New Jersey Life Producer Practice Exam

What form should the applicant sign when replacing an existing life insurance policy?

1. Confirmation of Coverage form

2. Notice Regarding Replacement of Life Insurance and Annuities

3. Policy Change Agreement

4. New Policy Application

The correct answer is: Notice Regarding Replacement of Life Insurance and Annuities

The correct form for an applicant to sign when replacing an existing life insurance policy is the Notice Regarding Replacement of Life Insurance and Annuities. This form serves several important purposes in the process of policy replacement. Firstly, it ensures that the applicant is fully informed about the implications of replacing their existing life insurance policy with a new one. This includes understanding the benefits and disadvantages of making the switch, as well as providing an opportunity to evaluate whether the new policy truly meets their needs compared to the existing coverage. Secondly, this notice is a regulatory requirement in many jurisdictions, including New Jersey. It is designed to protect consumers from potential pitfalls associated with replacing policies, such as losing valuable benefits or facing increased premiums due to age or health changes. By acknowledging this replacement notice, the applicant confirms their understanding of the replacement process and their decision to proceed. In contrast, the other options do not fulfill this specific regulatory obligation related to policy replacement. The Confirmation of Coverage form typically relates to verifying that coverage is in effect but does not address the complexities of replacement. The Policy Change Agreement pertains to modifications within the same policy rather than transitioning to a new one. Lastly, the New Policy Application is necessary for initiating a new insurance policy but does not cover the necessary disclosures regarding replacing