Alabama Administrative Code › Title 482 - ALABAMA DEPARTMENT OF INSURANCE › Chapter 482-1-133 - LIFE INSURANCE AND ANNUITIES REPLACEMENT REGULATION › Appendix C - Important Notice Regarding Replacements For Direct Response Insurers

Current through Register Vol. 42, No. 9, June 28, 2024
You are contemplating the purchase of a life insurance policy
				or annuity contract. In some cases this purchase may involve discontinuing or
				changing an existing policy or contract. If so, a replacement is occurring.
				Financed purchases are also considered replacements.
A replacement occurs when a new policy or contract is purchased
				and, in connection with the sale, you discontinue making premium payments on
				the existing policy or contract, or an existing policy or contract is
				surrendered, forfeited, assigned to the replacing insurer, or otherwise
				terminated or used in a financed purchase.
A financed purchase occurs when the purchase of a new life
				insurance policy involves the use of funds obtained by the withdrawal or
				surrender of or by borrowing some or all of the policy values, including
				accumulated dividends, of an existing policy, to pay all or part of any premium
				or payment due on the new policy. A financed purchase is a replacement.
You should carefully consider whether a replacement is in your
				best interests. You will pay acquisition costs and there may be surrender costs
				deducted from your policy or contract. You may be able to make changes to your
				existing policy or contract to meet your insurance needs at less cost. A
				financed purchase will reduce the value of your existing policy and may reduce
				the amount paid upon the death of the insured.
We want you to understand the effects of replacements and ask
				that you answer the following questions and consider the questions on the back
				of this form.
1. Are you considering discontinuing making premium payments,
				surrendering, forfeiting, assigning to the insurer, or otherwise terminating
				your existing policy or contract? ___YES ___ NO
2. Are you considering using funds from your existing policies
				or contracts to pay premiums due on the new policy or contract?___YES ___ NO
				Please list each existing policy or contract you are contemplating replacing
				(include the name of the insurer, the insured, and the policy or contract
				number if available) and whether each policy or contract will be replaced or
				used as a source of financing:
INSURER NAME
CONTRACT OR POLICY #
INSURED OR ANNUITANT
REPLACED (R) OR FINANCING (F)
1.
2.
3.
Make sure you know the facts. Contact your existing company or
				its agent for information about the old policy or contract. If you request one,
				an in force illustration, policy summary or available disclosure documents must
				be sent to you by the existing insurer. Ask for and retain all sales material
				used by the agent in the sales presentation. Be sure that you are making an
				informed decision.
I certify that the responses herein are, to the best of my
				knowledge, accurate:
_______________________________ ____
Applicant's Signature and Printed Name Date
A replacement may not be in your best interest, or your
				decision could be a good one. You should make a careful comparison of the costs
				and benefits of your existing policy or contract and the proposed policy or
				contract. One way to do this is to ask the company or agent that sold you your
				existing policy or contract to provide you with information concerning your
				existing policy or contract. This may include an illustration of how your
				existing policy or contract is working now and how it would perform in the
				future based on certain assumptions. Illustrations should not, however, be used
				as a sole basis to compare policies or contracts. You should discuss the
				following with your agent to determine whether replacement or financing your
				purchase makes sense:
PREMIUMS:
Are they affordable?
Could they change?
You're older-are premiums higher for the proposed new
							 policy?
How long will you have to pay premiums on the new
							 policy? On the old policy?
POLICY VALUES:
New policies usually take longer to build cash values
							 and to pay dividends.
Acquisition costs for the old policy may have been
							 paid, you will incur costs for the new one.
What surrender charges do the policies have?
What expense and sales charges will you pay on the
							 new policy?
Does the new policy provide more insurance
							 coverage?
INSURABILITY:
If your health has changed since you bought your old
							 policy, the new one could cost you more, or you could be turned down.
You may need a medical exam for a new policy.
Claims on most new policies for up to the first two
							 years can be denied based on inaccurate statements.
Suicide limitations may begin anew on the new
							 coverage.
IF YOU ARE KEEPING THE OLD POLICY AS WELL AS THE NEW
							 POLICY:
How are premiums for both policies being paid?
How will the premiums on your existing policy be
							 affected?
Will a loan be deducted from death benefits?
What values from the old policy are being used to pay
							 premiums?
IF YOU ARE SURRENDERING AN ANNUITY OR INTEREST
							 SENSITIVE LIFE PRODUCT:
Will you pay surrender charges on your old
							 contract?
What are the interest rate guarantees for the new
							 contract?
Have you compared the contract charges or other
							 policy expenses?
OTHER ISSUES TO CONSIDER FOR ALL TRANSACTIONS:
What are the tax consequences of buying the new
							 policy?
Is this a tax free exchange? (See your tax
							 advisor.)
Is there a benefit from favorable "grandfathered"
							 treatment of the old policy under the federal tax code?
Will the existing insurer be willing to modify the
							 old policy?
How does the quality and financial stability of the
							 new company compare with your existing company?