State RegulationsMI specificDifficulty 2/5
A Sterling Heights producer takes a life insurance application that may replace the applicant's current policy. Under R 500.602, which action must the producer complete as part of the replacement process?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
R 500.602 sets out the agent's replacement duties: obtain a signed applicant statement on whether replacement is involved, present the prescribed "Notice to Applicants Regarding Replacement of Life Insurance" and the information statement no later than at application time and leave them with the applicant, leave copies of all sales proposals, obtain the applicant's acknowledgment, and submit to the replacing insurer the proposal copy, the information statement, and the names of each existing insurer.
Why the other options are wrong
- A) The existing insurer's consent is not required; the rules require notice and disclosure, not permission from the company being replaced.
- B) Guaranteeing outperformance is a misrepresentation of policy benefits under M.C.L. 500.2005, not a duty under R 500.602.
- D) The application goes to the replacing insurer; conservation is the existing insurer's own response option, not a decision the agent routes to it.
Memory hook
Notice, signed statement, proposals: the replacement trio at application time.