Which of the following is not a valid contract exchange?

The concept of a valid contract exchange in the context of insurance revolves around the ability to trade one insurance product for another while maintaining compliance with regulatory standards. Annuities and life insurance policies serve different purposes and involve different contractual obligations. Specifically, an annuity is designed primarily for retirement income, while a life insurance policy provides a death benefit. Given this fundamental difference in function and structure, exchanging an annuity for a life insurance policy is not considered a valid or typical exchange within the regulatory framework, as it fails to establish a direct equivalence or continuity in purpose.

In contrast, exchanging one life insurance policy for another (whether it be the same type or different types, such as whole life for universal life) maintains the intent of providing life coverage, making such exchanges valid. Similarly, while the difference between variable and fixed life insurance policies represents variations in investment risk and growth potential, these products are both fundamentally designed for life insurance coverage, thus allowing for their exchange. Therefore, the correct focus on the unique nature of annuities compared to life insurance explains why that particular exchange is not valid.