Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Common to Life and Health InsuranceEasy
A Florida licensed life and health agent is preparing to meet with a prospect to discuss a new life insurance policy. The agent has heard that the prospect currently holds a life insurance policy with another insurer. What is the agent's primary obligation regarding replacement if the new policy will replace an existing one?
- ATo ensure the new policy offers significantly better benefits than the existing one.
- BTo advise the prospect to cancel the existing policy only after the new policy is issued.
- CTo present a Notice Regarding Replacement of Life Insurance or Annuity to the applicant.
- DTo contact the existing insurer immediately after the application is submitted.
Show answer & explanationAnswer & explanation
Correct answer: C. To present a Notice Regarding Replacement of Life Insurance or Annuity to the applicant.
In Florida, when a life insurance policy is being replaced, the replacing agent has a primary obligation to provide the applicant with a 'Notice Regarding Replacement of Life Insurance or Annuity' at the time of application. This ensures the applicant is fully aware of the implications of replacement.
Why the other options are wrong
- A. The primary obligation is disclosure, not a comparative analysis of benefits, though that may be part of the sales process.
- B. This is not the primary obligation and could be considered misleading advice, as the applicant should make an informed decision.
- D. Contacting the existing insurer is a responsibility of the replacing insurer, not the agent, and occurs after the application is taken.
Replacement Notice
A mandatory disclosure document provided to an applicant when a new life insurance policy or annuity will replace an existing one, outlining the potential disadvantages of replacement.
- Must be given at the time of application.
- Explains potential loss of benefits, surrender charges, and new contestable periods.
- Required by Florida insurance regulations.
Memory trick: Replacement Rules ensure fair play, disclosure is the key today.