L&HIllinoismedium
Which of the following transactions would generally be treated as a replacement under 50 Ill. Adm. Code 917?
Surrendering an in-force universal life policy to fund the premium for a new whole life policy with a different insurer
BAdding a child rider to an existing whole life policy with the same insurer
CAccepting an automatic premium loan on an existing policy
DConverting a group certificate to an individual policy with the same insurer at termination of employment
Why this is the answer
Part 917 defines replacement broadly to include any transaction in which a new life or annuity contract is purchased and an existing contract is lapsed, surrendered, reduced in value, or used as collateral. Surrendering a UL policy to pay premium on a new whole life policy with a different insurer squarely fits the definition. Adding a rider or taking an automatic premium loan buys no new policy, so neither is a replacement, and a group conversion with the same insurer falls under Part 917's exemptions for group life and same-insurer transactions.
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