State RegulationsIL specificDifficulty 2/5
An Illinois replacing insurer receives an application that indicates the new policy will replace existing life insurance. What must the replacing insurer do under 50 Ill. Adm. Code 917?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under 50 Ill. Adm. Code 917, the replacing insurer must send the existing insurer notice of the proposed replacement and furnish the applicant's replacement notice or a copy of the proposal, and it must keep evidence of its compliance. The hand-off enables the existing insurer to give the policyowner a summary of the policy about to be replaced, completing the information loop the regulation exists to create.
Why the other options are wrong
- B) Cash values flow between the policyowner and the existing insurer under the policy's own terms; no payment runs to the existing insurer from the replacing insurer.
- C) Newspaper publication is not part of the replacement procedure; notice goes directly to the existing insurer.
- D) License suspension is a disciplinary action reserved to the Director of Insurance, not a step the replacing insurer may take.
Memory hook
The taker tells the loser: replacing insurer notifies, existing insurer informs.