Illinois Life Producer State-designated Practice Exam

What document must accompany a replacement application?

1. Replacement application form

2. Disclosure statement

3. Notice regarding replacement

4. New policy proposal

The correct answer is: Notice regarding replacement

The correct choice is the "Notice regarding replacement" because this document is crucial in the context of insurance applications involving the replacement of an existing policy. When a producer or agent is helping a client replace their current insurance policy with a new one, the notice serves as an important disclosure that informs the policyholder about the implications of their decision. This notice typically outlines the potential ramifications of replacing an old policy, such as the loss of benefits and any waiting periods that may apply to the new policy. It also ensures that the policyholder is fully aware of the consequences before making a switch, promoting transparency and informed decision-making. While the other documents mentioned, such as the replacement application form, disclosure statement, or new policy proposal, play important roles in the insurance process, the "Notice regarding replacement" is specifically mandated to accompany replacement applications to protect the interests of the consumer and promote ethical practices within the industry.