Arkansas Life and Health Insurance Practice Exam

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Whenever the purchase of insurance results in an existing policy being dropped, all of the following requirements apply, except:

  1. A replacement statement must be signed by the applicant

  2. Existing insurers must be notified of replacement

  3. Any agent that violates the rules regarding replacement transactions is guilty of a Class A felony

  4. A notice of replacement must be provided to the applicant

The correct answer is: A replacement statement must be signed by the applicant

In the scenario where the purchase of insurance leads to an existing policy being dropped, several requirements apply to ensure transparency and consumer protection. Among these requirements, it is essential to notify the existing insurers of the replacement (Choice B), provide a notice of replacement to the applicant (Choice D), and any agent who violates the rules regarding replacement transactions may face severe consequences but not necessarily a Class A felony (Choice C). It is crucial to have these regulations in place to prevent unethical practices and ensure that clients understand the implications of replacing an existing policy with a new one. Therefore, having a replacement statement signed by the applicant (Choice A) is not a requirement in this context.

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