State RegulationsNY specificDifficulty 2/5
Which statement about replacing a New York long-term care insurance policy is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Reg 62 (11 NYCRR Part 52), what makes a transaction a replacement is not price or intent but effect: if the new purchase will cause existing long-term care coverage to be lapsed, surrendered, or reduced, the sale is a replacement and the disclosure duties attach. The definition looks at the outcome for the existing policy, so an agent cannot sidestep the rules by characterizing the sale differently.
Why the other options are wrong
- A) The trigger is the effect on the existing coverage, not a comparison of premiums; even a cheaper policy can be a replacement.
- C) The insurer whose policy is being replaced is exactly who must be notified; keeping it in the dark would defeat the consumer-protection purpose of the rules.
- D) The disclosure and notice obligations run with the application and the policy delivery - they are not satisfied merely by collecting the first premium.
Memory hook
If the old policy dies because of the new sale, it is a replacement - period.