R 500.604 Duties where replacement involved; notice; filing.
Rule 604. If a replacement is involved in a transaction, the life insurer shall do all of
the following:
(a) Require, with, or as part of each application, a
list
prepared
by the agent
representing, to the best of his or her knowledge, all of the existing life insurance policies
proposed to be replaced.
(b) Obtain all of the following:
(i) A copy of any sales proposal used.
(ii) The completed information statement.
(iii) Proof of receipt by the applicant of the information statement and the notice to
applicants regarding replacement of life insurance.
(iv) The name of each insurer which issued any life insurance being replaced.
(c) Within 3 business days following the receipt of the application in the home or
regional office of the replacing insurer, or on the day the life insurer issues the proposed
policy, whichever is sooner, notify the existing insurer and furnish a copy of any sales
proposal used and a copy of the completed information statement.
(d) Examine any proposal used and the completed information statement and ascertain
that the information statement meets the requirements of this rule, R 500.601 to R 500.603,
R 500.605, and R 500.606.
(e) Verify the substantial accuracy of information concerning the proposed policy
furnished to the applicant.
(f) Maintain in the life insurer's home office, for not less than 3 years or until the
conclusion of the next succeeding regular examination by the insurance regulatory authority of
the life insurer's state of domicile, whichever is later, all of the following:
(i) Copies of any proposal used.
(ii) The completed information statement.
(iii) Proof of receipt by the applicant of the information statement and the notice to
applicants regarding replacement of life insurance.
(iv) The applicant's signed statement with respect to replacement.
History: 1979 AC; 1984 AACS.
R 500.605 Exceptions.
Rule 605. (1) R 500.602, R 500.603, and R 500.604 do not apply to transactions in
which the application for the new life insurance is made to the same insurer that issued the
existing life insurance or to an affiliate of the existing insurer.
(2) R 500.602, R 500.603, and R 500.604 do not apply to transactions in which the new
life insurance is to be provided under any of the following plans, if full and complete
disclosure of all material facts is made to the administrator of any plan to be replaced:
(a) A group term life insurance policy.
(b) Policies covering employees of an employer, debtors of a creditor, or members of an
association or other eligible organization, which policies are distributed on a mass
merchandising basis and which do not involve direct contact between the covered person and
the agent.
(c) Life insurance policies issued in connection with a pension, profit sharing, or other
benefit plan qualifying for tax-deductibility of premiums.
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