State RegulationsTX specificDifficulty 1/5
A Texas agent's brochure tells prospects that their coverage is 'backed by the Texas Life and Health Insurance Guaranty Association' in order to reassure them about buying from a small insurer. Under TIC Chapter 463, how is that use of the Association treated?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under TIC Chapter 463 it is unlawful for any person to use the existence of the Texas Life and Health Insurance Guaranty Association in the sale, solicitation or inducement of insurance, or to state or imply that the Association guarantees the insurer's obligations. The Association is a safety net for insolvency, not a selling point, so accurate limits, an imagined disclosure duty or the insurer's financial rating all fail to make the reference lawful. Using it in marketing exposes the agent to license discipline.
Why the other options are wrong
- B) Stating the limits accurately does not turn an unlawful inducement into a lawful one.
- C) There is no duty to disclose the Association in solicitations; the statute points the other way.
- D) The insurer's financial rating is irrelevant to whether the Association may be used in marketing.
Memory hook
Guaranty Association: safety net, never a sales pitch.