Tex. Ins. Code § 1115.0514

Current with legislation from the 2023 Regular and Special Sessions signed by the Governor as of November 21, 2023.

Section 1115.0514 - Disclosure Obligation

(a) Before the recommendation or sale of an annuity, an agent shall provide a disclosure to the consumer on a form prescribed by the commissioner by rule.

(b) The prescribed form must be substantially similar to the National Association of Insurance Commissioners Insurance Agent Disclosure for Annuities form. The form must include:

(1) a description of the scope and terms of the agent's relationship with the consumer and role in the transaction;

(2) an affirmative statement on whether the agent is licensed and authorized to sell:

(A) fixed annuities;

(B) fixed indexed annuities;

(C) variable annuities;

(D) life insurance;

(E) mutual funds;

(F) stocks and bonds; or

(G) certificates of deposit;

(3) a statement describing the insurers for whom the agent is authorized, contracted or appointed, or otherwise able to sell insurance products, described as follows:

(A) one insurer;

(B) two or more insurers; or

(C) two or more insurers though primarily contracted with one insurer;

(4) a description of the sources and types of cash compensation and noncash compensation to be received by the agent, including whether the agent is to be compensated for the sale of a recommended annuity by commission as part of premium or other remuneration received from the insurer, intermediary, or other agent or by fee as a result of a contract for advice or consulting services; and

(5) a notice of the consumer's right to request additional information regarding cash compensation under Subsection (c).

(c) On request of the consumer or the consumer's designated representative, an agent shall disclose:

(1) a reasonable estimate of the amount of cash compensation to be received by the agent, which may be stated as a range of amounts or percentages; and

(2) whether the cash compensation is a one-time or multiple occurrence amount, and if a multiple occurrence amount, the frequency and amount of occurrence, which may be stated as a range of amounts or percentages.

(d) Prior to or at the time of the recommendation or sale of an annuity, the agent must have a reasonable basis to believe the consumer has been informed of the features of the annuity, including:

(1) the potential surrender period and surrender charge;

(2) the potential tax penalty if the consumer sells exchanges, surrenders, or annuitizes the annuity;

(3) mortality and expense fees;

(4) investment advisory fees;

(5) annual fees;

(6) potential charges for and features of riders or other options of the annuity;

(7) limitations on interest returns;

(8) potential changes in non-guaranteed elements of the annuity;

(9) insurance and investment components; and

(10) market risk.

Tex. Ins. Code § 1115.0514

Added by Acts 2021, Texas Acts of the 87th Leg. - Regular Session, ch. 262,Sec. 9, eff. 9/1/2021.