Which statement is TRUE regarding the duties of insurers?

• A. Replacement requirements do not apply to the existing insurer.
• B. Replacement requirements apply to the existing insurer only
• C. Insurers must waive replacement requirements if the insured requests
• D. Replacement requirements apply only to the new insurer

Answer: (A)

When a life policy is being replaced by a new one, there are rules to protect the insured and ensure the replacement is appropriate. The duties tied to replacement are duties of the insurer issuing the new policy. They must provide the required replacement notice, explain the implications of the replacement, and review whether the new policy truly serves the insured’s needs. Because these duties arise from the act of issuing a new policy to replace an existing one, they focus on the new insurer’s responsibilities in the replacement process. That’s why the statement that replacement requirements do not apply to the existing insurer is the true choice here. The other options misstate who bears the replacement duties or suggest waivers that aren’t permitted by standard replacement regulations.