THE PURPOSE OF THIS REGULATION

• To regulate the acts and practices of insurers and agents with respect to the replacement of life insurance policies and annuity contracts
• To protect the interest of the public
• To establish minimum standards of conduct regarding the replacement of life insurance and annuities
• To provide full and clear information so an applicant can make an informed decision
• To reduce the opportunity for misrepresentation and incomplete comparison in replacement

DEFINITIONS OF REPLACEMENT
When a new life insurance or annuity contract is purchased for delivery in New York and the agent knows that, as part of the transaction, existing life insurance or annuity contracts have been or are likely to be:
• lapsed, surrendered, partially surrendered, forfeited, assigned to the replacing insurer, or otherwise terminated;
• changed or modified into paid-up insurance, continued as extended term or another form of non-forfeiture benefit or otherwise reduced in value by the use of non-forfeiture benefits, dividend accumulations, dividend cash values or other cash values;
• changed or modified to reduce the amount of existing life insurance or annuity benefit or in the period of time the existing life insurance or annuity benefit will remain in force;
• reissued with a reduction in amount such that any cash values are released, including dividend accumulations or paid-up additions;
• assigned as collateral for a loan or made subject to borrowing or withdrawal of any portion of the loan value, including dividend accumulation or paid-up insurance;
• continued with a stoppage of premium payments or a reduction in the amount of premium paid.

EXEMPTIONS
• Contractual conversion privileges
• If the new coverage is group life or group annuity, and a portion of the premium is directly or indirectly paid by the insured
• Individual policy or annuity which is wholly paid for by employer or an association to which the insured belongs
• Individual policy or annuity distributed on a mass merchandising basis and administrated by group type methods
• If the existing life insurance is nonrenewable, nonconvertible term that expires in 5 years or less

DUTIES OF AGENT
• Obtain with each application a completed and signed Definition of Replacement form. Leave a copy for your client. If no replacement involved, submit copy of signed Definition of Replacement form with the application to the insurer.
If replacement is indicated:
o obtain a list of all coverage proposed to be replaced.
o submit to existing insurer a list of coverage to be replaced, as well as the policy or contract number, with Authorization form signed by the policy-owner requesting information needed to complete the Disclosure Statement.
o present to the applicant, no later than at the time of signing the application, review and sign the Important Notice Regarding Replacement and the completed Disclosure Statement and leave copies of such forms with applicant for his or her records.
o submit the application to the insurer with:
• signed and dated Authorization to Release Information listing all policies to be replaced (LF-203);
• a copy of any new business illustration if required;
• proof of receipt by applicant of the Important Notice Regarding Replacement (PR-103);
• completed and signed Disclosure Statement (PR-101);
• signed and dated Definition of Replacement (PR-102);
• copy of in force illustration provided by replaced carrier.

DUTIES OF REPLACING INSURER
• Training its agents about this regulation.
• With each application, life or annuity, with or without a replacement involved, require a Definition of Replacement form signed by the applicant and agent.
• Date all materials upon receipt.
• Retain copies of the Definition of Replacement for at least 6 years.
• Require with each application a signed statement by the agent (page 9 of the William Penn application) as to whether, to the best of his/her knowledge, replacement is involved in the transaction.
• If replacement is indicated, the insurer must require the submission of: o A copy of any new business illustration if required;
o Proof of receipt by applicant of the Important Notice Regarding
Replacement (PR-103);
o Completed and signed Disclosure Statement (PR-101);
o Signed and dated Definition of Replacement (PR-102);
o Signed and dated Authorization to release information (LF-203)o Copy of in force illustration provided by replaced carrier.
• If replacement is indicated, the insurer must:
o examine the proposal and sales material for accuracy; o examine the Disclosure Statement for accuracy and compliance with regulation.
• If replacement is indicated, within 10 business days the replacing insurer must: o notify existing insurer;
o provide existing insurer copy of proposal, sales material and Disclosure; o maintain copies of all documents for at least 6 years.
• Reject the application within 10 days of receipt if the required forms are not received, or if the forms are not correct and so notify the applicant of such rejection and the reason therefore.
• Submit quarterly reports within thirty days of the end of each quarter, to the Superintendent of Insurance, indicating which insurers, if any, have failed to provide the information to complete the Disclosure form.
• Provide the policy owner a 60 day refund provision.
• Treat proposed policies in all respects as if it were new issuance subject to no differences in underwriting or in other considerations including but not limited to: premium discount, interest rate credit, and or broker compensation or expenses, or incentives such as bonuses or other inducements to agents and or brokers.
If the policy issued differs from the application applied for, obtain revised documents including but not limited to a revised "Disclosure Statement", revised or additional sales material and acknowledgment by the applicant of receipt of such material.

DUTIES OF EXISTING INSURER
• Inform and train its agents about this regulation.
• Date all materials upon receipt.
• Maintain copies of replacement notification for at least 6 years.
• Within 20 days of receipt of a request from the replacing agent with proper authorization from the applicant, furnish the required information to complete the Disclosure Statement with respect to the contract being replaced, including:
o the insurer's customer service telephone number; o current status;
o currently illustrated dividends/interest and other non-guaranteed costs and benefits.
• Allow a 60 day free look period on replaced policies. Should policy owner elect to not accept the new policy within 60 days of receipt and upon written proof of cancellation, reinstate existing insurance without evidence.
WILLIAM PENN NEW BUSINESS REPLACEMENTS

Agent meets with prospect
Agent obtains signed Definition of Replacement form and leaves copy with applicant.

Replacement?
NO-Submit app to general agency with Definition of Replacement form.

YES-Obtain list of all policies to be replaced.

Agent contacts existing insurers with authorization from policy-owner to request information to complete disclosure statement. Sends copy to replacing insurer.

Wait 20 days for response

Received?

NO-
Agent completes disclosure form with "Good Faith Approximation. Gives copy to client.

YES-
Agent completes disclosure form with information received. Gives copy to client.

Client wants to proceed >
Agent gets signed app, signed Disclosure and signed Important Notice forms. Leaves copies with applicant

Agent submits to general agency:
1. Application
2. Signed Disclosure Form (PR-101)
3. Signed Important Notice Form (PR-103)
4. Signed Definition of Replacement Form (PR-102)
5. New business illustration if required
6. Authorization to release information (LF-203)

7. Copy of in force illustration provided by replaced carrier
Company reviews forms from general agency. Are they complete and accurate?

NO-
Company attempts to get forms corrected If not corrected within 10 days, app is rejected.

YES-
Within 10 days of app receipt, company sends Notification of Replacement to replaced company. Includes Disclosure form and illustrations/sales materials.

Life applications forwarded to Underwriting Department.

If the life insurance or annuity contract issued differs from what was originally applied for, company asks agent to get a new Disclosure form signed and resubmit with any revised illustrations/sales materials used.

Company submits quarterly reports to the Superintendent of Insurance, indicating insurers which have failed to provide information to complete the disclosure form
Insurance Department Website

New York
Insurance is regulated by each state’s insurance laws. These laws are enforced by the Insurance Department of each state