TEXAS LTC TEST CERTIFICATION EVALUATION
2026 QUESTIONS WITH PRACTICE SOLUTION
GRADED A+
◉ D i s c r i m i n a t i o n -. Answer: Discrimination is the unfair or
illegal
treatment of rights to a person purely on the arbitrary basis of
characteristics such as:
Age, Race, Gender, Note: Age and sex can determine rates
Religion
Marital S t a t u s
Sexual Orientation
National Origin
◉ False Advertising -. Answer: An insurer who misleads the public
about its assets, corporate
structure, financial standing or age is guilty of false advertising.
A statement in print that future dividends are guaranteed, or
exaggerated dividend payments are examples of false
advertising.
,◉ Rebating. Answer: Refund of part of the initial premium or
anything
of value for a sale or referral is ILLEGAL!
◉ Commission sharing. Answer: - ONLY allowed with another
licensed producer
◉ Unfair Claims Settlement Practices. Answer: -Failing to provide
explanation for claim denial
-Refusing to pay claims without conducting a
reasonable investigation
◉ Licensing Denial, Renewal and Expiration. Answer: -Obtained
/attempted to obtain a license by
fraud/misrepresentation
-Been convicted of a felony (not misdemeanor)
-Offered/given premium rebate to insured
-Obtained/attempted to obtain a license for purpose of
writing controlled business family, friends, employer,
etc.
-A licensee or applicant cannot be denied a license if
they filed for bankruptcy
,-If denied or revoked the individual must wait 5 years
before reapplying
◉ Fair Credit Reporting Act of 1971 (FCRA). Answer: -It protects the
public from overly intrusive information
collection practices by making sure the data collected on an
applicant is kept confidential, accurate, and used for a
proper purpose.
• At the time of application for a policy, the applicant must
be notified that a credit report will be obtained.
• Allows insurers to check credit history to determine
financial and moral status during the underwriting process.
-The applicant must contact the consumer reporting
agency that provided the report to make the correction.
◉ USA PATRIOT Act (Financial Anti-Terrorism Act). Answer: -E n a c
tedafter9/11
- aid in monitoring criminal acts like laundered money
for drug trafficking or money being used to finance
terrorism.
, ◉ Federal Laws Affecting Insurance. Answer: It was enacted in 1999
to eliminate Depression era restrictions on
financial institutions, such as banks, securities companies, and
i n s u r e r s t o m e r ge
◉ Method to handle risk. Answer: Transfer - By purchasing
insurance, an insured
transfers t h e risk to t h e insurer
◉ Elements of a Legal Contract. Answer: 1.)Legal Purpose
2.) Competent Parties (Old age or retired is competent)
3.)Agreement = Offer and Acceptance
Offer is submitting an application and premium
Acceptance is when the insurer issues a policy
4.)Consideration 4 P's
Insured's consideration is Payment of Premium
Insurer's consideration is Promise to Pay the claim
Not negotiation
◉ Agreement. Answer: 2-step process that
involves
•Offer = application and premium
2026 QUESTIONS WITH PRACTICE SOLUTION
GRADED A+
◉ D i s c r i m i n a t i o n -. Answer: Discrimination is the unfair or
illegal
treatment of rights to a person purely on the arbitrary basis of
characteristics such as:
Age, Race, Gender, Note: Age and sex can determine rates
Religion
Marital S t a t u s
Sexual Orientation
National Origin
◉ False Advertising -. Answer: An insurer who misleads the public
about its assets, corporate
structure, financial standing or age is guilty of false advertising.
A statement in print that future dividends are guaranteed, or
exaggerated dividend payments are examples of false
advertising.
,◉ Rebating. Answer: Refund of part of the initial premium or
anything
of value for a sale or referral is ILLEGAL!
◉ Commission sharing. Answer: - ONLY allowed with another
licensed producer
◉ Unfair Claims Settlement Practices. Answer: -Failing to provide
explanation for claim denial
-Refusing to pay claims without conducting a
reasonable investigation
◉ Licensing Denial, Renewal and Expiration. Answer: -Obtained
/attempted to obtain a license by
fraud/misrepresentation
-Been convicted of a felony (not misdemeanor)
-Offered/given premium rebate to insured
-Obtained/attempted to obtain a license for purpose of
writing controlled business family, friends, employer,
etc.
-A licensee or applicant cannot be denied a license if
they filed for bankruptcy
,-If denied or revoked the individual must wait 5 years
before reapplying
◉ Fair Credit Reporting Act of 1971 (FCRA). Answer: -It protects the
public from overly intrusive information
collection practices by making sure the data collected on an
applicant is kept confidential, accurate, and used for a
proper purpose.
• At the time of application for a policy, the applicant must
be notified that a credit report will be obtained.
• Allows insurers to check credit history to determine
financial and moral status during the underwriting process.
-The applicant must contact the consumer reporting
agency that provided the report to make the correction.
◉ USA PATRIOT Act (Financial Anti-Terrorism Act). Answer: -E n a c
tedafter9/11
- aid in monitoring criminal acts like laundered money
for drug trafficking or money being used to finance
terrorism.
, ◉ Federal Laws Affecting Insurance. Answer: It was enacted in 1999
to eliminate Depression era restrictions on
financial institutions, such as banks, securities companies, and
i n s u r e r s t o m e r ge
◉ Method to handle risk. Answer: Transfer - By purchasing
insurance, an insured
transfers t h e risk to t h e insurer
◉ Elements of a Legal Contract. Answer: 1.)Legal Purpose
2.) Competent Parties (Old age or retired is competent)
3.)Agreement = Offer and Acceptance
Offer is submitting an application and premium
Acceptance is when the insurer issues a policy
4.)Consideration 4 P's
Insured's consideration is Payment of Premium
Insurer's consideration is Promise to Pay the claim
Not negotiation
◉ Agreement. Answer: 2-step process that
involves
•Offer = application and premium
