State RegulationsTN specificDifficulty 1/5
When a life insurance producer knows that a proposed sale will replace an applicant's existing life insurance, what is the producer's baseline duty under Tennessee's replacement rules?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under Tenn. Comp. R. & Regs. 0780-1-24-.05, a producer who knows or should know that a life sale is a replacement must treat it as such: the producer completes the required disclosure so the applicant understands the consequences of exchanging coverage, such as new surrender terms and a new contestable period. The Tennessee Department of Commerce & Insurance enforces these producer duties in replacement transactions.
Why the other options are wrong
- B) Proceeding without disclosure defeats the rule's whole purpose; the replacement duties attach precisely because the applicant's existing coverage is being disturbed.
- C) The producer's duty is to inform, not to push surrender; steering the applicant to drop the old policy is the kind of conduct the replacement rules are designed to police.
- D) There is no requirement that the existing insurer pre-approve the presentation of a proposal; approval is not part of the producer's disclosure duties.
Memory hook
Know it's a replacement? Name it, notice it — disclosure comes before the sale.