State RegulationsTX specificDifficulty 2/5
A Texas agent tells an applicant that because the transaction is governed by the replacement chapter, the department has determined the replacement is in the applicant's best interest. Is that correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under TIC 1114.001, the chapter's purpose is to regulate insurer and agent conduct, set minimum standards, and assure that the purchaser receives the information needed to judge the transaction; it does not provide department review or approval of the merits of an individual replacement. Practically, a Texas agent who suggests that compliance means official endorsement is misrepresenting the statute, and the applicant still bears the decision.
Why the other options are wrong
- B) is wrong because there is no department pre-approval of a replacement transaction before the new policy is issued.
- C) is wrong because the chapter applies to the replacement of life insurance policies and of annuity contracts alike.
- D) is wrong because a transaction that reduces existing values can still proceed after full disclosure; the chapter does not automatically bar it.
Memory hook
Compliance is disclosure, not a departmental seal of approval.