State RegulationsTX specificDifficulty 2/5
Which arrangement for sharing a life insurance commission is permitted under the Texas commission sharing rules?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under TIC 4001.157 and TIC 4005.053-.054, commission sharing is lawful only between persons licensed for the type of insurance involved, and the receiving agent must hold the required license and appointment with the insurer. Every other option pays an unlicensed person or gives the policyowner a benefit not specified in the policy, which is rebating under TIC 541.056 and supports discipline under TIC 4005.101-.102.
Why the other options are wrong
- A) Passing part of a commission to the policyowner is rebating, an unlawful inducement not specified in the policy.
- C) An unlicensed out-of-state broker cannot receive a share of a Texas commission; the recipient must be licensed for that line.
- D) An unlicensed family member may not lawfully receive a share of an insurance commission, even for making the referral.
Memory hook
Licensed and appointed for that line: that is the whole test for splitting a commission.