State RegulationsTX specificDifficulty 2/5
A Texas agent describes a level term life policy as one that builds a cash value the insured may borrow against. Which prohibited practice does this describe?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under TIC 541.051 and 28 TAC 21.4, a person may not make, issue, or circulate a statement that misrepresents the terms of a policy or the benefits or advantages it promises. Describing a term policy as though it carried a cash value misstates both the terms and the benefits. Practical consequence: the misrepresentation is a prohibited trade practice even if the applicant suffers no financial loss, and it is also grounds for license discipline.
Why the other options are wrong
- A) Defamation under TIC 541.053 concerns statements that are false, maliciously critical of, or derogatory to an insurer's financial condition, not inaccurate descriptions of one's own product.
- C) Unfair discrimination concerns treating insureds of the same class differently as to rates or benefits, not giving one applicant wrong information.
- D) Boycott, coercion, and intimidation concern restraining trade or compelling conduct; a false product description is misrepresentation.
Memory hook
Wrong words about your own policy equals misrepresentation.