State RegulationsTX specificDifficulty 2/5
When a Texas insurer receives an application involving the replacement of an existing life policy, what must the replacing insurer do?
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
Under TIC 1114.051-.057, the replacing insurer must give written notice to each existing insurer whose contract may be replaced, advising of the proposed replacement and providing the notice and sales material used so the existing insurer can inform and conserve its policyowner. Practically, this gives the existing insurer a chance to point out values or benefits the applicant may be giving up, which is why a Texas agent must identify every contract that will be affected.
Why the other options are wrong
- A) is wrong because the replacing insurer does not handle surrender proceeds belonging to another insurer's contract.
- B) is wrong because there is no department approval step before a replacement policy may be issued.
- C) is wrong because no release from the existing insurer is required; the statutory duty is to notify that insurer.
Memory hook
Replacing insurer writes to the existing insurer.