California Insurance Code & EthicsQuestion 79 of 716
California's replacement regulations apply when:
a.The policyowner is age 65 or older, since the replacement regulations were adopted as part of the senior-protection statutes and impose no duty for a younger applicant
b.A producer moves his entire book of business to a different insurer, since the rules are aimed at agents who rewrite their own clients after changing an appointment
c.The same insurer issues both the old and the new policy, since an internal exchange is the one transaction in which the consumer's existing contract values, surrender charges and all, are truly at risk
d.An existing life or annuity policy will be lapsed, surrendered, converted to paid-up, borrowed against to fund the new contract, or otherwise reduced in value as part of the transaction
Explanation
Replacement is broadly defined: any transaction where existing coverage will be terminated, modified, or used as a funding source for the new contract is a replacement, regardless of insurer or insured age.
Law Reference: Cal. Ins. Code §10168.1This 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
- Under California life replacement regulations, the replacing insurer must send the existing insurer a copy of the replacement notice (and any sales material used) within how many working days of receiving the application?
- An agent's appointment with a particular insurer is terminated for cause. The insurer must notify the Commissioner of the termination and the reasons:
- The maximum administrative penalty per act under §790.035 for a willful unfair or deceptive practice may be up to:
- Which of the following may the Commissioner do as part of disciplinary action against a producer's license?
- A 17-year-old applicant scores 95% on the agent exam and passes a background check. Can the Department issue a resident life agent license?
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Last reviewed: · editorial process
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)