Texas Life Insurance Law: Practice Questions

20 free practice questions with explanations. Pick an answer for each, then check your score.

Exam weight: 6 of 30 Texas questions on the Texas state-law portion of the Life and Health agent exam. Updated 2026-11-04.

Quick study guide

Six of the 30 Texas questions come from this section. Most test a Texas number or a Texas rule about who must do what, not the general concept.

Marketing

Under 28 TAC 21.2201–21.2214, an insurer tells the commissioner whether each policy form will be sold with or without an illustration. If it chose "without", no illustration may be used for that form before the first policy anniversary. Illustrations may never call a plan a vanishing premium. An agent who writes an advertisement naming an insurer must get the insurer's home office to approve it in writing before using it (28 TAC 21.122). For annuities, the buyer's guide and disclosure document are due at or before a face-to-face application; if they come later, the contract needs a free look of at least 15 days (28 TAC 4.2308 and 4.2311).

Texas time limits to know

Rule	Texas figure	Source
Grace period, individual life	At least one month	TIC 1101.005
Grace period, group life	31 days	TIC 1131.103
Policy loans available after	3 full years of premiums	TIC 1101.009
Backdating to get a younger age	Up to 6 months before the application	TIC 1101.054
Death claim settled within	2 months after proofs are received	TIC 1101.011
Time limit to sue in the policy	Not less than 2 years	TIC 1101.053
Reinstatement window	At least 3 years from default	28 TAC 4.611
Group conversion	Apply and pay within 31 days	TIC 1131.110
Replacement free look	30 days, full refund	TIC 1114.053
Choose a nonforfeiture option	60 days after the missed premium	TIC 1105.004
Insurer may delay paying cash value	Up to 6 months	TIC 1105.004

Other provisions

Premiums are payable in advance, at the home office or to an agent, against a receipt signed by a designated officer. At maturity the insurer may deduct only debts secured by the policy. Benefits assigned after a child support lien notice is filed stay subject to the lien. An accelerated benefit on term coverage reduces both the death benefit and the convertible amount.

Group, credit and replacement

A group life policy must cover at least two employees when issued. An insured may assign group benefits to anyone except the employer. If the group policy itself ends, only people insured for at least five years may convert, and the policy may cap it at $2,000. Credit life is term only, can't exceed the debt, and the debtor may use existing coverage or any authorized insurer. In a replacement, the agent gets a signed statement about existing coverage and reads the replacement notice no later than when the application is taken; the replacing insurer notifies the existing insurer within five business days.

Practice questions

Under the Texas life insurance illustration rule, which of the following is an agent prohibited from doing when using an illustration?
1. A.Showing both guaranteed and non-guaranteed values, with the non-guaranteed ones labeled.
2. B.Numbering each page to show its place in the whole illustration, such as "page 4 of 7".
3. C.Describing a plan to pay future premiums from non-guaranteed dividends as a "vanishing premium".
4. D.Printing the insurer's name and the agent's business address on the illustration.
Show answer
Answer: C. 28 TAC 21.2206 bars using the term "vanish" or "vanishing premium", or any similar term implying the policy becomes paid up, to describe using non-guaranteed elements to pay future premiums. The other three are things the same rule requires: page numbering in "page X of Y" form, labeled non-guaranteed values, and the insurer's name and the producer's business address.
Source: Texas content outline II.A.1; 28 TAC § 21.2206 (illustrations: general rules and prohibitions)
An insurer has told the Texas commissioner that a certain whole life form will be marketed without an illustration. An agent wants to prepare an illustration for a client buying that form. Under 28 TAC 21.2205, the agent:
1. A.Must use an illustration, because every whole life sale in Texas requires one.
2. B.May use an illustration only after getting written permission from the Texas Department of Insurance.
3. C.May not use any illustration for a policy on that form before the first policy anniversary.
4. D.May use an illustration if the client signs a statement that values are not guaranteed.
Show answer
Answer: C. When an insurer identifies a form as one marketed without an illustration, 28 TAC 21.2205(b) prohibits using any illustration for a policy on that form before the first policy anniversary, and 21.2206 separately bars illustrating a form not identified for illustration. A client signature or a request to the department does not lift the ban. Illustrations are required only for forms the insurer has chosen to market with one.
Source: Texas content outline II.A.1; 28 TAC § 21.2205 (policies to be illustrated); 28 TAC § 21.2206 (illustrations: general rules and prohibitions)
A Texas agent writes her own newspaper advertisement that names the insurer whose life policies she sells. Before running it, she must:
1. A.File it with the Texas Department of Insurance and wait 30 days.
2. B.File it with the insurer's home office for written approval.
3. C.Do nothing, because agents pay for their own advertising.
4. D.Get approval from the local agents' association.
Show answer
Answer: B. 28 TAC 21.122 requires an agent to file an advertisement naming an insurer with that insurer's home office for written approval before using it, and requires every insurer to keep a system of control over its advertising. An agent does not need to file advertisements she received from the insurer itself. The rule does not route agent advertisements through the department or an association.
Source: Texas content outline II.A.1; 28 TAC § 21.122 (home office approval of advertising)
An agent takes an application for a deferred annuity in a face-to-face meeting but does not give the applicant the buyer's guide or disclosure document until the contract is delivered. Under Texas annuity disclosure rules, the contract must provide:
1. A.A free look of 30 days, but only if the annuity replaces an existing contract.
2. B.A free look of at least 10 days from the date of application.
3. C.A free look of at least 15 calendar days, starting when the consumer receives the contract.
4. D.No free look, because free-look periods apply only to life insurance.
Show answer
Answer: C. 28 TAC 4.2308 requires the buyer's guide and disclosure document at or before a face-to-face application. If they are not provided then, 28 TAC 4.2311 requires a free look of at least 15 calendar days, beginning on the date the consumer receives the contract and running at the same time as any other free look. The 30-day period is the separate replacement free look under TIC 1114.053.
Source: Texas content outline II.A.2 and II.B.1; 28 TAC § 4.2311 (annuity free look period); 28 TAC § 4.2308 (required consumer notices)
Under the Texas Insurance Code, a whole life policy's loan provision must make a loan available once the policy is in force, properly assigned, and premiums have been paid for at least:
1. A.Five full years
2. B.Three full years
3. C.Two full years
4. D.One full year
Show answer
Answer: B. TIC 1101.009 requires the policy to lend up to the cash value plus dividend additions once premiums have been paid for at least three full years. The same section lets the policy allow the insurer to defer a loan for up to six months after the request, and it exempts term policies. Five full years is the cash value threshold for industrial (not ordinary) policies under the nonforfeiture law.
Source: Texas content outline II.B.3; Texas Insurance Code § 1101.009 (policy loans)
A Texas applicant applies for a life policy in June. His nearest birthday puts him at age 46, and he asks for the policy to be dated eight months earlier so he rates at age 45. Under Texas law, the insurer:
1. A.May do so, because backdating is allowed up to one year.
2. B.May not date the policy more than six months before the application to give him a younger age.
3. C.May do so only if he pays the back premiums with interest.
4. D.May never backdate a life policy for any reason.
Show answer
Answer: B. TIC 1101.054 and 28 TAC 4.620 prohibit a policy from taking effect more than six months before the application if that makes the insured rate at a younger age than his age nearest birthday on the application date. Backdating within six months is allowed, so "never" is wrong, and paying back premiums does not cure a date beyond the limit. Conversions that relate back to the original issue date are a stated exception.
Source: Texas content outline II.B.4; Texas Insurance Code § 1101.054 (retroactive issuance); 28 TAC § 4.620 (backdating policies)
A beneficiary sends the insurer proof of the insured's death and proof of her right to the proceeds. Texas law requires the policy to provide that the claim will be settled no later than:
1. A.15 days after the proofs are received
2. B.Two months after the proofs are received
3. C.30 days after the date of death
4. D.Six months after the date of death
Show answer
Answer: B. TIC 1101.011 requires a life policy to provide for settlement no later than two months after the insurer receives proof of the death and of the claimant's right to the proceeds. The clock runs from receipt of those proofs, not from the date of death. The only stated exception is the separate-account portion of a private placement contract.
Source: Texas content outline II.B.10; Texas Insurance Code § 1101.011 (time for settlement of claim)
A proposed life policy form says any lawsuit on the policy must be filed within one year after the cause of action arises. Under Texas law, this provision is:
1. A.Allowed, because insurers may set any reasonable deadline.
2. B.Not allowed, because a policy may not limit the time to sue to less than two years after the cause of action accrues.
3. C.Allowed, as long as the deadline is printed in bold type.
4. D.Not allowed, because a policy may not set any deadline to sue.
Show answer
Answer: B. TIC 1101.053 and 28 TAC 4.619 bar a life policy from limiting the time to bring an action to less than two years after the cause of action accrues. A policy may set a deadline of two years or more, so a total ban on deadlines is wrong, and bold type does not save a one-year limit.
Source: Texas content outline II.B.15; Texas Insurance Code § 1101.053 (limitations periods); 28 TAC § 4.619 (limitations of lawsuits)
A Texas whole life policy lapsed for nonpayment, and its value went into extended term insurance. The owner never surrendered the policy for cash. Under 28 TAC 4.611, the policy must allow reinstatement for at least how long after the default?
1. A.One year
2. B.Ten years
3. C.Three years
4. D.31 days
Show answer
Answer: C. 28 TAC 4.611 requires policies with nonforfeiture benefits to allow reinstatement within three years of default (longer at the insurer's option), if the policy has not been surrendered and cancelled, on evidence of insurability and payment of overdue premiums with interest. Evidence of insurability may cover more than health alone. The rule does not apply to single-premium policies; 31 days is the group conversion window.
Source: Texas content outline II.B.14; 28 TAC § 4.611 (reinstatement)
A Texas endowment policy matures. The owner has a $4,000 policy loan and also owes the same insurer $1,500 on an unrelated account. Under 28 TAC 4.621, the insurer may deduct from the maturity proceeds:
1. A.Both the $4,000 loan and the $1,500 unrelated debt.
2. B.Only the $1,500 unrelated debt.
3. C.Only the $4,000 policy loan.
4. D.Nothing, because maturity proceeds must be paid in full.
Show answer
Answer: C. 28 TAC 4.621 says a policy may not provide for deducting all of the holder's debts to the company; the only allowed deduction is indebtedness on account of and secured by the policy, such as a policy loan. The same rule sets the minimum settlement at maturity as the face amount plus dividend additions, less policy debt and any premium the policy lets the insurer deduct.
Source: Texas content outline II.B.16; 28 TAC § 4.621 (settlement at maturity)
Under Texas law, which statement about the premium-payment provision of an individual life policy is correct?
1. A.Premiums must be payable in advance, at the home office or to an agent, against a receipt signed by a company officer designated in the policy.
2. B.Premiums may be paid only directly to the Texas Department of Insurance.
3. C.Premiums must be payable in arrears, at the end of each policy period.
4. D.Premiums may be paid only at the home office, never to an agent.
Show answer
Answer: A. TIC 1101.004 requires a life policy to provide that all premiums are payable in advance, at the insurer's home office or to an agent, on delivery of a receipt signed by at least one officer designated in the policy. 28 TAC 4.601 adds that the policy may allow payment at the home office, to an agent, or either, and may let unpaid premiums for the current policy year be deducted from death proceeds.
Source: Texas content outline II.B.7; Texas Insurance Code § 1101.004 (premiums payable in advance); 28 TAC § 4.601 (payment of premiums)
After the Title IV-D agency files a child support lien notice against a Texas policyowner, he assigns the benefits of his life policy to a friend. Under TIC 1108.101, the assigned benefits:
1. A.Remain subject to the child support lien, including arrears that build up after the assignment.
2. B.Become payable to the Texas Department of Insurance.
3. C.Are void, because Texas law forbids assigning life insurance benefits.
4. D.Are freed from the lien, because a valid assignment transfers clear title.
Show answer
Answer: A. TIC 1108.101 lets an insured, owner or annuitant assign policy benefits under the policy's terms, but benefits assigned after a child support lien notice has been filed stay subject to the lien, which secures all arrears, including those that accrue after the assignment. Assignment itself is lawful in Texas; 28 TAC 4.623 confirms policies may permit assignment of benefits.
Source: Texas content outline II.B.12; Texas Insurance Code § 1108.101 (assignment generally); 28 TAC § 4.623 (assignment provisions)
An employee with $100,000 of group term life coverage receives a $30,000 accelerated benefit after a terminal illness diagnosis. She later leaves her job and wants to convert. Under TIC 1111.052, the accelerated benefit is deducted from:
1. A.The death benefit only; she can still convert the full $100,000.
2. B.Neither, because accelerated benefits are paid in addition to the death benefit.
3. C.The amount she can convert only; the death benefit stays $100,000.
4. D.Both the death benefit and the amount she would otherwise be entitled to convert.
Show answer
Answer: D. TIC 1111.052 lets an insurer pay an accelerated benefit under individual or group term life on a satisfactory written medical opinion, and the amount must be deducted from both the death benefit and any amount the insured could convert to an individual contract. Here that leaves $70,000 of each. TIC 1111.051 defines a terminal illness as one reasonably expected to cause death within not more than two years.
Source: Texas content outline II.B.13 and II.D.6; Texas Insurance Code § 1111.052 (accelerated term life benefits); Texas Insurance Code § 1111.051 (definitions)
An employee covered by group life leaves his job. Under Texas law, to convert to an individual policy without evidence of insurability, he must:
1. A.Apply and pay the first premium within 31 days after his employment ends, and choose a non-term individual policy.
2. B.Apply within 31 days and pass a medical exam.
3. C.Apply within one year and pay the premium for his age when he first joined the group.
4. D.Apply within 60 days and choose any policy, including term.
Show answer
Answer: A. TIC 1131.110 gives a departing employee the right to an individual policy, issued without evidence of insurability, if he applies and pays the first premium within 31 days after employment ends. He may choose any individual policy the insurer customarily issues other than term, for no more than the coverage lost, at the rate for his current age and risk class. TIC 1131.354 gives a covered spouse the same conversion rights.
Source: Texas content outline II.D.2; Texas Insurance Code § 1131.110 (conversion on termination of employment); Texas Insurance Code § 1131.354 (spouse conversion rights)
An employer cancels its group life policy. Under TIC 1131.111, which covered employee is entitled to convert to an individual policy?
1. A.Only employees age 65 or older.
2. B.Every covered employee, regardless of how long they were insured.
3. C.No one, because conversion applies only when employment ends.
4. D.Only employees who have been insured under the policy for at least five years.
Show answer
Answer: D. When the group policy itself terminates, TIC 1131.111 gives conversion rights only to individuals insured under it for at least five years. The policy may cap the converted amount at the lesser of the lost coverage (reduced by any new group coverage within 31 days) or $2,000. Conversion on leaving employment under TIC 1131.110 has no five-year requirement.
Source: Texas content outline II.D.2; Texas Insurance Code § 1131.111 (conversion on termination of group policy)
Under TIC 1131.006, an employee insured under a group life policy may make an absolute or collateral assignment of the policy's rights and benefits, subject to the policy's terms, to:
1. A.No one, because group life benefits can never be assigned.
2. B.Only a spouse or child.
3. C.Any person or legal entity other than the insured's employer.
4. D.Only the insured's employer.
Show answer
Answer: C. TIC 1131.006 allows a group life insured, subject to the policy terms, to assign all rights and benefits absolutely or collaterally to any individual, firm, corporation, association, trust or other legal entity except the insured's employer. Assignment is not limited to family members and is not barred outright.
Source: Texas content outline II.D.4; Texas Insurance Code § 1131.006 (assignment of benefits)
A Texas lender requires credit life insurance as security for a car loan. Before the loan is completed, the person processing it must tell the borrower that:
1. A.He may provide the coverage through existing policies he owns or controls, or buy it from any insurer authorized in Texas.
2. B.He must buy whole life coverage equal to twice the loan amount.
3. C.The coverage must be bought from the lender's chosen insurer.
4. D.Credit life is optional only if he pays a higher interest rate.
Show answer
Answer: A. 28 TAC 3.5101 requires that a debtor be told, before the transaction is completed, of the right to furnish required credit insurance through existing policies or to buy it from any insurer authorized in Texas. Credit life must be term coverage (TIC 1153.151) and may not exceed the debt (TIC 1153.155), so whole life at twice the loan is wrong on both counts.
Source: Texas content outline II.E; 28 TAC § 3.5101 (debtor's choice of insurer); Texas Insurance Code §§ 1153.151 and 1153.155 (forms and limits of credit life)
An agent takes a life insurance application, and the applicant says she has an existing annuity. Under TIC 1114.051, the agent must:
1. A.Tell her that replacements are prohibited in Texas.
2. B.Get written approval from the existing insurer before taking the application.
3. C.Present and read the replacement notice to her no later than when the application is taken, unless she declines to have it read aloud.
4. D.Mail the replacement notice to her within 30 days after the policy is issued.
Show answer
Answer: C. TIC 1114.051 requires a statement signed by the applicant and agent on whether existing policies or contracts exist; if they do, the agent must present and read the replacement notice no later than when the application is taken, and both sign it (the applicant may decline the reading). The agent must also leave copies of all sales material. Replacement is regulated, not banned, and the existing insurer's approval is not required.
Source: Texas content outline II.F.3; Texas Insurance Code § 1114.051 (duties of agent; notice)
In a Texas replacement, the replacing insurer must tell the policyowner that she can return the new policy and receive an unconditional full refund of premiums within:
1. A.10 days of delivery
2. B.15 days of the application
3. C.20 days of delivery
4. D.30 days of delivery
Show answer
Answer: D. TIC 1114.053 requires the replacing insurer to notify the owner of the right to return the policy or contract within 30 days of delivery for an unconditional full refund (for variable or market value adjusted products, the cash surrender value plus fees and charges deducted). The replacing insurer must also notify the existing insurer within five business days after receiving an application indicating replacement. Fifteen days is the annuity disclosure free look.
Source: Texas content outline II.F.4; Texas Insurance Code § 1114.053 (duties of replacing insurers)
A Texas policyowner surrenders her whole life policy and asks for its cash value. The insurer says payment may be delayed. Under the Texas Standard Nonforfeiture Law, the insurer:
1. A.May defer payment only if the policy is less than three years old.
2. B.Must reserve the right to defer payment of the cash surrender value for up to six months after demand and surrender.
3. C.May defer payment for up to two years.
4. D.Must pay within 10 days, with no right to delay.
Show answer
Answer: B. TIC 1105.004(g) requires a company to reserve the right to defer paying a cash surrender value for six months after demand and surrender of the policy. The same section gives the owner 60 days after a missed premium to choose a nonforfeiture option; otherwise the paid-up benefit named in the policy applies. Cash values are required once premiums have been paid for three full years on ordinary policies.
Source: Texas content outline II.G; Texas Insurance Code § 1105.004 (required nonforfeiture provisions)

Where these questions come from: Texas content outline (Pearson VUE #124401, effective 1 Sep 2026), Life and Health agent state-specific content, section II: Texas Statutes and Rules Pertinent to Life Insurance Only. See how we write questions.