If you buy a New York life insurance policy, certain steps need to be taken, especially if you are replacing an existing policy.
As the life insurance buyer, you want to make sure you receive these important documents as they’ll help you decide if a new policy really is better than your existing life insurance policy.
Here’s What You Need to Know
Known as Reg. 60, New York requires that specific steps be taken when you apply for life insurance.
The type of life insurance you apply for will determine which forms are required.
The good news is that we know the Reg 60 rules and will show you exactly what needs to be done in order to complete the application process.
What is a Replacement?
If you have a life insurance policy and plan to trade it in for a new policy, that is considered to be a replacement.
It’s no big deal unless your agent fills out the paperwork incorrectly!
If that’s the case, you’ll need to complete all new paperwork.
Definition of Replacement
New York insurance laws require that form PR-102 – Definition of Replacement form be completed for every application.
The law is designed to protect you the consumer as it requires additional disclosures by the agent, existing insurance company, and new company.
The form asks if you will be lapsing, surrendering, canceling, reducing the face amount, changing policy to a paid-up insurance policy, assigning the policy as collateral, stopping premium payments, etc.
If you answer “yes” to any of the above, New York life insurance laws consider this to be a replacement under Regulation 60.
The benefit to you is that your agent, the existing life insurer and the new company must disclose detailed information to you.
Now What?
When a replacement is involved, your agent must contact your existing life insurance company with form LF-203 – Authorization to Release Information.
The existing life insurance company is required to respond with detailed information about your existing policy.
Your agent then needs to complete one of the following disclosure statements for your review and submission to the new company.
PR 101 – Disclosure Statement for Whole Life or Universal Life Product Replacement
or
PR 107 – Disclosure Statement for use with Replacement of Term Policy to Term Policy (With no cash value) only
Having these completed forms available to you will provide you with a way to make apples to apples comparisons.
The Bottom Line
Replacement paperwork while time-consuming is designed to protect the consumer.
When you have an existing whole life insurance or universal life insurance policy, it is extremely important for you to receive accurate information.
The reason why is that some agents may try to show you information that makes the new policy look better than it really is.
For term life insurance, the disclosures are simpler to understand as there is no cash value, policy loans or surrender values to contend with.
Make sure your agent provides you with all of the above or choose a different agent to help you.
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