State RegulationsNY specificDifficulty 1/5
A New York producer deliberately fails to disclose that a long-term care sale is a replacement. Under New York law, this failure is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under Reg 62 (11 NYCRR Part 52) and the New York Insurance Law, deliberately concealing that a sale is a replacement is a violation of the replacement rules, and the Superintendent of Financial Services may discipline a producer who commits it. The consumer-protection purpose of those rules depends on honest identification of replacements, so intending to save the client money - or to save the sale - is no defense.
Why the other options are wrong
- B) The quality of the new policy does not excuse concealment; the rules regulate disclosure of the transaction, not the merits of the coverage.
- C) A lower premium does not cure the violation; the disclosure duty exists precisely so the client can judge that trade-off for himself.
- D) The producer and the insurer each bear their own replacement duties; a producer's concealment is the producer's violation.
Memory hook
Hide the replacement, answer to the Superintendent.