State RegulationsCO specificDifficulty 2/5
A producer in Denver is replacing a client's existing life policy with a new one. Under Colorado Insurance Regulation 4-1-4, what must the Notice Regarding Replacement given to the applicant accomplish?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Colorado Insurance Regulation 4-1-4 requires the Notice Regarding Replacement to identify the replacing and existing policies and summarize the disadvantages of replacing, so the applicant understands the costs of the switch before going through with it. The notice must be signed by the applicant and the producer, with a copy left with the applicant, ensuring the replacement decision is an informed one.
Why the other options are wrong
- A) The notice may not guarantee the new policy is better; its job is to disclose possible disadvantages, not to promote the replacement.
- B) Underwriting requirements are internal insurer criteria and are not the subject of the required replacement notice.
- D) Regulation 4-1-4 does not waive surrender charges; it requires disclosure of the disadvantages so the applicant can weigh them.
Memory hook
Old, new, and what you lose — that's the notice.