State RegulationsTN specificDifficulty 2/5
A Tennessee life producer recommends that a consumer exchange an existing deferred annuity for a new one with a longer surrender-charge period. Which statement about the applicable Tennessee rule is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Tenn. Comp. R. & Regs. 0780-01-86 reaches recommendations to purchase annuity contracts and recommendations to exchange them, so advising an exchange of one deferred annuity for another is squarely within its best-interest requirements. The Tennessee Department of Commerce & Insurance treats exchanges as recommendation events because they can strip surrender-charge protection and benefits from the consumer.
Why the other options are wrong
- A) The rule contains no retirement-age trigger; its obligations follow the recommendation, not the consumer's age.
- B) Limiting the rule to initial purchases would leave exchanges unregulated, which contradicts the rule's coverage of annuity exchanges.
- D) The rule is not confined to group or employer-sponsored sales; it governs producer recommendations to consumers generally.
Memory hook
Buy or swap — the best-interest rule follows the recommendation either way.