Texas Insurance Agent Licensing Exam –
Practice Exam Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
1. Which of the following is considered an example of risk retention?
| | | | | | | | | |
A. Purchasing liability insurance | |
B. Establishing a self-insurance fund | | |
C. Transferring risk to an insurer | | | |
D. Buying a surety bond | | |
Answer: B |
Risk retention means assuming financial responsibility for a loss instead of
| | | | | | | | | |
transferring it, such as through self-insurance funds.
| | | | | | |
2. In Texas, the Texas Department of Insurance (TDI) is primarily responsible for:
| | | | | | | | | | |
A. Setting insurance premiums for all carriers
| | | | |
B. Licensing and regulating insurance agents and companies
| | | | | |
C. Enforcing federal insurance laws
| | |
D. Providing coverage for uninsured Texans
| | | |
Answer: B |
TDI oversees licensing, solvency, market conduct, and consumer protection in the
| | | | | | | | | |
Texas insurance market.
| | |
,3. Which type of insurance guarantees payment of the face amount if the
| | | | | | | | | | |
insured survives the policy period?
| | | | |
A. Whole life |
B. Universal life |
C. Endowment
D. Term life |
Answer: C |
Endowment policies pay out either at the insured’s death or after a specified
| | | | | | | | | | | |
period if the insured survives.
| | | | |
4. Which of the following is a requirement for obtaining a Texas insurance agent
| | | | | | | | | | | |
license?
|
A. Being at least 21 years old
| | | | |
B. Completing pre-licensing education and passing the exam
| | | | | |
C. Holding a college degree
| | |
D. Serving a 2-year apprenticeship
| | |
Answer: B |
Applicants must meet pre-licensing and exam requirements; college degrees or
| | | | | | | | |
apprenticeships are not mandatory.
| | | |
5. An insurance agent’s fiduciary responsibility primarily involves:
| | | | | |
A. Maximizing commissions |
B. Acting in the best interests of the insurer
| | | | | | |
C. Collecting and remitting premiums to the insurer
| | | | | |
D. Promoting only whole life policies | | | |
Answer: C |
Agents must promptly and accurately handle client funds, maintaining fiduciary
| | | | | | | | |
responsibility.
|
,6. Which policy provision prevents the insurer from denying a claim after a
| | | | | | | | | | |
specified period due to misstatements (except fraud)?
| | | | | | |
A. Consideration clause |
B. Grace period clause
| |
C. Incontestability clause |
D. Insuring agreement |
Answer: C |
The incontestability clause protects policyholders by limiting the time an insurer
| | | | | | | | | |
can contest the validity of a policy.
| | | | | | |
7. Which type of health insurance policy pays a daily benefit if the insured is
| | | | | | | | | | | | |
hospitalized?
|
A. Major medical|
B. Hospital indemnity |
C. Disability income |
D. Long-term care |
Answer: B |
Hospital indemnity policies pay a fixed amount per day of hospitalization,
| | | | | | | | | |
regardless of other coverage.
| | | |
8. What is the purpose of the Texas Guaranty Association?
| | | | | | | |
A. To set premium rates
| | |
B. To protect policyholders from insurer insolvency
| | | | |
C. To regulate insurance agent ethics
| | | |
D. To approve policy forms
| | |
, Answer: B |
The association ensures policyholders receive protection if an insurer becomes
| | | | | | | | |
insolvent.
|
9. Which is NOT a standard element of an insurance contract?
| | | | | | | | |
A. Offer and acceptance
| |
B. Legal purpose |
C. Mutual consent |
D. Profit guarantee |
Answer: D |
Insurance contracts are not designed to guarantee profits, but must include
| | | | | | | | | |
|agreement, purpose, and consideration. | | |
10. The period after the premium due date during which coverage remains in
| | | | | | | | | | |
force is called the:
| | | |
A. Free look period
| |
B. Grace period |
C. Contestability period |
D. Waiver period |
Answer: B |
The grace period gives policyholders time to pay overdue premiums before
| | | | | | | | | |
cancellation.
|
11. Which of the following is considered a hazard in insurance?
| | | | | | | | |
A. Fire destroying a building
| | |
B. Negligence by an insured | | |
C. Smoking cigarettes |
D. Death of the insured | | |
Practice Exam Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
1. Which of the following is considered an example of risk retention?
| | | | | | | | | |
A. Purchasing liability insurance | |
B. Establishing a self-insurance fund | | |
C. Transferring risk to an insurer | | | |
D. Buying a surety bond | | |
Answer: B |
Risk retention means assuming financial responsibility for a loss instead of
| | | | | | | | | |
transferring it, such as through self-insurance funds.
| | | | | | |
2. In Texas, the Texas Department of Insurance (TDI) is primarily responsible for:
| | | | | | | | | | |
A. Setting insurance premiums for all carriers
| | | | |
B. Licensing and regulating insurance agents and companies
| | | | | |
C. Enforcing federal insurance laws
| | |
D. Providing coverage for uninsured Texans
| | | |
Answer: B |
TDI oversees licensing, solvency, market conduct, and consumer protection in the
| | | | | | | | | |
Texas insurance market.
| | |
,3. Which type of insurance guarantees payment of the face amount if the
| | | | | | | | | | |
insured survives the policy period?
| | | | |
A. Whole life |
B. Universal life |
C. Endowment
D. Term life |
Answer: C |
Endowment policies pay out either at the insured’s death or after a specified
| | | | | | | | | | | |
period if the insured survives.
| | | | |
4. Which of the following is a requirement for obtaining a Texas insurance agent
| | | | | | | | | | | |
license?
|
A. Being at least 21 years old
| | | | |
B. Completing pre-licensing education and passing the exam
| | | | | |
C. Holding a college degree
| | |
D. Serving a 2-year apprenticeship
| | |
Answer: B |
Applicants must meet pre-licensing and exam requirements; college degrees or
| | | | | | | | |
apprenticeships are not mandatory.
| | | |
5. An insurance agent’s fiduciary responsibility primarily involves:
| | | | | |
A. Maximizing commissions |
B. Acting in the best interests of the insurer
| | | | | | |
C. Collecting and remitting premiums to the insurer
| | | | | |
D. Promoting only whole life policies | | | |
Answer: C |
Agents must promptly and accurately handle client funds, maintaining fiduciary
| | | | | | | | |
responsibility.
|
,6. Which policy provision prevents the insurer from denying a claim after a
| | | | | | | | | | |
specified period due to misstatements (except fraud)?
| | | | | | |
A. Consideration clause |
B. Grace period clause
| |
C. Incontestability clause |
D. Insuring agreement |
Answer: C |
The incontestability clause protects policyholders by limiting the time an insurer
| | | | | | | | | |
can contest the validity of a policy.
| | | | | | |
7. Which type of health insurance policy pays a daily benefit if the insured is
| | | | | | | | | | | | |
hospitalized?
|
A. Major medical|
B. Hospital indemnity |
C. Disability income |
D. Long-term care |
Answer: B |
Hospital indemnity policies pay a fixed amount per day of hospitalization,
| | | | | | | | | |
regardless of other coverage.
| | | |
8. What is the purpose of the Texas Guaranty Association?
| | | | | | | |
A. To set premium rates
| | |
B. To protect policyholders from insurer insolvency
| | | | |
C. To regulate insurance agent ethics
| | | |
D. To approve policy forms
| | |
, Answer: B |
The association ensures policyholders receive protection if an insurer becomes
| | | | | | | | |
insolvent.
|
9. Which is NOT a standard element of an insurance contract?
| | | | | | | | |
A. Offer and acceptance
| |
B. Legal purpose |
C. Mutual consent |
D. Profit guarantee |
Answer: D |
Insurance contracts are not designed to guarantee profits, but must include
| | | | | | | | | |
|agreement, purpose, and consideration. | | |
10. The period after the premium due date during which coverage remains in
| | | | | | | | | | |
force is called the:
| | | |
A. Free look period
| |
B. Grace period |
C. Contestability period |
D. Waiver period |
Answer: B |
The grace period gives policyholders time to pay overdue premiums before
| | | | | | | | | |
cancellation.
|
11. Which of the following is considered a hazard in insurance?
| | | | | | | | |
A. Fire destroying a building
| | |
B. Negligence by an insured | | |
C. Smoking cigarettes |
D. Death of the insured | | |
