California Insurance Code & EthicsQuestion 71 of 716
After a life insurance policy is replaced under California rules, the existing insurer has the right to:
a.Charge the policyowner a replacement fee for canceling the old coverage early
b.Conserve the policy by communicating with the policyowner during the notice period
c.Refuse to accept the replacement notice from the replacing agent and keep the policy in force
d.Cancel the existing policy immediately, with no conservation effort or notice to the owner
Explanation
Under §§10509 and 10 CCR §§2534+, the existing insurer is given the chance to conserve the policy, including by sending a comparison and contacting the owner. The replacing insurer and agent must give proper notice so this right is preserved.
Law Reference: Cal. Ins. Code §10509This 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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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)