State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
When long-term care coverage is replaced, how is the first-year sales commission paid by the insurer calculated?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
CIC Section 10234.97(a) requires that when LTC coverage is replaced, the first-year sales commission be calculated on the difference between the annual premium of the replacement coverage and that of the original coverage. If the replacement premium is less than or equal to the original, the commission is limited to the renewal commission rate. AH-V.2f anchors this anti-churning compensation rule.
Why the other options are wrong
- A) Basing the commission on the full replacement premium would reward churning, which the statute prevents.
- C) LTC policies generally have no cash value, and the statute keys on premium difference.
- D) The law sets a calculation formula, not a Commissioner-determined flat fee.
Memory hook
Replacement commission = only on the premium increase, so churning pays nothing extra.