State RegulationsIL specificDifficulty 3/5
Which Illinois transaction constitutes a replacement subject to 50 Ill. Adm. Code 917?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
50 Ill. Adm. Code 917 turns on the consequence for the existing policy, and surrendering it for cash value to buy a new contract is the classic replacement. Once the transaction falls within the definition, the producer must follow the notice, disclosure, and documentation procedures, and the replacing insurer must handle its notification duties, so the policyowner receives an accurate comparison before the old coverage disappears.
Why the other options are wrong
- B) Adding a rider to an in-force policy changes its terms by agreement but does not purchase new insurance that disturbs the existing contract, so it is not a replacement.
- C) Coexisting policies with no lapse, surrender, reduction, or borrowing leave the existing contract intact; there is no replacement.
- D) Exercising a contractual privilege with the insurer that issued the existing contract is excluded from the replacement definition.
Memory hook
Surrender the old to fund the new, and the replacement rules wake up.