Texas Insurance Licensing Self-Study Guide: Life, Accident, Health, Property & Casualty

Vocabulary flashcards covering core life, health, property, and casualty insurance concepts, along with Texas-specific insurance regulations and statutes.

Level Term Insurance

Temporary death-benefit protection for a defined period, generally without cash value.

Decreasing Term Life

Term coverage whose death benefit declines on a schedule, often matching a reducing debt.

Annually Renewable Term

One-year term protection renewable annually, where premiums generally rise as the insured ages.

Convertible Term

A policy feature permitting the change of eligible term coverage to permanent life insurance without new evidence of insurability during the conversion window.

Whole Life Insurance

Permanent insurance providing a permanent death benefit plus scheduled cash-value growth and generally fixed premiums.

Limited-Pay Whole Life

Permanent protection with scheduled premiums paid over a shortened number of years.

Single-Premium Life

Permanent life insurance paid for in full with one large premium at issue.

Universal Life Insurance

Life insurance that separates insurance charges from an accumulation component and often allows flexible premiums and adjustable benefits, subject to policy rules and adequate cash value.

Variable Life Insurance

Life insurance in which the policyowner bears the investment risk, with cash value depending on separate-account investment performance.

Indexed Universal Life

Universal life insurance where credited interest may be linked to an index formula, subject to caps, floors, and costs.

Immediate Annuity

An annuity designed to begin income payments shortly after a lump-sum premium.

Annuitization

The process of converting an annuity value into a stream of periodic payments under a chosen option.

Life-Only Annuity Payment Option

An annuity payout option providing income for the annuitant's life, usually with no remaining payment after death.

Joint Life Insurance

A policy covering multiple lives that generally pays the death benefit on the first insured death.

Survivorship Life Insurance

A policy covering multiple lives that pays the death benefit after the second or last covered death.

Waiver-of-Premium Rider

A rider that waives required premiums after the insured meets the rider's qualifying disability terms.

Guaranteed Insurability Rider

A rider allowing the purchase of additional coverage at specified times without new medical underwriting.

Primary Beneficiary

The first person or entity designated to receive policy death proceeds.

Contingent Beneficiary

A backup beneficiary designated to receive proceeds if the primary beneficiary does not qualify.

Revocable Beneficiary

A beneficiary designation that the policyowner may generally change without obtaining the beneficiary's approval.

Irrevocable Beneficiary

A beneficiary whose protected interest generally requires their consent for certain policy changes.

Entire-Contract Clause

A provision identifying that the policy and the attached application or amendments constitute the entire agreement.

Free-Look Provision

An initial review period during which the policy can be returned for a refund under applicable rules.

Reduced Paid-Up Insurance

A nonforfeiture option using available cash value to buy a smaller permanent paid-up death benefit.

Extended Term Insurance

A nonforfeiture option applying available cash value to purchase term coverage for a limited period.

Automatic Premium Loan Provision

A provision that, if elected and available, borrows against policy cash value to cover an overdue premium.

Incontestability Clause

A provision that limits certain insurer challenges to policy validity after a specified period, subject to exceptions.

Misstatement-of-Age Provision

A clause stating that if the insured's age was misstated, the benefit is adjusted to the amount the correct premium would have purchased.

Insurable Interest (Life)

A relationship requiring a legitimate interest in the insured's life, which generally must exist at policy inception when applied for and issued.

Field Underwriting

The agent's collection and reporting of information relevant to an insurer's risk assessment.

Representation

An applicant's statement of fact made to the best of their knowledge and belief.

Conditional Receipt

A receipt issued with an application that may make coverage effective only when stated conditions are satisfied.

Stranger-Originated Life Insurance (STOLI)

Arrangements generally involving investors who purchase life insurance on individuals without legitimate insurable interest.

Contributory Group Life Plan

A group insurance plan where covered employees pay some or all of their premiums.

Noncontributory Group Life Plan

A group insurance plan paid entirely by the employer.

Life Settlement

The sale of an existing life insurance policy to an outside purchaser for an amount greater than surrender value but less than the death benefit.

Modified Endowment Contract (MEC)

A life contract failing certain premium limits, resulting in special tax treatment on withdrawals and loans.

Business Overhead Expense (BOE) Policy

Coverage that helps pay covered fixed business operating expenses while the owner is disabled.

Health Maintenance Organization (HMO)

A managed-care entity that emphasizes coordinated care through a defined provider network and plan rules.

Preferred Provider Organization (PPO)

A managed-care plan offering preferred network providers, often with different cost sharing when care is received outside the network.

Point-of-Service (POS) Plan

A managed-care arrangement combining features of both HMO and PPO designs.

High-Deductible Health Plan (HDHP)

A health plan with higher deductibles that may qualify eligible participants to contribute to a Health Savings Account (HSA).

Health Savings Account (HSA)

A tax-advantaged account owned by an eligible individual to pay for qualifying medical expenses.

Activities of Daily Living (ADLs)

Common daily self-care tasks such as bathing, dressing, eating, toileting, transferring, and continence.

COBRA

A federal law providing eligible continuation of employer-sponsored group health coverage after qualifying events.

Elimination Period

The waiting time after a covered disability begins before income benefits become payable.

Probationary Period

A waiting interval at policy inception before coverage for certain types of illness becomes effective.

Guaranteed Renewable

A renewability provision requiring the insurer to renew coverage as specified, though premiums may change on a class-wide basis.

Noncancelable Health Coverage

A provision under which the insurer cannot cancel the policy or raise the stated premium as long as the insured complies with contract terms.

Medicare Part A

Hospital insurance under Medicare covering certain inpatient services and qualifying related care.

Medicare Part B

Medical insurance under Medicare covering many physician and outpatient services.

Medicare Part C

Medicare Advantage plans offered through approved private health insurers.

Medicare Part D

Prescription-drug coverage provided through eligible private plans approved by Medicare.

Medicaid

A jointly funded federal-state program providing health coverage to qualifying low-income individuals.

Medigap

Private supplemental coverage designed to pay certain deductibles, copayments, and coinsurance under Original Medicare.

Contract of Adhesion

A contract largely drafted by one party (the insurer) and accepted or declined as a whole by the other party (the applicant).

Unilateral Contract

A contract in which only one party (the insurer) makes a legally enforceable promise to pay if the insured satisfies policy conditions.

Aleatory Contract

A contract in which the values exchanged between the parties may be unequal and depend on an uncertain event.

Domestic Insurer (Texas)

An insurance company legally organized and chartered under Texas law.

Foreign Insurer

An insurer legally organized under the laws of another U.S. state or jurisdiction.

Alien Insurer

An insurer legally organized under the laws of a country outside the United States.

Texas General Lines Continuing Education (CE) Requirement

A requirement to complete $24$ hours of approved continuing education every two-year renewal period, including at least $3$ ethics hours, with at least $12$ hours in classroom or classroom-equivalent formats.

Misrepresentation

Communicating a materially false, deceptive, or misleading statement about coverage, benefits, or policy terms.

Commingling

The improper mixing of client insurance funds held in a fiduciary trust capacity with personal or agency operating funds.

Texas Life Policy Grace Period

A required provision noted by TDI providing $31$ days to pay an overdue premium before the life policy lapses.

Texas Life Policy Free-Look Period

A required consumer review period described by TDI generally ranging from at least $10$ to $20$ days depending on the contract and product.

Evidence of Coverage (EOC)

The document summarizing a Texas HMO enrollee's covered health-care services, limitations, and operational rules.

HO-3 Form

A common owner-occupied homeowners form generally combining open-peril dwelling protection with named-peril personal-property coverage.

HO-4 Form

A homeowners policy form designed for tenants and renters, principally covering personal belongings and personal liability.

HO-6 Form

A homeowners policy form designed for condominium unit owners covering unit real property and personal belongings.

DP-1 Form

A basic dwelling property policy covering limited named perils unless broadened by specific endorsement.

DP-3 Form

A special dwelling property policy generally providing broader open-peril coverage for dwelling structures compared to basic forms.

Businessowners Policy (BOP)

A commercial package policy typically combining eligible small-business property and liability coverages into one bundle.

Peril

The specific cause of a property loss, such as fire, lightning, wind, or theft.

Hazard

A condition or situation that increases the probability or severity of a loss.

Moral Hazard

A hazard arising from intentional dishonesty, character defects, or a deliberate willingness to cause a loss.

Morale Hazard

A hazard arising from carelessness, negligence, or indifference toward potential loss.

Pure Risk

A risk situation involving only the chance of loss or no loss, without any possibility of financial gain.

Speculative Risk

A risk situation involving an opportunity for either loss or gain, such as business ventures or market investments.

Actual Cash Value (ACV)

A loss valuation method commonly calculated as replacement cost minus applicable physical depreciation.

Replacement Cost

The cost to replace damaged or destroyed property with comparable materials and quality without deducting depreciation.

Principle of Indemnity

A fundamental insurance principle that restores an insured to their approximate pre-loss financial condition without allowing a profit.

Binder

A temporary written or oral agreement providing immediate insurance coverage pending formal policy issuance.

Subrogation

The transfer of an insured's right of legal recovery to the insurer following payment of a covered claim.

Appraisal Clause

A policy procedure used to resolve disputes between the insurer and insured regarding the dollar amount of a property loss.

CGL Coverage A

The portion of a Commercial General Liability policy covering bodily injury and property damage liability resulting from an occurrence.

Occurrence Policy

A liability policy triggered by covered injury or property damage that takes place during the policy period, regardless of when the claim is filed.

Claims-Made Coverage

A liability policy triggered by a claim first made and reported during the policy period or extended reporting period, provided the act occurred on or after the retroactive date.

Retroactive Date

A specified date in a claims-made policy before which any wrongful act, error, or omission is excluded from coverage.

Collision Coverage

Auto physical damage coverage for losses resulting from impact with another vehicle or object, or by vehicle overturning.

Other-Than-Collision Coverage

Auto physical damage coverage protecting against noncollision perils such as theft, fire, hail, flood, vandalism, or falling objects.

Surety Bond

A three-party contract in which the surety financially guarantees to the obligee that the principal will perform a designated duty.

Fidelity Bond

A bond designed to protect an employer against financial loss caused by dishonest or fraudulent acts of covered employees.

Errors and Omissions (E&O) Insurance

Professional liability insurance covering financial losses caused by negligent acts, errors, or omissions in rendering professional services.

Coinsurance (Property)

An insurance-to-value policy condition requiring an insured to carry coverage equal to a specified percentage of the property value to avoid a penalty on partial losses.

Texas Minimum Auto Liability Limits

Statutory liability limits represented as $30/60/25$, signifying $\$30{,}000$ bodily injury per person, $\$60{,}000$ bodily injury per accident, and $\$25{,}000$ property damage per accident.

Personal Injury Protection (PIP)

Auto coverage providing designated medical and disability benefits without regard to fault, subject to mandatory offering and written rejection rules in Texas.

Texas Automobile Insurance Plan Association (TAIPA)

An assigned-risk plan offering state minimum auto liability coverage to drivers who have been turned down by at least $2$ insurers within the previous $60$ days.

Texas FAIR Plan

A state-created residential property insurance market of last resort for eligible homeowners who cannot obtain coverage in the standard voluntary market.

Texas Windstorm Insurance Association (TWIA)

A residual property market providing windstorm and hail insurance to eligible coastal county property owners unable to obtain private coverage.