State RegulationsTN specificDifficulty 2/5
A Tennessee producer tells a policyowner that her current life policy will pay nothing if she keeps it, and urges her to surrender it and buy a new policy from him, knowing the statement is false. Under T.C.A. § 56-8-104, misrepresentation to induce the lapse, forfeiture, exchange, conversion, or surrender of an insurance policy is:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
T.C.A. § 56-8-104 prohibits misrepresentations made to induce a policyowner to lapse, forfeit, exchange, convert, or surrender an existing policy, the conduct commonly taught as twisting. The producer's false claim that the current policy will pay nothing is a misrepresentation aimed at precisely that result, and the higher premium on the replacement only sharpens the motive. The Tennessee Department of Commerce & Insurance treats twisting as an unfair trade practice regardless of whether the policyowner ultimately acts on the false advice.
Why the other options are wrong
- A) Replacement activity becomes prohibited when it rests on misrepresentation designed to induce surrender; a richer premium makes the practice more, not less, suspect.
- B) The conduct is not confined to fiduciary-duty analysis; it is an enumerated misrepresentation under the unfair trade practices statute.
- D) The policyowner's freedom to decline does not authorize the false statement; the misrepresentation itself is the violation.
Memory hook
Twisting = lying to pry a policy loose: lapse, forfeit, exchange, convert, surrender.