State RegulationsTX specificDifficulty 3/5
A Texas insurer charges two applicants of the same age, sex and health class different premiums for the same individual life policy. Under TIC 544.002, when is such a rate difference permitted?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
TIC 544.002 prohibits unfair discrimination between insureds who are in the same class and represent essentially the same hazard, but it does not require identical rates. A difference is allowed when it is based on sound actuarial principles or on actual or reasonably anticipated experience. A marketing preference, the group-versus-individual setting or a flat rule that everyone pays the same all miss the point: the test is whether the classification is actuarially supported.
Why the other options are wrong
- A) Internal marketing approval is not an actuarial basis for charging different rates.
- C) The actuarial exception is not confined to single-employer group business.
- D) The statute bars unfair discrimination, not every difference that is actuarially justified.
Memory hook
Same class, same hazard: differ only on actuarial grounds.