State RegulationsTN specificDifficulty 1/5
Under Tennessee's life replacement rule, Tenn. Comp. R. & Regs. 0780-1-24, which of the following best describes a 'replacement'?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Tenn. Comp. R. & Regs. 0780-1-24 defines replacement to include transactions in which new life insurance displaces an existing policy through lapse, surrender, conversion to reduced paid-up or extended term, or use of existing values to fund the new contract. The definition matters because replacement triggers the notice and documentation duties the Tennessee Department of Commerce & Insurance supervises.
Why the other options are wrong
- B) A first-time sale with no existing policy to displace is new business, not replacement.
- C) Changing the producer of record does not affect the policy itself, so nothing is replaced under the rule.
- D) Claim payment occurs after the policy has done its work and involves no new purchase.
Memory hook
Old policy out (lapse, surrender, paid-up) to bring a new policy in = replacement.