State RegulationsTN specificDifficulty 2/5
Which of the following transactions is exempt from Tennessee's life replacement requirements under Tenn. Comp. R. & Regs. 0780-1-24?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Tenn. Comp. R. & Regs. 0780-1-24 exempts certain transactions from the replacement requirements, including credit life insurance, where coverage is tied to a specific debt and the displacement concerns the rule targets do not arise. The Tennessee Department of Commerce & Insurance keeps the replacement machinery focused on transactions in which policyowners might be induced to displace sound personal coverage.
Why the other options are wrong
- A) Using whole life values to fund a new universal life policy is the core displacement the rule governs.
- B) Converting to reduced paid-up status while buying new coverage is expressly within the replacement definition.
- D) Term-for-term replacement across insurers is a classic replacement scenario subject to the rule.
Memory hook
Credit life sits outside: the debt ends and the coverage ends — no displacement game.