State RegulationsMA specificDifficulty 2/5
A Massachusetts producer takes an application that would replace the applicant's existing life policy with coverage from a different insurer. Under the Massachusetts replacement rules in 211 CMR 34.00, what must happen with respect to the existing insurer?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under 211 CMR 34.00, the Massachusetts Division of Insurance's replacement regulation, the replacing insurer must notify the existing insurer that a replacement is contemplated. The existing insurer can then review the transaction and take steps to preserve the policy's values for the applicant. The rule builds transparency into the transaction; it does not give one insurer veto power over another's sale.
Why the other options are wrong
- A) The existing insurer has no approval power over a competitor's application; 211 CMR 34.00 requires notice, not consent.
- C) Confidentiality is the opposite of what 211 CMR 34.00 demands; the existing insurer must be told so it can act in the applicant's interest.
- D) Nothing in 211 CMR 34.00 forces the existing insurer to convert a policy; its options after notice are its own.
Memory hook
Replacement is a spotlight event — the old carrier gets told.