A Texas business entity operates an insurance agency through which several licensed individuals solicit life and health insurance. Under TIC 4001.003 and 4001.006, what licensing is required?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 4001.003 and 4001.006, the licensing requirement attaches both to each person who acts as an agent and to the business entity that acts as an insurance agency in this state. The agency license and the individual agent licenses are separate instruments: the entity license does not cover the solicitation activities of unlicensed staff, and an individual's license does not authorize a business entity to hold itself out as an agency. In practice the agency must maintain its own license, and every individual who solicits, negotiates or sells must hold a current personal license.
Why the other options are wrong
- A) A business entity that acts as an agency in Texas must itself be licensed; relying solely on the personal licenses of its agents leaves the entity unlicensed.
- B) The entity's license does not permit unlicensed individuals to solicit; every person who acts as an agent must hold a personal license.
- D) There is no rule that an owner's license covers everyone else; each individual who solicits must be licensed in that person's own name.
Memory hook
Two licenses, always: the agency entity and each individual who solicits.