Texas Guaranty Association & Insurer Regulation — Texas Insurance Law — Life & Health Practice Test
21 questions in this topic · 21 drawn at random this round
How is the Texas Life and Health Insurance Guaranty Association generally funded to pay obligations of insolvent member insurers?
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This Texas Insurance Law — Life & Health Texas Guaranty Association & Insurer Regulation practice set has 21 practice questions based on the official exam materials, each with an instant explanation.
Sample questions
Three questions from the Texas Guaranty Association & Insurer Regulation bank with the correct answer and an explanation. The practice quiz above draws 21 questions at random from the same bank.
What is the primary purpose of the Texas Life and Health Insurance Guaranty Association?
- To protect Texas policyholders against loss when a member life or health insurer becomes insolvent — Correct answer
- To set the premium rates every life and health insurer must charge in Texas
- To replace the need for individual insurers to hold financial reserves
- To act as the state agency that issues agent licenses
Explanation: The Texas Life and Health Insurance Guaranty Association exists to protect policyholders, within statutory limits, against losses that arise when a member insurer is found insolvent. (Tex. Ins. Code §463.002)
Handbook: Texas Guaranty Association & Insurer Regulation — Guaranty Association Purpose
Which of the following is required for an insurer authorized to write life or health insurance in Texas?
- Membership in the Texas Life and Health Insurance Guaranty Association is mandatory as a condition of holding a certificate of authority for those lines — Correct answer
- Membership is optional and only large insurers typically join
- Only insurers domiciled in Texas must join; out-of-state insurers are exempt
- Membership is only required for insurers selling annuities, not life or health policies
Explanation: Participation in the guaranty association is a mandatory condition of authority for insurers writing life, annuity, or accident and health business in Texas — it is not optional. (Tex. Ins. Code §463.205)
Handbook: Texas Guaranty Association & Insurer Regulation — Membership Requirement
The Texas Life and Health Insurance Guaranty Association becomes obligated to act primarily when:
- A member insurer is declared insolvent and placed in liquidation — Correct answer
- A policyholder simply misses a premium payment
- An agent's license is revoked for misconduct
- A policyholder wants to cancel a policy for a refund
Explanation: The guaranty association's statutory role is triggered by the insolvency and liquidation of a member insurer, not by routine policyholder actions like a missed payment or a voluntary cancellation. (Tex. Ins. Code §§463.003(6), 463.253)
Handbook: Texas Guaranty Association & Insurer Regulation — What Triggers Coverage