State RegulationsIL specificDifficulty 3/5
In a proposed Illinois replacement, Company M issued the policy the applicant may surrender, and Company N has received the application for the new policy. Which identification is correct under 50 Ill. Adm. Code 917?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
50 Ill. Adm. Code 917 assigns the roles by function: Company N, which issued the new contract causing the old one to be disturbed, is the replacing insurer and owes the notification duties; Company M, whose policy may be surrendered, is the existing insurer and receives the notice so it can give the policyowner a summary of the coverage at risk. Mislabeling the parties misdirects the entire disclosure process.
Why the other options are wrong
- A) The labels are reversed; the new issuer replaces, the old issuer exists.
- B) The terms are mutually exclusive in a single transaction; only the new issuer is the replacing insurer.
- D) The roles arise automatically from the transaction; no designation by the Director of Insurance is needed.
Memory hook
N takes, M gives: new issuer replaces, old issuer exists.