Colorado Life Producer License Practice Test

Do the regulations regarding replacement apply to renewable term policies?

1. Yes

2. No

3. Only for fixed terms

4. Only if nonrenewable

The correct answer is: Yes

The regulations regarding replacement do indeed apply to renewable term policies. When a policyholder considers replacing their existing policy with a new one, it is important to evaluate the new policy's terms and conditions, even if the current policy is a renewable term. This is because the process of replacing a life insurance policy involves understanding not just the coverage but also the implications on premiums, benefits, and any pre-existing conditions that might affect underwriting. The regulations are designed to protect consumers by ensuring that they fully understand the risks and benefits associated with switching policies. This includes providing necessary information disclosures and ensuring that the new policy genuinely offers advantages over the previous one. Therefore, since renewable term policies can impact a policyholder's decision-making process regarding replacements, the regulations are applicable to them.