State RegulationsIL specificDifficulty 2/5
A producer tells a colleague that replacing an in-force Illinois life policy is "an unfair trade practice that the Director will fine you for." How accurate is that statement?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
50 Ill. Adm. Code 917 treats replacement as a lawful but regulated transaction: the producer obtains the applicant's signed replacement statement, provides the comparison material, and the replacing insurer notifies the existing insurer. A replacement completed with these procedures intact is fully permissible; what draws discipline from the Director of Insurance is skipping the disclosures, misrepresenting the comparison, or inducing needless replacement, not the transaction itself.
Why the other options are wrong
- A) Misreads a regulatory scheme as a prohibition; the unfair practice is mishandling the replacement, not performing a proper one.
- C) The rule contains no time-based ban on replacing recently issued policies.
- D) The duties fall squarely on the producer and the replacing insurer; the existing insurer has rights to notice, not regulatory burdens.
Memory hook
Replacement is road-tested, not road-closed: follow the signs and the trip is legal.