Michigan Life Insurance Practice Exam

The correct action that a producer is required to take when replacing an existing life insurance policy is to submit a list of policies to be replaced. This requirement is in place to ensure transparency and to protect the interests of the policyholder. By providing this list, the producer makes it clear to the insurer and the client which policies are being replaced, allowing for a complete understanding of the implications of the replacement.

This process is essential as it helps in evaluating the potential impact on the policyholder, such as understanding the benefits that might be lost with the existing policy and ensuring that the new policy aligns with the client’s current needs. This regulation is designed to prevent lapses in coverage and to ensure that policyholders are fully informed about their options before making decisions regarding their insurance coverage.

The other options may involve actions that can be beneficial or advisable for a producer to take during the replacement process, but they are not mandatory under the rules governing insurance replacements. For example, providing a summary of benefits or notifying the policyholder in writing can enhance communication, and canceling the existing policy may not even occur until the new policy is in place. However, submitting a list of policies to be replaced is specifically mandated to facilitate transparency and informed decision-making for the policyholder.