L&HMAmedium
Under 211 CMR 34.00, a new life purchase is a replacement when its premium is funded by which source?
AA bank loan secured by the applicant's home
BThe applicant's earned wages
CGifts received from a relative
Cash surrendered from an existing policy
Why this is the answer
211 CMR 34.00 defines replacement to include any purchase that causes existing life insurance or an annuity to be surrendered, reduced by use of its nonforfeiture values, or borrowed against for more than 25% of its loan value. Funding the new premium by surrendering an existing policy is therefore a replacement.
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