TEXAS INSURANCE LICENSING EXAM – PRACTICE QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2026 Q&A | INSTANT
DOWNLOAD PDF.
Core Domains
- Insurance Regulation and Texas Statutes
- General Insurance Concepts and Principles
- Life Insurance Policies and Provisions
- Health and Accident Insurance Basics
- Property and Casualty Insurance Fundamentals
- Ethics and Professional Responsibility
- Marketing and Underwriting Practices
- Claim Settlement and Consumer Protection
Introduction
The Texas Insurance Licensing Exam is designed to evaluate the competency of
individuals seeking to enter the insurance industry. This comprehensive assessment
ensures that candidates possess the foundational knowledge and technical skills required
to protect consumers and uphold state standards. The exam structure features multiple-
choice and scenario-based questions that test both theoretical understanding and real-
world application. Candidates must demonstrate proficiency in state-specific regulations,
policy provisions, and ethical decision-making. By focusing on critical thinking, this exam
prepares prospective agents to navigate complex financial landscapes and provide
professional guidance to policyholders in the state of Texas.
SECTION ONE: QUESTIONS 1–100
, 1. Under the Texas Insurance Code, an agent’s license is considered to be the
property of:
A. The agent
B. The insurance company
🟢 C. The State of Texas
D. The appointing agency
🔴 RATIONALE: In Texas, insurance licenses are issued by the state and remain the
property of the State of Texas, as they represent a privilege granted by the regulatory
authority.
2. Which of the following best describes the principle of Indemnity?
A. To allow the insured to profit from a loss
🟢 B. To restore the insured to the same financial position as before the loss
C. To provide double recovery for a single loss
D. To ensure the insurer pays the full face value of the policy regardless of the loss
amount
🔴 RATIONALE: The purpose of indemnity is to compensate the insured for their
actual loss, preventing them from gaining financially from an insurance claim.
3. An applicant for a resident agent license in Texas must be at least how many
years of age?
A. 16
🟢 B. 18
,C. 19
D. 21
🔴 RATIONALE: Texas law requires that an individual must be at least 18 years old to
be eligible for an insurance agent license.
4. A policyholder intentionally burns down their own house to collect insurance
money. This is an example of a:
A. Physical hazard
B. Morale hazard
🟢 C. Moral hazard
D. Legal hazard
🔴 RATIONALE: A moral hazard refers to a conscious or intentional act by an
individual to cause a loss, often driven by dishonesty or a desire for financial gain.
5. In Texas, the Commissioner of Insurance is:
🟢 A. Appointed by the Governor
B. Elected by popular vote
C. Appointed by the State Senate
D. Selected by the National Association of Insurance Commissioners (NAIC)
🔴 RATIONALE: The Texas Commissioner of Insurance is appointed by the Governor
for a two-year term, subject to confirmation by the State Senate.
6. Which type of authority is NOT specifically written in an agent's contract but is
required for the agent to do their job?
, A. Express authority
🟢 B. Implied authority
C. Apparent authority
D. Fiduciary authority
🔴 RATIONALE: Implied authority consists of actions that are not explicitly stated in
the contract but are necessary to carry out the duties specified in the express
authority.
7. A Life Insurance policy where the death benefit and cash value fluctuate based
on the performance of a separate investment account is known as:
A. Whole Life
B. Universal Life
🟢 C. Variable Life
D. Term Life
🔴 RATIONALE: Variable Life policies allow the policyholder to allocate premiums into
separate accounts, meaning the values are tied to investment market performance.
8. Under the Unfair Claims Settlement Practices Act in Texas, an insurer must
acknowledge receipt of a claim within how many days?
A. 5 business days
B. 10 days
🟢 C. 15 days
D. 30 days
ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2026 Q&A | INSTANT
DOWNLOAD PDF.
Core Domains
- Insurance Regulation and Texas Statutes
- General Insurance Concepts and Principles
- Life Insurance Policies and Provisions
- Health and Accident Insurance Basics
- Property and Casualty Insurance Fundamentals
- Ethics and Professional Responsibility
- Marketing and Underwriting Practices
- Claim Settlement and Consumer Protection
Introduction
The Texas Insurance Licensing Exam is designed to evaluate the competency of
individuals seeking to enter the insurance industry. This comprehensive assessment
ensures that candidates possess the foundational knowledge and technical skills required
to protect consumers and uphold state standards. The exam structure features multiple-
choice and scenario-based questions that test both theoretical understanding and real-
world application. Candidates must demonstrate proficiency in state-specific regulations,
policy provisions, and ethical decision-making. By focusing on critical thinking, this exam
prepares prospective agents to navigate complex financial landscapes and provide
professional guidance to policyholders in the state of Texas.
SECTION ONE: QUESTIONS 1–100
, 1. Under the Texas Insurance Code, an agent’s license is considered to be the
property of:
A. The agent
B. The insurance company
🟢 C. The State of Texas
D. The appointing agency
🔴 RATIONALE: In Texas, insurance licenses are issued by the state and remain the
property of the State of Texas, as they represent a privilege granted by the regulatory
authority.
2. Which of the following best describes the principle of Indemnity?
A. To allow the insured to profit from a loss
🟢 B. To restore the insured to the same financial position as before the loss
C. To provide double recovery for a single loss
D. To ensure the insurer pays the full face value of the policy regardless of the loss
amount
🔴 RATIONALE: The purpose of indemnity is to compensate the insured for their
actual loss, preventing them from gaining financially from an insurance claim.
3. An applicant for a resident agent license in Texas must be at least how many
years of age?
A. 16
🟢 B. 18
,C. 19
D. 21
🔴 RATIONALE: Texas law requires that an individual must be at least 18 years old to
be eligible for an insurance agent license.
4. A policyholder intentionally burns down their own house to collect insurance
money. This is an example of a:
A. Physical hazard
B. Morale hazard
🟢 C. Moral hazard
D. Legal hazard
🔴 RATIONALE: A moral hazard refers to a conscious or intentional act by an
individual to cause a loss, often driven by dishonesty or a desire for financial gain.
5. In Texas, the Commissioner of Insurance is:
🟢 A. Appointed by the Governor
B. Elected by popular vote
C. Appointed by the State Senate
D. Selected by the National Association of Insurance Commissioners (NAIC)
🔴 RATIONALE: The Texas Commissioner of Insurance is appointed by the Governor
for a two-year term, subject to confirmation by the State Senate.
6. Which type of authority is NOT specifically written in an agent's contract but is
required for the agent to do their job?
, A. Express authority
🟢 B. Implied authority
C. Apparent authority
D. Fiduciary authority
🔴 RATIONALE: Implied authority consists of actions that are not explicitly stated in
the contract but are necessary to carry out the duties specified in the express
authority.
7. A Life Insurance policy where the death benefit and cash value fluctuate based
on the performance of a separate investment account is known as:
A. Whole Life
B. Universal Life
🟢 C. Variable Life
D. Term Life
🔴 RATIONALE: Variable Life policies allow the policyholder to allocate premiums into
separate accounts, meaning the values are tied to investment market performance.
8. Under the Unfair Claims Settlement Practices Act in Texas, an insurer must
acknowledge receipt of a claim within how many days?
A. 5 business days
B. 10 days
🟢 C. 15 days
D. 30 days
