17 Free Texas Life Agent Practice Questions: Texas Insurance Law (2026)
How to Use This Texas Insurance Law Question Set
The Life Agent exam's state specific section is 30 of the 80 scored questions, more than a third of the whole exam: 20 cover Texas statutes and rules common to both life and health insurance agents, and 10 cover statutes and rules pertinent to life insurance only. It is also the section where candidates most often come up short. The general knowledge section tests concepts that carry over from policy to policy; the state section tests specific numbers, specific statute sections and specific Texas Administrative Code rules that have to be learned as written, not reasoned out from first principles.
These 17 questions come from Chapters 7 and 8 of LanePrep's Texas Life Agent quiz bank: 11 from Chapter 7 (statutes and rules common to life and health agents, including agent conduct, licensing and company structure), and 6 from Chapter 8 (statutes specific to life insurance contracts). Each question shows its chapter, so a miss tells you exactly which chapter to go back to.
Work them before you read the answer. Every question has the explanation folded underneath it, with the statute or rule cited directly.
Practice Questions 1-6: Texas Insurance Companies, Conduct and Licensing
These six questions open the state section with company structure, conduct and licensing: the mutual company owned by its policyholders, the Commissioner's cease and desist order, the licensing requirement behind commission sharing, the guaranty association that stands behind an insolvent insurer's policyholders, misrepresentation as a prohibited sales practice, and the reciprocity requirement behind a nonresident license.
Question 1 (Chapter 7)
A life insurance company is owned by its policyholders and issues participating policies that pay dividends. This company is known as a:
- A) Stock company
- B) Mutual company
- C) Fraternal benefit society
- D) Reciprocal insurer
Show answer & explanation
Answer: B
A mutual insurance company is owned by its policyholders. When the company has a surplus, it may return a portion to policyholders in the form of dividends. Stock companies are owned by stockholders.
Question 2 (Chapter 7)
The Commissioner of Insurance discovers that an agent has been commingling client premiums with their personal savings account. The Commissioner issues an order for the agent to immediately stop this practice. This is known as a:
- A) Summary Judgment
- B) Writ of Mandamus
- C) Injunction
- D) Cease and Desist Order
Show answer & explanation
Answer: D
Under TIC 83.051, the Commissioner can issue a Cease and Desist Order if they believe a person is engaging in an unfair or deceptive act or practice or is in violation of the Insurance Code.
Question 3 (Chapter 7)
An agent is licensed in Texas but wants to share a commission with a colleague who helped with a complex case. Under what circumstances is this legal under TIC 4005.053?
- A) Only if the colleague is also a licensed agent for the same line of insurance.
- B) Only if the colleague is a family member of the agent.
- C) As long as the colleague has a business license in any field.
- D) Commission sharing is strictly prohibited in Texas under all circumstances.
Show answer & explanation
Answer: A
TIC 4005.053 states that an agent may not pay a commission or other valuable consideration to a person for services as an agent unless that person holds a license to act as an agent for that line of insurance.
Question 4 (Chapter 7)
A life insurance company has become insolvent and cannot pay its claims. Which entity is responsible for protecting Texas policyholders in this scenario?
- A) The Federal Deposit Insurance Corporation (FDIC)
- B) The Texas Department of Banking
- C) The National Association of Insurance Commissioners (NAIC)
- D) The Texas Life and Health Insurance Guaranty Association
Show answer & explanation
Answer: D
The Texas Life and Health Insurance Guaranty Association (TIC Ch. 463) provides protection for policyholders, insureds, and beneficiaries when a member insurer becomes insolvent and is unable to fulfill its contractual obligations.
Question 5 (Chapter 7)
An agent is trying to convince a prospect to switch their life insurance policy. The agent provides a comparison that intentionally overstates the benefits of the new policy and understates the benefits of the existing one. This is an example of:
- A) Misrepresentation
- B) Rebating
- C) Coercion
- D) Discrimination
Show answer & explanation
Answer: A
TIC 541.051 prohibits misrepresentation, which includes making false or misleading statements about the benefits, advantages, or terms of an insurance policy.
Question 6 (Chapter 7)
Which of the following is a requirement to obtain a nonresident agent license in Texas under TIC Chapter 4056?
- A) The individual must hold a similar license in good standing in their home state.
- B) The individual must move to Texas within 90 days of licensure.
- C) The individual must pass the Texas-specific portion of the exam.
- D) The individual must be appointed by a Texas-based domestic insurer.
Show answer & explanation
Answer: A
Texas grants nonresident licenses to individuals who are in good standing in their home state, provided that state has a reciprocal agreement with Texas. Usually, no additional exam is required if the home state requirements are met.
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Practice Questions 7-11: Texas Agent Oversight and Insurer Classification
These five move through regulatory oversight and company classification: how long an insurer's appointment of an agent stays in effect, coercion as a separate unfair trade practice from misrepresentation, the window to notify TDI of an out-of-state felony conviction, how the Commissioner of Insurance is chosen for the position, and how Texas classifies an insurer formed outside the United States.
Question 7 (Chapter 7)
An insurer must file a notice with the Commissioner when they appoint an agent to represent them. Under TIC 4001.201, this appointment remains in effect until:
- A) The agent's license expires.
- B) One year from the date of appointment.
- C) The agent reaches the age of 65.
- D) The appointment is terminated or the agent's license is revoked.
Show answer & explanation
Answer: D
An appointment continues in effect until it is terminated by the insurer or the agent, or until the agent's license is forfeited, suspended, or revoked by the Department.
Question 8 (Chapter 7)
A bank tells a loan applicant that their mortgage will only be approved if they purchase life insurance through the bank's affiliated agency. This prohibited practice is known as:
- A) Coercion
- B) Twisting
- C) Defamation
- D) Misrepresentation
Show answer & explanation
Answer: A
TIC 541.054 prohibits boycott, coercion, or intimidation that results in an unreasonable restraint of, or monopoly in, the business of insurance. Requiring a consumer to buy insurance from a specific source as a condition of a loan is coercion.
Question 9 (Chapter 7)
An agent is convicted of a felony in another state. According to 28 TAC 1.502, what is the agent's responsibility regarding their Texas license?
- A) They must notify the TDI only if the felony was insurance-related.
- B) They must wait until their license renewal period to report the conviction.
- C) No notification is required for out-of-state convictions.
- D) They must notify the TDI within 30 days of the conviction.
Show answer & explanation
Answer: D
License holders are required to notify the TDI within 30 days of a felony conviction or any administrative action taken against them by another state's insurance regulator.
Question 10 (Chapter 7)
How is the Commissioner of Insurance in Texas chosen for the position?
- A) Appointed by the Governor for a 2-year term.
- B) Elected by popular vote every 4 years.
- C) Appointed by the State Senate for a 6-year term.
- D) Elected by the Board of Directors of the Guaranty Association.
Show answer & explanation
Answer: A
Under TIC 31.022, the Commissioner of Insurance is appointed by the Governor with the advice and consent of the Texas Senate for a two-year term expiring on February 1 of each odd-numbered year.
Question 11 (Chapter 7)
An insurance company is incorporated in Canada and is authorized to sell life insurance in Texas. This company is classified as:
- A) Domestic
- B) Foreign
- C) Non-admitted
- D) Alien
Show answer & explanation
Answer: D
An 'alien' insurer is one formed under the laws of a country other than the United States. Since Canada is a foreign country, the insurer is alien.
Practice Questions 12-17: Texas Life Insurance Statutes
Chapter 8 closes the outline with the statutes written specifically for life insurance contracts: the incontestability clause, the misstatement of age provision that adjusts rather than voids a claim, the point at which an insurer must advance a policy loan, the floor on how short a policy's lawsuit-filing deadline can be, the accelerated benefits rider for a terminally or chronically ill insured, and the requirements for reinstating a policy that has lapsed.
Question 12 (Chapter 8)
A policyholder dies three years after purchasing a life insurance policy. The insurer discovers that the insured failed to mention a minor medical treatment on the application. Under TIC 1101.006, can the insurer contest the claim?
- A) Yes, because any omission is grounds for denial.
- B) Yes, but only if the omission was related to the cause of death.
- C) No, because the policy has been in force for more than two years.
- D) No, because the incontestability period in Texas is only 90 days.
Show answer & explanation
Answer: C
TIC 1101.006 establishes an Incontestability Clause, stating that a life insurance policy is incontestable after it has been in force for two years from its date of issue, except for non-payment of premiums.
Question 13 (Chapter 8)
An insured person stated on their application that they were 35 years old when they were actually 37. Upon the insured's death five years later, the insurer discovers the discrepancy. Under TIC 1101.008, what action will the insurer take?
- A) The insurer will deny the claim entirely due to material misrepresentation.
- B) The insurer will pay the full face amount but charge the estate for the back premiums.
- C) The insurer must pay the full face amount because the policy is past the contestable period.
- D) The insurer will adjust the death benefit to the amount the premiums paid would have purchased at the correct age.
Show answer & explanation
Answer: D
Under TIC 1101.008, if an insured's age is misstated, the amount payable is the amount that the premium paid would have purchased at the correct age. This is an exception to the incontestability rule.
Question 14 (Chapter 8)
A Texas life insurance policyholder wishes to take out a loan against the cash value of their permanent policy. According to TIC 1101.009, after the policy has been in force for how many years must the insurer provide a policy loan?
- A) One year
- B) Two years
- C) Five years
- D) Three years
Show answer & explanation
Answer: D
TIC 1101.009 requires that after a policy has been in force for three full years, the insurer must advance a loan to the policyholder using the policy as security.
Question 15 (Chapter 8)
A life insurance company includes a provision in its policy stating that any lawsuit against the company must be filed within one year of the insured's death. Is this provision valid in Texas?
- A) Yes, insurers can set their own limits for litigation.
- B) Yes, but only if the policy is a term life policy.
- C) No, because Texas law requires a minimum of 10 years for all lawsuits.
- D) No, TIC 1101.054 prohibits provisions that limit the time for filing a lawsuit to less than two years.
Show answer & explanation
Answer: D
TIC 1101.054 (Prohibited Provisions) states that a policy may not contain a provision that limits the time for bringing a legal action to a period of less than two years after the cause of action accrues.
Question 16 (Chapter 8)
John is diagnosed with a terminal illness and expected to live less than 12 months. He has a $200,000 life insurance policy with an accelerated benefits rider. Under TIC 1111.052, what is the primary purpose of this rider?
- A) To double the death benefit if the insured dies in a hospital.
- B) To waive all future premiums automatically.
- C) To pay for the insured's funeral expenses in advance.
- D) To allow John to receive a portion of the death benefit while still living to pay for medical or living expenses.
Show answer & explanation
Answer: D
TIC 1111.052 governs accelerated term life benefits, which allow a terminally ill or chronically ill person to access a portion of their death benefit prior to death.
Question 17 (Chapter 8)
A policyholder's life insurance policy lapses for non-payment of premium. The policyholder wishes to reinstate the policy 18 months later. According to 28 TAC 4.611, which of the following is NOT typically a requirement for reinstatement?
- A) Payment of all overdue premiums with interest.
- B) The insured must pay a $500 reinstatement penalty fee to the TDI.
- C) Evidence of insurability satisfactory to the insurer.
- D) The policy must not have been surrendered for its cash value.
Show answer & explanation
Answer: B
Reinstatement (28 TAC 4.611) requires back premiums, interest, and evidence of insurability. There is no statutory 'penalty fee' payable to the Texas Department of Insurance for reinstating a private contract.
The Mistakes That Cost Marks
Confusing the entire contract provision with the statement of insured. TIC 1101.003 is the entire contract provision, the policy plus the application plus any attached riders. TIC 1101.007 is a separate section, the statement of insured. The two numbers sit three digits apart and get swapped constantly.
Treating the 30-day replacement right of return as the free-look period. TIC 1114.053(e) gives a replaced policy its own 30-day right of return, a figure some test-prep shortcuts shrink to '20 days.' The general free-look provision lives at 28 TAC 4.2311 and is a different rule with a different purpose.
Assuming a misstatement of age voids the claim. TIC 1101.008 adjusts the death benefit to what the premium paid would have purchased at the correct age. It does not void the policy.
Treating misrepresentation, defamation, coercion and rebating as one generic 'bad sales practice.' Texas insurance law treats each as its own distinct unfair trade practice, and rebating carries its own de minimis exception under TIC 541.058(b)(7) alongside the general rebating prohibition at 541.056. A multiple-choice question often turns on exactly which one of these the scenario describes, not on recognizing that something is generically wrong.
Assuming this exam shares the General Lines exam's question count, time limit or fee. The Life Agent exam is a separate 90-question, 120-minute, $39 product with its own state section weights; don't carry over a figure from a different Texas exam.
Your Next Step
How did you score?
13 or more correct: You're clearing most of the state-specific section, the part of the exam that sinks the most candidates. Move to the policy types, riders and annuities set to round out the general knowledge side, then read how to pass the Texas Life Agent exam on the first try for the full study plan.
9-12 correct: You know some of the law but not all of it cold. Note which chapter your misses fell in, Chapter 7 or Chapter 8, and replay that chapter's audio lesson before retesting.
Under 9 correct: This is the section where preparation matters most, since it is written exam-specific statute language rather than general insurance concepts you can reason through. Start with Chapter 7 of the LanePrep Texas Life Agent course and work forward. A free preview is available at /tx/life/preview, no signup required.
For a 25-question sample across the whole exam, see the free practice set.
Statute and rule cites from the Life Agent state outline in Pearson VUE's Texas Life Agent examination content outline (124401), effective September 1, 2026, cross-checked against the Texas Insurance Code and 28 TAC. Read October 2026.
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