General Insurance PrinciplesQuestion 602 of 716
In insurance, a 'replacement' occurs when a new policy is purchased and an existing policy is:
a.Renewed with the same insurer at the same terms
b.Lapsed, surrendered, forfeited, or reduced in value in connection with the new sale
c.Reinstated after a lapse using the same insurer and the policy's original issue-age premium rate
d.Kept fully in force with no change
Explanation
Replacement means the new purchase causes an existing policy to be terminated or materially reduced. Keeping, reinstating, or simply renewing a policy is not replacement.
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Related questions on this topic
- A producer who holds premiums collected from clients before remitting them to the insurer is acting in a ________ capacity and must not commingle those funds:
- Commingling, a violation of a producer's fiduciary duty, means:
- Errors and omissions (E&O) insurance protects a producer against:
- Replacement regulations exist primarily to:
- In a replacement transaction, the producer generally must:
- The principle of utmost good faith in insurance means that:
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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)