State RegulationsTX specificDifficulty 2/5
A licensed Texas agent takes an application for a life policy that may replace existing coverage. What must the agent do at that point?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 1114.051-.057, the agent must obtain with or as part of the application the applicant's signed statement as to whether the new coverage will replace existing coverage, present and leave with the applicant the required replacement notice, and submit the signed statement, the notice and any sales proposal used to the replacing insurer with the application. Practically, these steps must be completed when the application is taken; a Texas agent who delivers the disclosures only after the policy is issued has already violated the chapter.
Why the other options are wrong
- A) is wrong because the free-look right is a separate protection and does not substitute for the replacement disclosures.
- B) is wrong because the notice duty arises at the time of the application, not after the insurer makes its own determination.
- D) is wrong because no release from the existing insurer is required; the duty is disclosure to the applicant and notice to the existing insurer by the replacing company.
Memory hook
At the application: statement signed, notice left, copies submitted.