State RegulationsMA specificDifficulty 3/5
Why do Massachusetts' individual accident and health replacement rules require the applicant to receive a comparison of the existing and proposed coverage?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
The comparison requirement under M.G.L. c. 175, § 110(N)(3)(a) and the Massachusetts Division of Insurance's replacement regulations in 211 CMR 42.08 exists to surface the downside risks of switching: a new policy may impose new waiting periods, new preexisting-condition limitations, new exclusions, or less favorable terms than the policy being given up. The applicant who sees both policies side by side can judge whether the change truly serves his needs, which is the consumer protection the rules are designed to deliver.
Why the other options are wrong
- A) Producer compensation is not the subject of the comparison; the disclosure exists for the applicant's benefit, not to audit commissions.
- B) Nothing in M.G.L. c. 175, § 110(N)(3)(a) or 211 CMR 42.08 guarantees a lower premium; the comparison may well show the new policy is more expensive.
- C) The rules do not create a right of first refusal for the existing insurer; the comparison informs the applicant, not the competition.
Memory hook
The comparison exposes the fine print: new waits, new exclusions, new costs.