State RegulationsCO specificDifficulty 2/5
Denver producer Marisol Vega is recommending that a client replace an existing life policy with a new one. Under Colorado Insurance Regulation 4-1-4, what must happen with the Notice Regarding Replacement?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Colorado Insurance Regulation 4-1-4, the Notice Regarding Replacement must identify the new and existing policies, summarize the disadvantages of replacement, and be signed by both the applicant and the producer. A copy must be left with the applicant and copies provided to the replacing insurer so the new insurer can evaluate the transaction. Skipping these steps exposes the producer to Division of Insurance discipline for improper replacement practices.
Why the other options are wrong
- A) The applicant must also sign the notice, and copies must be distributed — it is not a producer-only document kept in personal files.
- C) The existing insurer does not sign the notice; the form protects the applicant, not the company being replaced.
- D) No Division of Insurance pre-approval is required for the notice; the duty is to complete and distribute it at the point of sale.
Memory hook
Both sign, applicant keeps a copy, replacing insurer gets the rest — the notice never goes to the Division.