State RegulationsTX specificDifficulty 2/5
Under TIC 1153.004, what limit applies to the amount of credit life insurance that may be written in connection with a Texas loan?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under TIC 1153.004, credit life insurance may be written only in an amount that does not exceed the total amount repayable under the contract of indebtedness, so the coverage is tied to the debt it secures and ends when the debt is satisfied. The debtor is the insured and the creditor is the beneficiary, and the creditor may not require more coverage than the debt supports. That is why an agent must match the coverage amount to the loan balance rather than selling a larger face amount.
Why the other options are wrong
- B) TIC 1153.004 sets an upper limit tied to the amount repayable under the loan; it does not require a minimum equal to the outstanding balance.
- C) The creditor's lending policy does not displace the statutory limit imposed by TIC 1153.004.
- D) Credit life coverage is tied to the debt and terminates when the loan is paid in full rather than continuing afterward.
Memory hook
Credit life covers the debt, never more: TIC 1153.004.