Life License Qualification Program (LLQP) Practice Exam

Which document must an agent submit to the replacing insurance company during the replacement of an existing life insurance policy?

1. Notice to existing and replacing insurers of intention to replace

2. A list of all policies the agent has replaced in the last 3 years

3. A statement made by the agent that NAIC guidelines have been met during the replacement process

4. A copy of the agent's insurance license

The correct answer is: Notice to existing and replacing insurers of intention to replace

The requirement for an agent to submit a Notice to existing and replacing insurers of intention to replace is rooted in regulatory practices intended to protect consumers during the replacement of life insurance policies. The notice is crucial because it ensures that all parties, including the existing insurer and the new insurer, are aware of the impending replacement. This transparency helps prevent any misunderstandings regarding policy benefits, terms, and potential financial impacts on the policyholder. By providing this notice, agents facilitate a smooth transition for the policyholder and promote compliance with industry regulations designed to safeguard consumer interests, such as ensuring that the policyholder fully understands the implications of replacing their existing policy. It serves as a formal communication that initiates the necessary disclosures and assessments related to the replacement, thereby preventing potential issues that could arise from undisclosed policy changes or benefits that may be lost in the process. In contrast, the other choices, while relevant in different contexts, do not specifically fulfill this regulatory obligation for notifying both insurers involved in the transaction. Their focus may not directly address the clear needs of the replacing process as mandated by insurance regulations.