Life Insurance and Annuities: Policy Replacement and Cancellation

What is the minimum free-look period for newly issued life insurance policies in this state?

10 Days

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

10 days

What is the minimum free-look period for newly issued life insurance policies in this state (CA)?

10 days

Every policy of individual life insurance must include a notice of right to cancel the policy, stating the specific time frame for the free-look period. Once the insured has cancelled the policy, within how many days must the insurer refund all premiums and policy fees?

30 days All premiums and policy fees paid for the policy must be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the insured has cancelled the policy.

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.

A legally acceptable attempt by an existing insurer to dissuade a current policyowner from the replacement of existing life insurance is called

Conservation

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 (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

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 insured has the right to return the new insurance policy for a full refund during the

Free-look period.

Which of the following insureds has a right to cancel an individual life policy within 30 days?

Insureds 60 years of age of older

An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any existing 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.

The Replacement Regulation does not apply to...

Credit life, group life and group annuities, or transactions with the same insurer.

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

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

To which of the following products does the Replacement Regulation apply?

Whole life insurance The Replacement Regulation does not apply to credit life, group life and group annuities, or transactions with the same insurer.

If the insured on the individual life policy is 60 years of age or older, the right of rescission for a full refund must last for at least...

30 days.

Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for

An administrative penalty of no less than $5,000 and no more than $50,000 per violation. The fines for additional violations of the replacement article by an individual agent will result in increased fines ($5,000 to $50,000). The Commissioner may suspend or revoke the license of any person or entity that violates this article.

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.

Conservation means

Any attempt by the existing insurer or its producers, or by a broker to dissuade a current policyowner from the replacement of existing life insurance or annuity.

The right of the applicant to rescind the policy for a full refund of all premiums

Must be clearly stated in the policy's text (outlined on title page and described in text).

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 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.

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

Variable 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.

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

During the cancellation period, an insurer must refund any premiums and policy fees within how many days of written cancellation notice by the insured?

30 days