State RegulationsTX specificDifficulty 2/5
Which statement about the Texas Life and Health Guaranty Association is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under TIC Chapter 463, a person may not use the existence of the Texas Life and Health Guaranty Association in selling, soliciting, or inducing the purchase of insurance. The Association exists to pay claims of an insolvent insurer, not to serve as a selling point. Practical consequence: presenting the Association as a safety net behind a sale is itself a violation, separate from any license discipline that follows from the same conduct.
Why the other options are wrong
- A) There is no disclosure safe harbor; using the Association's existence as an inducement is prohibited even when the limits are stated accurately.
- C) Coverage requires that the policyowner be a Texas resident on the date of liquidation; the Association is not a national guaranty fund.
- D) The Association pays only up to the statutory per-life limits and only for covered policies, so it does not make policyowners whole.
Memory hook
The Guaranty Association pays claims and is never a sales pitch.