State RegulationsTN specificDifficulty 2/5
A producer narrows her recommendation to a single annuity because it pays her the highest first-year commission, even though comparable annuities would serve the consumer's retirement needs equally well or better. Under Tennessee's annuity rule, how is this conduct viewed?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Tenn. Comp. R. & Regs. 0780-01-86 requires a producer recommending an annuity to act in the consumer's best interest and to avoid letting the producer's own financial interest drive the recommendation. Selecting a product because it maximizes the producer's commission, when better options exist for the consumer, is precisely the self-dealing the Tennessee Department of Commerce & Insurance's best-interest rule forbids.
Why the other options are wrong
- A) Freedom to seek compensation ends where the best-interest standard begins; commission-driven selection is not a protected choice.
- B) Treating all annuities as interchangeable ignores the rule's demand that the recommendation actually serve the consumer's needs.
- C) The insurer's advance approval of a commission schedule has no bearing on whether the producer's motive violated the best-interest standard.
Memory hook
Biggest paycheck is not a suitability test — consumer interest outranks the commission.