Texas Statutes — Life & Health Specific

Correct

The answer is D: A 'Notice Regarding Replacement' form.

Under Texas Insurance Code §1114.051, when an applicant has existing policies, the producer must present and read a notice regarding replacement no later than when the application is taken. The notice explains possible disadvantages of replacing, such as a new contestable period, a new suicide period and premiums based on an older age. The applicant and producer both sign it, and the producer submits a copy with the application to the replacing insurer, which must then notify the existing insurer.

Source: Insurance Code §1114.051

Correct

The answer is A: Illegal rebating.

Under the Texas Insurance Code, rebating means offering anything of value not specified in the policy as an inducement to buy it. The life rebating rules are now in Insurance Code Chapter 1702 (for policies issued or renewed from January 1, 2026), whose gift exemptions are narrow: promotional items, educational items, or traditional courtesies valued at $25 or less (§1702.104(5)), and noncash gifts within a commissioner-set limit that don't require a purchase (§1702.053). A $50 gift card offered as an incentive to buy the policy fits neither and is illegal rebating, whether or not it is disclosed. Offering a rebate is also grounds for license discipline (§4005.101), and the department may suspend or revoke the license (§4005.102).

Source: Insurance Code §1702.104(5) · Insurance Code §1702.053 · Insurance Code §4005.101 · Insurance Code §4005.102

Correct

The answer is A: Illegal rebating, even if it seems helpful.

Paying a client's premium out of personal funds is illegal rebating in Texas — this is one of the most commonly tested traps. Even seemingly generous acts that provide value not specified in the policy violate Texas Insurance Code rebating prohibitions. A small amount does not excuse it: the $25 exemption covers promotional items, educational items and traditional courtesies (§1702.104(5) for life policies from 2026), not paying part of a client's premium.

Source: Insurance Code §1702.104(5)

Correct

The answer is A: At or before the time of taking the application.

Texas Insurance Code §1114.051(c) requires the producer to present and read the notice regarding replacement to the applicant no later than the time the application is taken, so the applicant can weigh the decision before committing. The producer submits a copy with the application to the replacing insurer, which must notify the existing insurer within five business days (§1114.053(c)).

Source: Insurance Code §1114.051(c) · Insurance Code §1114.053(c)