Texas Life & Health: Texas Statutes — Life & Health Specific

Correct

The answer is C: 30 days

Medicare Supplement policies in Texas are required to have a free-look period of at least 30 days after delivery (Insurance Code §1652.155). This allows beneficiaries ample time to review their policy and return it for a full refund if they are not satisfied. Ten, 15, and 20 days all fall short of the required free-look period for Medicare Supplement policies.

Source: Insurance Code §1652.155

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 C: 30 days

Texas Insurance Code §1114.053(e) requires the replacing insurer to give the owner of a replacement policy the right to return it within 30 days of delivery for an unconditional full refund of premiums. Texas sets no statutory free look for an ordinary new life policy, and a new variable life contract must allow 10 days (28 TAC §3.804). Don't confuse 30 days with the 31-day group life conversion period (§1131.110).

Source: Insurance Code §1114.053(e) · Insurance Code §1131.110

Correct

The answer is A: Entire contract clause and incontestability clause

TIC Chapter 1101 requires a life insurance policy to contain certain provisions, including the entire contract clause (the policy, or the policy and the application, form the entire contract) and the incontestability clause (once in force for two years during the insured's lifetime, the policy cannot be contested except for nonpayment of premium). Others include the grace period, the adjustment for misstated age, policy loans (except on term policies) and nonforfeiture benefits. A suicide exclusion is not a required clause: §1101.055(b) only allows a policy to pay less than face value when death is by the insured's own hand. Rebating and twisting are unfair trade practices, not policy clauses.

Source: Insurance Code §1101.055(b)

Correct

The answer is A: The insurer can contest a material misstatement within the 2-year period.

During the first two years, the incontestable clause (Insurance Code §1101.006) does not yet protect the policy, so the insurer can contest it over a material misstatement such as an undisclosed heart attack. A misrepresentation defeats recovery only if it is of a material fact and affects the risks assumed (§705.051), and Texas courts also require the insurer to prove the applicant intended to deceive, whether or not the policy is still contestable (American National Ins. Co. v. Arce, Tex. 2023). If the insurer proves its case, it rescinds the policy and refunds the premiums. After two years, §705.104 limits the defense to a misrepresentation shown to be material and intentionally made, or one the insurer had already given notice of rescinding over.

Source: Insurance Code §1101.006 · Insurance Code §705.051 · Insurance Code §705.104