If it is known or should be known by the agent that an existing policy is going to be lapsed, forfeited, surrendered or terminated in favor of a new policy, the agent must submit a :

• A. Notice of Replacement
• B. Replacement Declaration
• C. Lapse Notice
• D. Application for Replacement

Answer: (D)

The main idea is documenting that a replacement is happening. When an agent knows an existing policy will be replaced by a new policy, the process must be formally initiated with the insurance carrier. Submitting an Application for Replacement starts that process with the replacing insurer, providing the old policy details and confirming the replacement plan. This creates a clear record for both insurers and the client, helping ensure suitability, disclose potential consequences (like lapse of the old policy and any differences in benefits or costs), and comply with replacement regulations.

Notice of Replacement and Replacement Declaration are related tools used to inform involved parties about the replacement, but they do not initiate the replacement with the insurer. A Lapse Notice would address the lapse of the existing policy itself, not the formal replacement action. Therefore, the form that properly starts the replacement transaction is the Application for Replacement.