TEXAS LIFE AND HEALTH RELIABLE EXAMS 2025/2026
QUESTIONS AND SOLUTIONS GRADED A+
✔✔commissioner may also do this: - ✔✔suspend the license for up to 1 year
issue a cease and desist order from activity determined to be a violation
order the licensee to pay an administrative penalty
direct the licensee to make restitution to each tx resident or insured in the amount, form,
and within the period specified by commissioner
resolve a matter informally by consent order, an agreed settlement, stipulation, or
default
deny an original application for licensure or an application for license renewal
✔✔commissioner does not have the power to - ✔✔imprison any person in violation of
insurance laws
✔✔cease and desist orders - ✔✔if commissioner finds an authorized person is in
violation of insurance laws, commissioner may issue a cease and desist order
order must contain a statement of the charges and it must be served by registered or
certified mail, return receipt requested, to the the affected person's last known address
if a health benefit plan issuer fails to comply order, the commissioner may revoke or
suspend the issuer's certificate of authority or other authorization to operate a health
benefit plan in TX
✔✔request for hearing - ✔✔person affected by order is entitled to request a hearing to
contest the order
person must request hearing not later than 60 days after the date on which person
receives the order. a request to contest must:
- be in writing
- directed to the commissioner
- state the grounds for the request to set aside or modify the order
✔✔hearing - ✔✔must be held not later than 30 days after the date the commissioner
receives the request for a hearing, unless the parties mutually agree to a later hearing
date
✔✔penalties agent - ✔✔an agent who violates a cease and desist order may be subject
to an administrative fine and/or license suspension or revocation
,✔✔contested case - ✔✔any action that has been referred by the TDI to the state office
of administrative hearings
when its been instituted, the respondent (who may be appealing a decision) MUST
- within 20 days of the date that notice of a hearing is provided, file a written answer or
plea
if they dont file a written response to the notice, the scheduled hearing may be
cancelled and the commissioner of insurance may grant relief set out in the notice of the
hearing, including revocation of license by default
this may also occur if a written response is filed but the respondent fails to attend the
hearing
✔✔certificate of authority - ✔✔insurance company must submit application for certificate
of authority
if dept finds applicant complied w state law, it will approve application and issue COA
authorizing insurer to engage in business of insurance
when issued, it's effective until suspended or revoked and must state the specific lines
of insurance for which insurer is authorized to transact business
authorized insurers required to file annual statement w dept
failure to file annual statement as required by law subjects insurer to suspension or
revocation of COA
if dept issues denial or disapproval of application for COA, applicant may request a
hearing
- comissioner must request a hearing date no later than 30 DAYS after applicant's
request for hearing
✔✔modify or revoke certificate of authority - ✔✔commissioner may revoke or modify an
insurer's COA if insurer doesnt meet the reqs of law necessary for granting the issuance
of a COA
before doing so, commissioner must provide insurer with at least 10 DAYS advance
WRITTEN notice before such revocation or modification. notice MUST state reason for
action
✔✔transacting insurance - ✔✔involves activing relating to the business of insurance,
including execution of an insurance contract and the transaction of matters relating to
the contract
,- issuing or proposing to issue, as an insurer, an insurance contract
- taking or receiving of an insurance application
- receiving or collecting any consideration for insurance, including a premium,
commission, membership fee, or assessment
- issuing or delivering an insurance contract
- directly or indirectly acting as an insurance producer or otherwise representing an
insurer
✔✔insurance contracts w/ unauthorized insurers - ✔✔an insurance contract effective in
TX and entered into by an unauthorized insurer is unenforceable by the insurer
if a loss is sustained, both unauthorized insurer and agent who assisted, directly or
indirectly, in the sale of the contract, are liable to the insure for the amount of a claim or
loss under the terms of the contract.
if the unauthorized insurer fails to pay the claim or loss, the agent is responsible for the
full amount
✔✔domestic insurer - ✔✔organized under the laws of TX, whether it is admitted to do
business in TX
✔✔foreign insurer - ✔✔organized under the laws of another US jurisdiction, whether it is
admitted to do business in TX
✔✔alien insurer - ✔✔organized under the laws of a jurisdiction outside of the US,
whether it is admitted to do business in TX
✔✔stock insurer - ✔✔owned by the company's stockholders or shareholders and issues
non-participating policies
directors and officers of the company manage the company's operations and are
elected by stockholders
when the directors declare the issuance of dividends, which are a taxable return of
profit, they are paid to the stockholders
✔✔mutual insurer - ✔✔owned by the company's policyholders, may be referred to as
members, and issues participating policies
companys BOD manages its operations and the boards members are elected by
policyholders
when directors declare issuance of dividends, which are nontaxable return of profit, they
are paid to the policyholders
, ✔✔agent - ✔✔a person authorized and licensed to transact insurance on behalf of an
insurer, and includes any other person who performs the acts of an agent (oral, written
or electronic communication) by soliciting, negotiating, and procuring insurance or
collecting insurance and annuity policy premiums
✔✔an agent is NOT - ✔✔a regular salaried employee or officer who:
- devotes substantially all of their time to activities other than solicitation of insurance
applications
- doesnt receive a commission or other compensation directly from the sale of insurance
- doesnt solicit or accept insurance applications from the public
an employer, employee, or trustee engaged in the administration or operation of an
employee benefits plan if not directly compensated by the insurer issuing the contracts
✔✔dept will issue an agent license if the applicant - ✔✔- is at least 18 years of age
- hasnt committed an act for which a license may be denied
- submitted the application, appropriate fees, and any other required info
-passed a licensing exam within the past 12 months, an individual has 1 year from
passing the licensing exam to apply for a license
dept may not issue license as an agent UNLESS its determined that applicant intends to
be actively engaged in the soliciting or writing of insurance for the general public and
actively engaged in the business of insurance
✔✔controlled business prohibition - ✔✔prohibited to license an applicant who has the
intent to engage in the business of insurance principally to handle business that the
applicant controls only through ownership, mortgage, family relationship or employment
applicant must have the intent to engage in business in which, in any calendar year, at
least 25% of the total volume of premiums is derived from persons other than the
business controlled by the license applicant
✔✔issuance of an agency license to a corporation or partnership - ✔✔dept will issue an
agency license if following has been determined:
- the corp or partnership is organized under the laws of the state and authorized under
the corp or partnership to act as an agent
- at least one officer, active partner or principal employee of the corporation or
partnership must be individually licensed by the dept separate from the entity for the
same or greater line of authority as the agency
- all persons transacting insurance are licensed individually and separately from the
agency
- the corp or partnership has ability to pay any amount up to 25k that it is legally
obligated to pay to a customer based on negligent act, error, or omission
- the corp or partnership intends to be actively engaged in the solicitation or writing of
insurance for the general public and is actively enged in the business of insurance
QUESTIONS AND SOLUTIONS GRADED A+
✔✔commissioner may also do this: - ✔✔suspend the license for up to 1 year
issue a cease and desist order from activity determined to be a violation
order the licensee to pay an administrative penalty
direct the licensee to make restitution to each tx resident or insured in the amount, form,
and within the period specified by commissioner
resolve a matter informally by consent order, an agreed settlement, stipulation, or
default
deny an original application for licensure or an application for license renewal
✔✔commissioner does not have the power to - ✔✔imprison any person in violation of
insurance laws
✔✔cease and desist orders - ✔✔if commissioner finds an authorized person is in
violation of insurance laws, commissioner may issue a cease and desist order
order must contain a statement of the charges and it must be served by registered or
certified mail, return receipt requested, to the the affected person's last known address
if a health benefit plan issuer fails to comply order, the commissioner may revoke or
suspend the issuer's certificate of authority or other authorization to operate a health
benefit plan in TX
✔✔request for hearing - ✔✔person affected by order is entitled to request a hearing to
contest the order
person must request hearing not later than 60 days after the date on which person
receives the order. a request to contest must:
- be in writing
- directed to the commissioner
- state the grounds for the request to set aside or modify the order
✔✔hearing - ✔✔must be held not later than 30 days after the date the commissioner
receives the request for a hearing, unless the parties mutually agree to a later hearing
date
✔✔penalties agent - ✔✔an agent who violates a cease and desist order may be subject
to an administrative fine and/or license suspension or revocation
,✔✔contested case - ✔✔any action that has been referred by the TDI to the state office
of administrative hearings
when its been instituted, the respondent (who may be appealing a decision) MUST
- within 20 days of the date that notice of a hearing is provided, file a written answer or
plea
if they dont file a written response to the notice, the scheduled hearing may be
cancelled and the commissioner of insurance may grant relief set out in the notice of the
hearing, including revocation of license by default
this may also occur if a written response is filed but the respondent fails to attend the
hearing
✔✔certificate of authority - ✔✔insurance company must submit application for certificate
of authority
if dept finds applicant complied w state law, it will approve application and issue COA
authorizing insurer to engage in business of insurance
when issued, it's effective until suspended or revoked and must state the specific lines
of insurance for which insurer is authorized to transact business
authorized insurers required to file annual statement w dept
failure to file annual statement as required by law subjects insurer to suspension or
revocation of COA
if dept issues denial or disapproval of application for COA, applicant may request a
hearing
- comissioner must request a hearing date no later than 30 DAYS after applicant's
request for hearing
✔✔modify or revoke certificate of authority - ✔✔commissioner may revoke or modify an
insurer's COA if insurer doesnt meet the reqs of law necessary for granting the issuance
of a COA
before doing so, commissioner must provide insurer with at least 10 DAYS advance
WRITTEN notice before such revocation or modification. notice MUST state reason for
action
✔✔transacting insurance - ✔✔involves activing relating to the business of insurance,
including execution of an insurance contract and the transaction of matters relating to
the contract
,- issuing or proposing to issue, as an insurer, an insurance contract
- taking or receiving of an insurance application
- receiving or collecting any consideration for insurance, including a premium,
commission, membership fee, or assessment
- issuing or delivering an insurance contract
- directly or indirectly acting as an insurance producer or otherwise representing an
insurer
✔✔insurance contracts w/ unauthorized insurers - ✔✔an insurance contract effective in
TX and entered into by an unauthorized insurer is unenforceable by the insurer
if a loss is sustained, both unauthorized insurer and agent who assisted, directly or
indirectly, in the sale of the contract, are liable to the insure for the amount of a claim or
loss under the terms of the contract.
if the unauthorized insurer fails to pay the claim or loss, the agent is responsible for the
full amount
✔✔domestic insurer - ✔✔organized under the laws of TX, whether it is admitted to do
business in TX
✔✔foreign insurer - ✔✔organized under the laws of another US jurisdiction, whether it is
admitted to do business in TX
✔✔alien insurer - ✔✔organized under the laws of a jurisdiction outside of the US,
whether it is admitted to do business in TX
✔✔stock insurer - ✔✔owned by the company's stockholders or shareholders and issues
non-participating policies
directors and officers of the company manage the company's operations and are
elected by stockholders
when the directors declare the issuance of dividends, which are a taxable return of
profit, they are paid to the stockholders
✔✔mutual insurer - ✔✔owned by the company's policyholders, may be referred to as
members, and issues participating policies
companys BOD manages its operations and the boards members are elected by
policyholders
when directors declare issuance of dividends, which are nontaxable return of profit, they
are paid to the policyholders
, ✔✔agent - ✔✔a person authorized and licensed to transact insurance on behalf of an
insurer, and includes any other person who performs the acts of an agent (oral, written
or electronic communication) by soliciting, negotiating, and procuring insurance or
collecting insurance and annuity policy premiums
✔✔an agent is NOT - ✔✔a regular salaried employee or officer who:
- devotes substantially all of their time to activities other than solicitation of insurance
applications
- doesnt receive a commission or other compensation directly from the sale of insurance
- doesnt solicit or accept insurance applications from the public
an employer, employee, or trustee engaged in the administration or operation of an
employee benefits plan if not directly compensated by the insurer issuing the contracts
✔✔dept will issue an agent license if the applicant - ✔✔- is at least 18 years of age
- hasnt committed an act for which a license may be denied
- submitted the application, appropriate fees, and any other required info
-passed a licensing exam within the past 12 months, an individual has 1 year from
passing the licensing exam to apply for a license
dept may not issue license as an agent UNLESS its determined that applicant intends to
be actively engaged in the soliciting or writing of insurance for the general public and
actively engaged in the business of insurance
✔✔controlled business prohibition - ✔✔prohibited to license an applicant who has the
intent to engage in the business of insurance principally to handle business that the
applicant controls only through ownership, mortgage, family relationship or employment
applicant must have the intent to engage in business in which, in any calendar year, at
least 25% of the total volume of premiums is derived from persons other than the
business controlled by the license applicant
✔✔issuance of an agency license to a corporation or partnership - ✔✔dept will issue an
agency license if following has been determined:
- the corp or partnership is organized under the laws of the state and authorized under
the corp or partnership to act as an agent
- at least one officer, active partner or principal employee of the corporation or
partnership must be individually licensed by the dept separate from the entity for the
same or greater line of authority as the agency
- all persons transacting insurance are licensed individually and separately from the
agency
- the corp or partnership has ability to pay any amount up to 25k that it is legally
obligated to pay to a customer based on negligent act, error, or omission
- the corp or partnership intends to be actively engaged in the solicitation or writing of
insurance for the general public and is actively enged in the business of insurance
