Life Insurance and Annuities - Policy Replacement and Cancellation

Every Individual life insurance policy must provide for a free-look provision that lasts for at least :

10 days - Insurers must allow individual life insurance customers the ability to return their new policy within 10-30 days (this time period is up to the insurer) for a full refund.

Any insurance agent who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation :

Be fined a sum of $1,000 - An agent who violated the replacement provision of the Code will be fined a $1,000 for the first offense.

Any insurer who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation

Be fined a sum of $10,000 - An insurance company that violated the replacement provision of the Code will be fined $10,000 for the first offense.

Which of the following documents must be provided to the policyowner or applicant during policy replacement?

Notice Regarding Replacement - During the policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement Rule - Anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company.

An insurer has been found guilty of a Code violation regarding replacement. The insurer then repeats the violation. What will be the minimum penalty?

$30,000 - Additional violations of the replacement article by an insurer will result in increased fines ($30,000 to $300,000). The Commissioner may suspend or revoke the license of any person or entity that violates this article.

The notice to senior consumers regarding their right to cancel a policy must be printed on the cover or policy jacket in at least what type of print?

12-point bold print - Each individual life policy annuity contract delivered to a senior consumer must have the regarding their right to cancel either printed on the cover page or policy jacket in 12-point bold print with one inch of space on all sides, or printed on a sticker attached to the cover page or policy jacket.

All insurance policies and annuity contracts delivered to senior citizens in the State of California are subject to a cancellation period of at least

30 days - All insurance policies and annuity contracts, other than variable contracts and modified guaranteed contracts, marketed to senior citizens in the State of California are subjected to a cancellation period of no fewer than 30 days.

During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT:

Value Funds - During the 30-day cancellation (free-look) period, the premium for a variable annuity may only be invested in fixed-income investments and money-market funds, unless the investor specifically requests that the premiums be invested in the mutual funds.

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced. - The replacing insurance company must require from the producer a list of the applicant's life insurance or annuity contracts to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.

An insured has the right to cancel a policy by written notification to the insurer. This notification may be mailed to the insurer or returned to the original agent who made the sale. Upon receipt of the cancellation request, the insurer will:

Refund any premiums and policy fees within 30 days of notice if the policy is within the cancellation period specified by the insurer. - An insurer has 30 days from the notification of cancellation to refund any premiums and policy fees and return the parties to the place they were prior to the policy being sold.

An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any exiting life insurance policies. If the customer replies. "Yes," which of the following best describes the agent's next step?

The agent must provide a replacement notice to the applicant. - In a replacement transaction, an agent must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the agent.