California Insurance Code & EthicsQuestion 59 of 716
If a life insurance policy or annuity is sold to a senior using funds from the surrender of an existing annuity, the consumer must receive a written disclosure that includes:
a.Only the cost of the new product, with no comparison to the existing annuity being surrendered
b.A written statement that the transaction has been reviewed and approved in advance by the Insurance Commissioner
c.The effect of the transaction on the senior's existing coverage, including surrender charges and lost benefits
d.Only the new policy's projected returns, illustrated at whatever assumed crediting rate the producer selects
Explanation
§789.8 requires a written, signed comparative disclosure of the effect of replacing or surrendering an existing annuity, listing surrender charges, lost benefits, and tax consequences. The Commissioner does not pre-approve sales.
Law Reference: Cal. Ins. Code §789.8This topic, taught in full in the California Life & Health Insurance Producer Exam guide. California Life & Health Insurance Producer Exam — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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Related questions on this topic
- The free-look (right-to-examine) period for an individual life insurance policy issued to a person age 65 or older in California is:
- Before an agent may sell an annuity in California, what training requirement applies?
- California's senior insurance protections (§§785-789.10) impose heightened duties when selling to consumers age:
- Which of the following is a permissible ground for the Commissioner to deny, suspend, or revoke an agent's license?
- If a licensee's address, name, or background information changes, the licensee must notify the Commissioner within how many days?
- For a life insurance policy to be valid in California, the policyowner generally must have an insurable interest in the insured. When must this insurable interest exist?
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)