Texas Life Agent Practice Exam

What action is NOT allowed under the definition of controlled business in Texas?

1. Insuring family members

2. Insuring oneself

3. Insuring employees

4. Only selling to the public

The correct answer is: Only selling to the public

The definition of controlled business in Texas refers to the practice of an agent selling insurance primarily to individuals or entities with whom they have a close personal or financial relationship, such as family members, themselves, or employees. These transactions can create a conflict of interest and raise ethical concerns, which is why regulations are in place to limit the extent of controlled business. The option highlighting “only selling to the public” is not allowed under the definition of controlled business because controlled business specifically involves situations where the agent has a personal or financial relationship with the insured. Therefore, solely selling insurance to the general public does not constitute controlled business, as it involves a more open and less restricted market interaction. Selling to the public should encompass transactions that do not primarily benefit the agent's interests or relationships, thereby aligning with ethical practices in insurance sales. This distinction ensures that agents maintain a fair marketplace, avoiding the potential pitfalls of favoring friends, family, or self-interests, which could undermine the integrity of the insurance profession.