2023 Texas Statutes › Insurance Code › Title 7 - Life Insurance and Annuities › Subtitle A - Life Insurance in General › Chapter 1115 - Suitability of Certain Annuity Transactions › Subchapter A. General Provisions › Section 1115.002. Definitions

Sec. 1115.002.  DEFINITIONS.  In this chapter:
(1)  "Agent" means an individual who holds a license under Chapter 4054 and who sells, solicits, or negotiates insurance or annuity contracts in this state.
(2)  "Annuity" means an annuity that is an insurance product under the laws of this state that is individually solicited, whether the product is classified as an individual annuity or group annuity.
(2-a)  "Cash compensation" means a discount, concession, fee, service fee, commission, sales charge, loan, override, or cash benefit received by an agent from an insurer, intermediary, or consumer in connection with the recommendation or sale of an annuity.
(2-b)  "Consumer profile information" means information that is reasonably appropriate to determine whether a recommendation addresses the consumer's financial situation, insurance needs, and financial objectives, including the following:
(A)  age;
(B)  annual income;
(C)  existing assets and financial products, including investment, annuity, and insurance holdings;
(D)  financial situation and needs, including debts and other obligations;
(E)  financial experience;
(F)  financial objectives;
(G)  financial resources used to fund the annuity;
(H)  financial time horizon;
(I)  insurance needs;
(J)  intended use of the annuity;
(K)  liquid net worth;
(L)  liquidity needs;
(M)  risk tolerance, including willingness to accept non-guaranteed elements in the annuity; and
(N)  tax status.
(2-c)  "Continuing education provider" means a person authorized to offer continuing education courses under Chapter 4004.
(3)  "Insurer" means a company authorized to engage in the business of life insurance and annuities in this state, and includes a fraternal benefit society operating under Chapter 885.
(3-a)  "Intermediary" means an entity contracted directly with an insurer or with another entity contracted with an insurer to facilitate the sale of the insurer's annuities by agents.
(3-b)  "Material conflict of interest" means a financial interest of an agent in the sale of an annuity that a reasonable person would expect to influence the impartiality of a recommendation. The term does not include cash or noncash compensation paid to an agent.
(3-c)  "Noncash compensation" means any form of compensation that is not cash compensation, including health insurance, office rent, office support, and retirement benefits.
(3-d)  "Non-guaranteed element" means a premium, credited interest rate, including any bonus, benefit, value, dividend, non-interest based credit, or charge, or an element of a formula used to determine any of those elements, that is determined at the discretion of the insurer and is not guaranteed at issue. The term includes an element that is calculated using an element that is determined at the discretion of the insurer and is not guaranteed at issue.
(4)  "Recommendation" means advice provided by an agent, or an insurer if no agent is involved, to an individual consumer that is intended to result or does result in a purchase, exchange, or replacement of an annuity made in accordance with that advice. The term does not include a general communication to the public, any generalized customer service assistance or administrative support, any general educational information or tools, a prospectus, or any other product or sales material.
(5)  "Replacement" means a transaction in which a new annuity is to be purchased and the proposing agent, or the proposing insurer regardless of whether an agent is involved, knows or should know that, by reason of the transaction, an existing annuity or other insurance policy has been or is to be:
(A)  lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise terminated;
(B)  converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;
(C)  amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;
(D)  reissued with any reduction in cash value; or
(E)  used in a financed purchase.
(6)  Repealed by Acts 2021, 87th Leg., R.S., Ch. 262 (H.B. 1777), Sec. 18(1), eff. September 1, 2021.
Added by Acts 2007, 80th Leg., R.S., Ch. 736 (H.B. 2761), Sec. 1, eff. September 1, 2007.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 1156 (H.B. 2277), Sec. 7, eff. September 1, 2011.
Acts 2021, 87th Leg., R.S., Ch. 262 (H.B. 1777), Sec. 3, eff. September 1, 2021.
Acts 2021, 87th Leg., R.S., Ch. 262 (H.B. 1777), Sec. 18(1), eff. September 1, 2021.