State RegulationsIL specificDifficulty 2/5
A prospect wants to replace a long-held whole life policy with a newly introduced product because "new products are always better." Under Illinois replacement rules, what is the producer's fundamental obligation?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
50 Ill. Adm. Code 917 does not prohibit replacement; it regulates it by requiring the producer to make a full comparison of the costs, benefits, and consequences of the proposed replacement and to ensure the applicant's decision is informed and documented. Replacing an in-force policy can hurt the owner through new contestability periods, higher long-term costs, and loss of accumulated cash value, which is why the analysis duty rests on the producer before any recommendation is made.
Why the other options are wrong
- A) Replacement is a regulated transaction, not a banned one; an outright refusal misstates the rule.
- B) Rushing the sale is exactly the churn behavior the regulation is designed to prevent.
- C) The existing insurer's consent is not a prerequisite; the rule's procedures run through the replacing insurer and the producer instead.
Memory hook
Replace on paper before you replace in fact: compare, document, then sell.