Texas Life Insurance Law — Texas Insurance Law — Life & Health Practice Test

This Texas Insurance Law — Life & Health Texas Life Insurance Law practice set has 26 practice questions based on the official exam materials, each with an instant explanation.

Sample questions

Three questions from the Texas Life Insurance Law bank with the correct answer and an explanation. The practice quiz above draws 26 questions at random from the same bank.

1. Under the Texas advertising rules for life insurance (28 TAC Subchapter A), what standard must an advertisement's description of policy benefits meet?

   • It must be truthful and not misleading, and must fairly and accurately describe the policy's actual benefits, terms, and limitations — Correct answer
   • It only needs approval from the agent's direct manager before it is used
   • It may omit any mention of future premium increases as long as the initial premium is accurate
   • It only needs to comply with federal advertising law, since state rules do not apply to life insurance ads

   Explanation: Texas advertising rules for life, accident, and health insurance require that advertisements be truthful and not misleading, and that they fairly and accurately describe the policy being advertised. (28 TAC §§21.104-21.105)

   Handbook: Texas Life Insurance Law — Advertising & Illustrations

2. Which of the following advertising practices is prohibited for a life insurer marketing policies in Texas?

   • Using words, phrases, or statements that exaggerate a policy's benefits or create a false impression of the insurer's financial condition or claims-paying ability — Correct answer
   • Identifying the insurer's legal name and the general type of policy being advertised
   • Disclosing that the advertised product is a life insurance policy rather than an investment
   • Providing a licensed agent's name and contact information in the advertisement

   Explanation: Texas advertising rules prohibit deceptive words, phrases, or descriptions that exaggerate benefits or misstate an insurer's financial standing, and require disclosure statements identifying the insurer and the nature of the product. (28 TAC §§21.107, 21.111, 21.122)

   Handbook: Texas Life Insurance Law — Advertising & Illustrations

3. When a Texas life insurance sales illustration shows non-guaranteed values, such as projected dividends or excess interest credits, what does Texas rule require?

   • The non-guaranteed values must be clearly and prominently labeled as non-guaranteed and must be distinguished from the policy's guaranteed values — Correct answer
   • The illustration may present non-guaranteed values as guaranteed once they are shown to the applicant
   • Non-guaranteed values may never be shown in any illustration furnished to a consumer
   • Non-guaranteed values only need to be disclosed if the applicant is over age 65

   Explanation: Texas rules governing life insurance advertising and illustrations require that any non-guaranteed values be clearly labeled as such and separated from guaranteed values, so the consumer is not misled about what is contractually guaranteed. (28 TAC §4.1003; 28 TAC §21.122)

   Handbook: Texas Life Insurance Law — Advertising & Illustrations