Free Annuities Study Guide
Texas Life Agent exam — Annuities.
Annuity types, phases and taxation are covered in the national Annuities guide. Texas regulates annuity sales under TIC Chapter 1115 (best interest), 1116 (free look) and 1114 (replacement and exchange timing). It also requires annuity training and CE. This guide covers those rules.
Best-interest standard (TIC 1115.051 to 1115.056)
An agent recommending an annuity must act in the consumer's best interest, without putting the agent's or insurer's financial interest first. The agent meets the standard by satisfying four obligations:
| Obligation | Texas rule |
|---|---|
| Care (1115.0513) | Know the consumer's financial situation and needs. For an exchange or replacement, consider surrender charges, lost benefits, fees, whether the consumer substantially benefits, and any exchange in the past 60 months. |
| Disclosure (1115.0514) | Explain the agent's role, which products and insurers the agent can sell, and the sources and types of compensation. |
| Conflict of interest | Identify material conflicts and avoid or disclose them. |
| Documentation | Record the basis for the recommendation. |
- The care obligation isn't a fiduciary duty.
- It doesn't require ongoing monitoring.
- It doesn't require recommending the lowest-compensation product.
- An agent or insurer may not discourage a consumer from confirming information truthfully, filing a complaint or cooperating with an investigation (1115.0521).
- Records are kept until the 5th anniversary of the completed transaction (1115.055).
Training and CE
- A one-time 4-credit annuity training course is required. The insurer must confirm it's done before the agent sells its annuities (1115.056).
- 8 hours of annuity CE every 2-year period, counted within the 24-hour total (4004.202; 28 TAC 19.1029).
- Variable annuities are securities, so the agent also needs FINRA registration (4054.301).
Free look (TIC 1116.002)
| Annuity type | Free look | Refund |
|---|---|---|
| Fixed | At least 20 days after delivery | All premiums, including fees and charges |
| Variable or modified guaranteed | 20 days | Cash surrender value plus any fees and charges deducted |
Exchanges and surrenders (TIC 1114.0541, 1114.0542)
The existing insurer must transfer an exchange or pay a surrender within 30 business days of a complete request. Otherwise it owes 10% annual penalty interest, unless an exception applies.
Guaranty protection
The Texas Life and Health Insurance Guaranty Association covers up to $250,000 in present value of annuity benefits per life (463.204).
Common exam traps
- Best interest has four obligations, and it's not a fiduciary duty.
- Annuity free look: 20 days. A fixed annuity refunds premiums. A variable annuity refunds cash value plus charges.
- Training is a one-time 4 hours, plus 8 hours of annuity CE each period.
- Exchanges are paid within 30 business days, or 10% penalty interest applies.
Practice Annuities questions All Life Agent topics
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
