17 Free Texas Life Agent Practice Questions: Texas Life Insurance Law (2026)

Question 1 (Chapter 8)

Sarah is reviewing a life insurance illustration provided by her agent. The illustration shows a potential cash value of $50,000 in year 20, but only $32,000 is based on the policy's guaranteed interest rate. According to 28 TAC 4.1003, how must this be presented?

• A) The agent must verbally explain the difference but does not need to show it in writing.
• B) The illustration must clearly distinguish between guaranteed and non-guaranteed values.
• C) The illustration can only show guaranteed values.
• D) The non-guaranteed values must be printed in a larger font than the guaranteed values.

Question 2 (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

Question 3 (Chapter 8)

Under Texas Insurance Code Chapter 1131, what is the standard requirement for an employee to be eligible for a group life insurance policy?

• A) The employee must have worked for the company for at least 5 years.
• B) The employee must provide a full medical exam regardless of group size.
• C) The employee must be a part-time worker working less than 10 hours a week.
• D) The employee must be part of a group formed for a purpose other than obtaining insurance.

Question 4 (Chapter 8)

In a replacement transaction, the applicant receives the new policy but realizes two weeks later they made a mistake and want their old policy back. Under TIC 1114.053(e), what is the 'free look' or right of return period for a replaced policy in Texas?

• A) 30 days
• B) 10 days
• C) 20 days
• D) 60 days

Question 5 (Chapter 8)

A Texas life insurance policy must state that all statements made by the insured in the application are considered __________, not __________.

• A) Representations; warranties
• B) Warranties; representations
• C) Facts; opinions
• D) Guarantees; estimates

Question 6 (Chapter 8)

An agent is creating a radio advertisement for a new term life product. The script includes the phrase: 'This plan is a special introductory offer only available for the next 30 days.' According to 28 TAC 21.114, why might this be a violation of Texas advertising rules?

• A) Texas law prohibits any time-limited offers in life insurance advertising.
• B) All radio advertisements must be pre-approved by the Texas Attorney General.
• C) Insurance advertisements cannot mention specific timeframes like '30 days'.
• D) The term 'introductory' cannot be used if the product will be available on a continuing basis.

Question 7 (Chapter 8)

An insured individual has a $500,000 life insurance policy and is diagnosed with a terminal illness with a life expectancy of 12 months. They wish to access a portion of the death benefit now. Under TIC 1111.052, what must the insurer provide?

• A) A disclosure that receipt of accelerated benefits may be taxable and may affect Medicaid eligibility.
• B) A full refund of all premiums paid plus interest.
• C) The entire face amount immediately, with no reduction for interest or fees.
• D) A statement that the policy must be surrendered entirely to receive any funds.

Question 8 (Chapter 8)

A borrower takes out a 5-year loan for $10,000 and purchases a credit life insurance policy. Two years later, the borrower pays off the loan early. According to 28 TAC 3.5103, what must happen to the credit life policy?

• A) The coverage continues until the original 5-year term ends.
• B) The insurer keeps the premium as a processing fee for early payoff.
• C) The policy must be canceled and a refund of unearned premium must be paid to the insured.
• D) The face amount increases to $20,000 since the debt is gone.

Question 9 (Chapter 8)

A policyholder's whole life policy has lapsed due to non-payment of premium. The policyholder applies for reinstatement 2 years later. Under 28 TAC 4.611, which of the following is the insurer NOT allowed to require?

• A) A new suicide exclusion period starting from the reinstatement date.
• B) Evidence of insurability satisfactory to the company.
• C) Payment of all overdue premiums plus interest.
• D) Repayment of any outstanding policy loans plus interest.

Question 10 (Chapter 8)

An agent is completing a life insurance application for a client. The client mentions they might cancel an existing policy once this one is issued. The agent fails to mark the 'replacement' box on the application. This is a violation of which Texas statute?

• A) TIC Chapter 1101 (Provisions)
• B) TIC Chapter 1114 (Replacement)
• C) TIC Chapter 1131 (Group Life)
• D) TIC Chapter 541 (Unfair Trade Practices)

Question 11 (Chapter 8)

A life insurance policy is issued in Texas with a 'Settlement at Maturity' provision. According to 28 TAC 4.621, what is the insurer prohibited from doing?

• A) Paying the benefit in a lump sum.
• B) Paying an amount less than the face value plus dividends, minus any indebtedness.
• C) Paying the benefit in installments over 20 years.
• D) Paying the benefit to a named trust instead of an individual.

Question 12 (Chapter 8)

A Texas life insurance policy includes a provision requiring any lawsuit against the insurer to be filed within one year of the date of the insured's death. Under 28 TAC 4.619, is this provision enforceable?

• A) No, because Texas law prohibits any limitation period shorter than two years for life insurance suits
• B) Yes, because parties can contractually shorten the statute of limitations
• C) Yes, but only if the policy is a term policy issued before 2000
• D) No, because the limitation period must be at least four years to match the general statute of limitations

Question 13 (Chapter 8)

A policyholder in Lubbock receives a new life insurance policy that replaces an existing one. The policy is delivered on May 1. On May 28, the policyholder decides to return the new policy and keep the old one. Under TIC 1114.053(e), what is the result?

• A) The policyholder may return the policy for a full refund because it is within the 30-day right of return period
• B) The policyholder may return the policy, but only receives a refund of premium minus a surrender charge
• C) The policyholder cannot return the policy because the free-look period for replacements is only 20 days
• D) The policyholder may return the policy only if the replacing insurer agrees to the return

Question 14 (Chapter 8)

A policyholder in Tyler wants to assign their life insurance policy to a charity as a charitable gift. Under TIC 1103.055 and 1108.101, which of the following is true regarding the assignment?

• A) The assignment is invalid because life insurance policies cannot be assigned to charities
• B) The assignment is valid without the charity needing an insurable interest, because the policy was validly issued with insurable interest at inception
• C) The assignment is valid, but the charity must have an insurable interest in the insured's life
• D) The assignment requires the insurer's written approval to be effective

Question 15 (Chapter 8)

An insured person's age was recorded as 30 on the application, but they were actually 34. The error is discovered after the insured dies. According to TIC 1101.008, how is the benefit calculated?

• A) The benefit is adjusted to the amount the premium paid would have purchased at the correct age.
• B) The claim is denied due to material misrepresentation.
• C) The full death benefit is paid because the incontestability period has passed.
• D) The insurer must refund all premiums plus 6% interest.

Question 16 (Chapter 8)

A policyholder in Dallas receives a new life insurance policy that replaces an existing one. They realize 25 days later that they are unhappy with the new policy's terms. Under TIC 1114.053(e), what is the policyholder's right?

• A) They have no right to return the policy after 10 days.
• B) They can return the policy but must pay a 15% cancellation fee.
• C) They can return the policy for a full refund of all premiums paid because the return period is 30 days for replacements.
• D) They must wait until the first anniversary to cancel the policy.

Question 17 (Chapter 8)

A life insurance policy reaches its maturity date (the insured has reached age 100 or 121). Under 28 TAC 4.621, the insurer must settle the policy by paying the proceeds. Which of the following is prohibited?

• A) Paying the proceeds in a lump sum.
• B) Settling for an amount less than the face value plus dividends and minus loans.
• C) Paying the proceeds in installments.
• D) Paying the proceeds to a named beneficiary.