Required Disclosure Form for Replacing Life Insurance Policies

The special disclosure form that must be provided to insureds when a life insurance policy is being replaced is the Replacement Disclosure Form, also known as the Replacement Notice or Replacement Disclosure Statement. It must list the new policy's costs, benefits, and any differences from the existing coverage so the insured can make an informed decision.

Purpose of the Replacement Disclosure Form

The form is designed to protect consumers by ensuring they understand how the new policy compares to the one being surrendered, including premium changes, cash‑value implications, and any surrender charges.

Key Elements Required on the Form

• Policy numbers of both the existing and replacement policies.
• Effective date of the new policy.
• Premium amounts for both policies, highlighting increases or decreases.
• Cash‑value and death‑benefit comparisons.
• Surrender charges or fees associated with terminating the old policy.
• Any tax consequences of the replacement.

Timing and Delivery

The insurer must deliver the Replacement Disclosure Form at least 10 days before the new policy becomes effective, giving the insured a clear window to review the information and ask questions.

Regulatory Basis

State insurance departments and the National Association of Insurance Commissioners (NAIC) require this disclosure under model regulation NAIC Model Regulation 2600, which many states have adopted.

Consequences of Non‑Compliance

Failure to provide the form can result in regulatory penalties, rescission of the new policy, or legal action from the insured.