory notice-and-hearing protections; revocation is not final until the agent's hearing rights have been exhausted.
D. Correct Texas law requires the Commissioner to give notice and an opportunity for a hearing before revoking a license, so due process is satisfied through the contested-case hearing.
Before the Texas Commissioner revokes a producer license, the agent is entitled to notice and a contested-case hearing. Enforcement must follow due process, not summary action.
A Texas life insurer receives complete proof of an insured's death but does not pay the named beneficiary until several months later, with no valid reason for the holdup. Under Texas life insurance rules, what does the insurer owe the beneficiary because of this delay?
A. Correct Texas requires interest on life insurance death proceeds not paid promptly after due proof of loss, compensating the beneficiary for the insurer's delay in settling.
B. Tempting because some assume insurers can deduct administrative costs, but Texas does not allow a service charge to shrink a life death benefit for slow handling.
C. The contestable period limits when an insurer may rescind, but a payment delay does not reopen contestability or trigger a fresh application investigation.
D. Premium refunds apply to cancellations or rescission, not to a paid death claim; the beneficiary receives the face amount, not the face amount plus prior premiums.
When a Texas life insurer delays paying death benefit proceeds after receiving due proof of death, it owes interest on the amount; the delay does not let it deduct charges or refuse the claim.
A Texas employee loses group health coverage when her employer, which has only eight employees, downsizes her position. The group is too small to be subject to federal COBRA. Under Texas law, what continuation right is available to her through the group health benefit plan?
A. This is tempting because COBRA is the best-known continuation law, but Texas state continuation independently covers employees of small groups that fall below the COBRA employee threshold.
B. Correct Texas law requires insured group health benefit plans to offer state continuation, filling the gap for small employers below the federal COBRA size threshold so the employee can keep group coverage for a limited period.
C. Marketplace enrollment is a separate option, but it is not a continuation of the group plan, and Texas continuation law does give her a right to keep group coverage for a time.
D. Open enrollment governs new elections, not loss of coverage, so it confuses a routine enrollment cycle with the immediate state continuation right Texas grants after a qualifying loss.
Texas state continuation lets employees of small insured groups keep group health coverage when the employer is too small for federal COBRA, closing the gap COBRA leaves open.
A Texas insurer wants a newly licensed life agent to begin transacting business and submitting applications on the insurer's behalf. Beyond holding a valid license, what must occur before the agent can act for that insurer in Texas?
A. Bonding applies to certain limited situations and is tempting, but it is not the general prerequisite for an appointed agent to represent a Texas insurer.
B. Correct A Texas license grants the line authority, but representing a specific insurer requires that insurer to appoint the agent on file with the department before solicitation.
C. Texas distinguishes agent and broker roles, but representing an appointing insurer is agency, not brokerage, so a broker certificate is not what is required here.
D. Carriers may offer product training, but Texas does not condition the license's effectiveness for a company on completing that insurer's internal courses.
In Texas a license authorizes a line of business, but an appointment filed by the insurer is what authorizes the agent to represent that specific company before soliciting policies.
An applicant for a Texas general lines life, accident, and health license submits the application and exam results. As part of qualifying the applicant, what does the Texas Department of Insurance require regarding the applicant's background?
A. Character references can support an application, but Texas relies on an official background check rather than substituting peer affidavits for it.
B. Financial responsibility matters for some entities, but a personal credit and net worth threshold is not the Texas licensing background requirement for an individual agent.
C. Correct Texas requires fingerprinting so the department can review state and national criminal history as part of determining the applicant's fitness to be licensed.
D. Prior industry experience is not mandated, and it would not replace the criminal history check the department conducts on applicants.
Texas screens license applicants through fingerprint-based criminal history checks. This lets the department assess an applicant's fitness and trustworthiness before granting authority to transact insurance.
A licensed Texas life and health agent moves to a new home and the agency relocates its office during the same month. To keep the license records accurate, what must the agent do under Texas rules?
A. Renewal does collect current information, but Texas expects address changes to be reported promptly rather than held until the renewal cycle.
B. This sounds procedural but is wrong, since the duty to report an address change does not depend on whether a county line is crossed.
C. A move does not void a license, so reapplying is unnecessary; the agent simply updates the address of record with the department.
D. Correct Texas requires agents to keep a current address on file and to notify the department of changes promptly so the department can serve notices reliably.
Texas agents must keep a current address on file and report changes to the department promptly, so license notices and official correspondence reach the agent without delay.
An individual licensed as a life and health agent in another state wants to become licensed in Texas without retaking a full course of study. Under Texas licensing rules, how is a nonresident applicant from a reciprocal state generally treated?
A. Correct Texas honors reciprocity, so a nonresident already licensed for the same lines in good standing in the home state can be licensed without sitting the Texas exam again.
B. A Texas business presence is not a precondition for nonresident licensing, which is the whole purpose of a nonresident license.
C. Nonresident licenses are not limited to a brief nonrenewable permit; reciprocity supports a standard nonresident license tied to the home-state license.
D. Requiring full Texas prelicensing and the exam defeats reciprocity, which lets the home-state license stand in for the Texas exam for nonresidents.
Texas reciprocity lets a nonresident already licensed and in good standing in the home state obtain a Texas nonresident license without retaking prelicensing or the Texas exam.
A Texas general lines life and health agent is approaching the end of a license renewal cycle and is reviewing continuing education obligations. Under Texas rules, what is the purpose of the ethics portion of the required continuing education?
A. Ethics hours are a required component within the total, not a replacement that excuses the remaining continuing education hours.
B. Correct Texas carves out a set of the continuing education hours specifically for ethics so licensees regularly review their professional and consumer obligations.
C. Ethics hours are tempting to read as discipline-driven, but they are part of routine renewal for licensees generally, not only those with complaints.
D. The ethics component is mandatory and counts within the required hours; it is not an optional elective offering bonus credit.
Texas requires a dedicated ethics portion within the continuing education hours for each renewal, ensuring licensees regularly revisit their professional and consumer-protection duties.
A business partnership wants to sell life and health insurance in Texas through its individually licensed producers and receive commissions in the firm's name. Under Texas licensing rules, what does the firm itself need?
A. Individual licenses cover the producers, but the firm collecting commissions in its own name generally needs its own business entity license in Texas.
B. An assumed-name filing is a general business formality and does not stand in for the insurance entity license the department requires.
C. Correct Texas licenses business entities as well as individuals, so a firm transacting insurance and receiving commissions in its name must hold its own entity license.
D. The stamping office relates to surplus lines placement, not to whether an agency firm must hold its own license to receive commissions.
Texas licenses business entities separately from individuals. A firm that transacts insurance and receives commissions in its own name must hold an entity license alongside its producers' individual licenses.
A Texas life agent offers a prospective buyer a personal gift card worth a share of the first-year premium as an incentive to sign the application, an inducement not stated anywhere in the policy. Under the Texas Insurance Code unfair trade practice provisions, which prohibited marketing practice is this?
A. Misrepresentation involves false statements about policy terms, dividends, or benefits; the agent stated nothing false, so this names a different prohibited act.
B. Defamation targets a competitor's reputation through false statements; no rival insurer was disparaged here, so this label does not match the conduct.
C. Twisting requires inducing replacement of existing coverage through misrepresentation; no replacement or misleading comparison occurred, so twisting does not apply here.
D. Correct Rebating is offering any premium discount, gift, or inducement not set out in the policy to induce a sale, which is exactly this conduct and is prohibited in Texas.
Rebating is offering a gift, premium cut, or other inducement of value that the policy itself does not provide in order to win a sale. Texas prohibits it as an unfair trade practice.
A Texas health insurer charges two applicants who are the same age, in the same health class, and of equal life expectancy materially different premiums for identical coverage, with no actuarial justification. Under the Texas Insurance Code unfair trade practice provisions, which prohibited practice has the insurer committed?
A. Correct Unfair discrimination is treating insureds in the same class and risk differently in rate or terms without justification, which is precisely the conduct described and is prohibited in Texas.
B. Rebating involves an unlawful inducement given to a buyer; the insurer set unequal base rates rather than returning value, so rebating mislabels the act.
C. Misrepresentation concerns false statements about policy terms or benefits; the rating was unequal but no false statement was made, so this does not fit.
D. Coercion involves intimidation or restraint of trade to force a transaction; charging an unjustified rate is not force, so coercion describes a separate violation.
Unfair discrimination is charging different premiums or terms to people of the same class and equal risk without an actuarial basis. Texas prohibits it as an unfair trade practice in life and health.
A Texas insurer runs an advertisement that describes a health policy as covering nearly every medical expense while quietly omitting major exclusions, leaving the public with a false impression of the coverage. Under the Texas Insurance Code, how is this advertising practice best classified?
A. Texas does regulate misleading insurance advertising; an ad that creates a false impression is not protected as harmless puffery, so this answer is wrong.
B. Correct False or misleading advertising that misstates policy terms or coverage is a prohibited unfair trade practice in Texas, which is exactly what this advertisement does.
C. Rebating concerns inducements of value to a buyer, not advertising content; the scenario describes a misleading ad, so this term does not apply.
D. Coercion requires force, intimidation, or restraint of trade; a misleading ad persuades but does not compel, so coercion mislabels the conduct.
An advertisement that omits key exclusions to create a false impression of coverage is prohibited false advertising in Texas, not permitted puffery. Insurers must not mislead the public about policy terms.
Several Texas insurers agree among themselves to refuse to do business with a particular agency unless it stops placing coverage with a rival carrier, using that pressure to restrain the agency's trade. Under the Texas Insurance Code unfair trade practice provisions, which prohibited practice does this describe?
A. Unfair discrimination concerns unequal treatment of like-risk insureds in rates or terms; this scenario involves pressure on an agency, not rate discrimination, so it does not fit.
B. Twisting is inducing a policyholder to replace coverage through misrepresentation; no replacement or misleading comparison is present here, so twisting is incorrect.
C. Correct Agreeing to withhold business to force an agency's conduct is a boycott and coercion that restrains trade, a prohibited unfair trade practice under Texas law.
D. Defamation requires false statements harming a competitor's reputation; the insurers applied pressure rather than spreading falsehoods, so this names a different violation.
Combining to withhold business and pressure a firm to restrain its trade is boycott, coercion, and intimidation, a prohibited unfair trade practice in Texas. It involves force, not misrepresentation.
A Texas life insurer files with the state a financial statement that knowingly overstates its reserves and assets to appear more solvent than it is. Under the Texas Insurance Code unfair trade practice provisions, which prohibited practice has the insurer committed?
A. Misrepresentation here targets policy terms or benefits told to a buyer; the falsehood concerned the insurer's finances filed with the state, so this term is too narrow.
B. Defamation harms a competitor's standing; the insurer overstated its own finances rather than disparaging a rival, so defamation does not apply.
C. Rebating involves inducements given to a buyer to win a sale; a falsified financial filing is unrelated to any inducement, so rebating mislabels the act.
D. Correct Knowingly filing or publishing a false statement of an insurer's financial condition is a specifically prohibited unfair trade practice in Texas, matching this conduct exactly.
Knowingly filing a false statement of an insurer's financial condition is its own prohibited unfair trade practice in Texas, separate from misrepresenting policy benefits to a buyer.
A Texas insurer offers a buyer a special supplemental rider for free, an inducement not described in the policy, only if the buyer purchases the life policy that same day. Under the Texas Insurance Code unfair trade practice provisions, which prohibited practice is this offer?
A. Correct Offering a free rider or any value not stated in the policy to induce a sale is rebating, a prohibited unfair trade practice under Texas law.
B. Misrepresentation requires a false statement about policy terms or benefits; the free rider is an inducement, not a falsehood, so this answer misidentifies the practice.
C. Defamation involves false statements harming a competitor; no rival was disparaged in this offer, so defamation describes a different prohibited act.
D. Unfair discrimination is unequal rating of like-risk insureds; the issue here is a free inducement, not differing rates, so this term does not fit the facts.
A free rider, gift, or any value not provided in the policy and offered to win a sale is rebating in Texas. The inducement need not be cash to count as a prohibited rebate.
A candidate studying Texas insurance regulation wants to know who holds the chief regulatory authority over insurers and producers in the state. Which official heads the Texas Department of Insurance and carries out its enforcement powers?
A. The Attorney General handles state legal matters and consumer-protection suits but does not run the Department's day-to-day insurance regulation, so this misassigns the role.
B. The Governor appoints the Commissioner but does not personally operate the Department; appointing authority is not the same as serving as its operating head.
C. Texas once used a multi-member insurance board but now vests regulation in a single appointed Commissioner, so an elected board no longer runs the Department.
D. Correct Texas vests regulatory leadership and enforcement of the insurance laws in the Commissioner of Insurance, who heads the Department.
The Texas Department of Insurance is headed by a single appointed Commissioner of Insurance, who carries out the state's regulatory and enforcement authority over insurers and producers.
After a contested-case hearing, the Texas Department of Insurance finds that a licensed producer violated the unfair trade practice rules but the conduct does not warrant losing the license. Which enforcement outcome reflects the Department's authority in this situation?
A. Correct Texas allows the Department to impose monetary administrative penalties as a graduated sanction short of revocation, fitting a violation that does not justify license loss.
B. Revocation is discretionary and reserved for serious conduct, so treating every proven violation as automatic loss overstates the required outcome.
C. A verbal-only warning understates the Department's powers, which include formal penalties and orders documented in the record.
D. Administrative penalties are independent of the criminal process, so requiring a conviction first confuses two separate enforcement tracks.
The Texas Department of Insurance can impose administrative penalties for rule violations without revoking the license. Sanctions are graduated, and they do not depend on a separate criminal conviction.
A Texas health insurer must submit a new individual policy form before using it with the public. The Texas Department of Insurance reviews the form for compliance with state requirements. What authority does the Department exercise over the form?
A. Texas form filing triggers substantive review of content, not just a clerical check that the paperwork is complete and timely.
B. Correct Texas authorizes the Department to review filed policy forms and disapprove those that fail to meet statutory and rule requirements before public use.
C. Paying a filing fee does not compel approval; the Department still reviews the form's substance and may disapprove a noncompliant one.
D. The NAIC is a standard-setting association without authority to approve a Texas insurer's form; that approval power rests with the state Department.
The Texas Department of Insurance reviews filed policy forms and may disapprove any that violate state requirements. Substantive review, not mere fee collection or paperwork checks, is the point of form filing.
A Texas resident buys an individual whole life policy and receives the contract in the mail. Under the Texas free look requirement, what protection does this give the new policyowner?
A. This wrongly ties the free look to a premium increase; the right to examine applies on delivery regardless of any future premium change.
B. Conversion of whole life to term is not the free look right, and convertibility normally runs the other direction from term to permanent coverage.
C. Cash surrender returns only built-up value, not a full premium refund, and it is a separate nonforfeiture feature from the free look.
D. Correct Texas requires a free look (right to examine) period stated on the policy that lets the owner return it for a full premium refund if unsatisfied.
Texas requires a free look period on delivered life policies. During it, the owner may return the policy for a full refund of premium, separate from cash surrender or conversion rights.
A Texas life insurer issues a policy containing a suicide exclusion. The insured dies by suicide after the policy has been in force beyond the stated exclusion period. How must the insurer treat the death claim under Texas life rules?
A. Correct Once the Texas suicide exclusion period passes, suicide is treated like any other covered death and the full face amount is payable.
B. Texas limits the suicide exclusion to a defined early period; after it expires the cause of death no longer bars the claim.
C. Returning only cash value is the remedy during the exclusion window, not after it; after expiry the full benefit is due.
D. Premium refund is the typical remedy for a suicide within the exclusion period, not for one occurring after that period ends.
A Texas life suicide exclusion lasts only a limited early period. After it expires, a suicide death is paid in full like any other claim rather than refunded or denied.
A Texas life policy has been in force for several years when the insurer discovers a misstatement the insured made on the original application. Under the required incontestability provision in Texas, what may the insurer do about it?
A. This ignores the contestability limit; only true fraud can sometimes survive, and ordinary misstatements cannot be contested after the period ends.
B. Correct Texas requires an incontestability clause; once the period passes the insurer cannot void coverage for application misstatements.
C. Proportional reduction describes the misstatement of age remedy, not the general contestability rule, which bars contest after the stated period.
D. Premium default is handled by the grace period and lapse rules, not the incontestability clause, so this confuses two separate provisions.
Texas life policies must include an incontestability clause. After the stated period, the insurer generally cannot void the policy for application misstatements, separate from age or premium rules.
A Texas agent is selling a new life policy that will replace the applicant's existing life coverage with another insurer. Under the Texas rules governing replacement of life insurance, what must the agent do?
A. Notice must happen at application, not after issue; delaying defeats the comparison the replacement rule is designed to protect.
B. Replacement disclosure applies whether or not cash value exists, so limiting it to cash value contracts misstates the rule.
C. Correct Texas replacement rules require the agent to give a replacement notice and trigger notice to the existing insurer so the owner can compare.
D. No prior approval from the Commissioner is required; the safeguard is disclosure and notice, not advance regulatory sign off.
When replacing life insurance in Texas, the agent must deliver a replacement notice and see that the existing insurer is notified, giving the owner a fair chance to compare coverage.
A Texas life policyowner misses a premium due date but pays during the period the policy keeps coverage active. Under the grace period provision required in Texas life policies, what is the effect of paying within that window?
A. Reinstatement with evidence applies after a lapse, not during the grace period, when the policy is still treated as in force.
B. Extended term is a nonforfeiture option used after lapse, not the grace period mechanism for a late but timely premium payment.
C. No full-year penalty applies; during the grace period the policy never lapsed, so only the overdue premium is owed.
D. Correct The required grace period keeps coverage in force, so a premium paid within it maintains the policy with no break in protection.
The grace period required in Texas life policies keeps coverage in force after a missed due date. Paying the premium within it preserves the policy with no lapse or new insurability proof.
A Texas life policy application lists the insured's age incorrectly, and the error is found after the insured dies while the policy is in force. Under the misstatement of age provision required in Texas, how is the death benefit handled?
A. Correct The misstatement of age provision recalculates the benefit to what the actual premium would have bought at the true age.
B. Misstatement of age does not void coverage; it triggers a benefit adjustment rather than denial, unlike intentional concealment.
C. Paying the full face ignores the provision, which expressly adjusts the benefit to reflect the correct age rather than leaving it unchanged.
D. A full premium refund with no benefit is the suicide-period remedy, not the age provision, which keeps coverage with an adjusted amount.
A misstatement of age in a Texas life policy does not void coverage. The death benefit is adjusted to what the premium paid would have bought at the insured's true age.
A Texas resident enrolls in a health maintenance organization and visits a participating clinic for care. Under Texas HMO regulation, how is the basic health care she receives normally delivered and paid for?
A. This describes a traditional indemnity reimbursement model, which is the opposite of how a Texas HMO works, since the HMO arranges and prepays for services through its network rather than reimbursing the member.
B. Correct A Texas HMO delivers prepaid health care through contracted network providers, combining the financing and delivery of care so the member receives services for a set premium plus any required copayments.
C. Texas permits HMOs to use a defined provider network, so the idea that any provider must be treated as in-network confuses HMO design with a broad open-access indemnity plan.
D. Large deductibles and percentage reimbursement describe major medical indemnity coverage, not the prepaid network model that defines how a Texas HMO delivers basic health care.
A Texas HMO both finances and delivers care, providing covered services through its contracted network for a fixed prepaid premium rather than reimbursing the member after the fact.
A small Texas employer with twelve eligible employees applies to a carrier for a group health benefit plan. The group meets the carrier's participation and contribution requirements. Under the Texas small employer health insurance rules, how must the carrier treat the application?
A. Declining a qualifying small group for one member's health status is exactly what the Texas guaranteed availability rules forbid, so this tempts a candidate who forgets that small group issue is health blind.
B. Carving out an individual employee to avoid risk violates the guaranteed availability protections, which require the qualifying group to be covered as a whole, not selectively enrolled.
C. Correct Texas small employer rules require guaranteed issue of small employer health plans to any qualifying group that meets participation and contribution terms, so the carrier cannot turn the group away based on its size or health risk.
D. Free underwriting discretion describes large group or individual practice, but Texas removes that discretion for qualifying small employers by mandating guaranteed availability of small employer plans.
Texas guarantees availability of small employer health plans to qualifying groups that meet participation and contribution rules, so a carrier cannot reject the group or a member based on health status.
An agent is helping a Texas senior compare Medicare supplement policies from several insurers. Under the Texas rules governing Medicare supplement insurance, how are the core benefits of these policies arranged so the senior can compare them?
A. Correct Texas adopts standardized Medicare supplement plans, meaning a given lettered plan provides identical core benefits across insurers, so the senior can compare on price and service rather than coverage details.
B. Free-form policy design is the situation standardization was created to fix, so this tempts a candidate who does not know Texas adopts standardized Medicare supplement benefit plans.
C. Medicare supplement coverage is health insurance, not a life rider, so this confuses two unrelated product lines and misstates how the supplements are offered in Texas.
D. Loss ratio rules govern pricing fairness, but they are not how a buyer compares coverage, so this swaps a financial standard for the benefit standardization that aids comparison.
Texas requires Medicare supplement policies to use standardized benefit plans, so a given lettered plan offers the same core benefits from any insurer, letting buyers compare mainly on price and service.
A Texas insurer issues an individual accident and health policy that contains a defect not allowed under state law, while otherwise providing broad coverage to the insured. Under Texas health insurance rules, how is that noncompliant policy provision treated?
A. Voiding the whole contract over one bad clause is harsher than Texas requires, since the law preserves the insured's coverage by construing the defective provision to conform rather than canceling everything.
B. Correct Texas health insurance rules treat a noncompliant provision as amended to meet the legal minimum, protecting the insured by enforcing the policy as if the defective clause had been drafted lawfully.
C. Form filing does not immunize an unlawful clause, so this tempts a candidate who overestimates the finality of approval and ignores the statutory conformity rule that protects the insured.
D. A waiver cannot strip a statutory protection, so this confuses a negotiated endorsement with the automatic conformity Texas applies to bring a defective provision up to the required minimum.
Under Texas health insurance rules a policy provision that falls short of a legal requirement is read as conforming to that requirement, so the insured keeps the protection the law guarantees.