A Texas producer replaces an existing individual life policy with a new one. Under the Texas free-look rule, what free-look period must the replacement policy provide?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 1114.053(e), whenever a transaction is a replacement, the replacing insurer must give the policy or contract owner notice of the right to return the policy or contract within 30 days of its delivery and to receive an unconditional full refund of all premiums or considerations paid, including any policy fees or charges (for a variable or market value adjusted contract, the cash surrender value plus fees). The longer window reflects the risk that a replacing policy is bought by surrendering an existing one; because the period runs from delivery, the producer should keep proof of the delivery date and of the replacement disclosures.
Why the other options are wrong
- A) Fifteen calendar days is the annuity free look triggered when the buyer's guide and disclosure are not provided at or before application (28 TAC 4.2311(a)); it is not the replacement figure.
- B) Ten days is the variable life free-look figure under 28 TAC 4.1504(3)(A)(v), not the replacement figure.
- D) Twenty days is the annuity rescission period under TIC 1116.002, not the replacement figure; a replacement requires at least 30 days from delivery.
Memory hook
Replacement buys thirty days, the longest free look in the Texas book.