<html> <head> <title>Rule 20:06:08:0D Sample Replacement Notice.</title> <META NAME="Keywords" Content="Administrative Rules 20:06:08:0D"> <META NAME="Description" Content="Administrative Rules 20:06:08:0D Sample Replacement Notice."> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <meta name=Generator content="Microsoft Word 15 (filtered)"> <style> <!-- /* Font Definitions */ @font-face {font-family:"Cambria Math"; panose-1:2 4 5 3 5 4 6 3 2 4;} @font-face {font-family:Tahoma; panose-1:2 11 6 4 3 5 4 4 2 4;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {margin:0in; margin-bottom:.0001pt; font-size:12.0pt; font-family:"Times New Roman",serif;} p.MsoFooter, li.MsoFooter, div.MsoFooter {mso-style-link:"Footer Char"; margin:0in; margin-bottom:.0001pt; font-size:12.0pt; font-family:"Arial",sans-serif;} a:link, span.MsoHyperlink {color:blue; text-decoration:underline;} a:visited, span.MsoHyperlinkFollowed {color:purple; text-decoration:underline;} p.MsoAcetate, li.MsoAcetate, div.MsoAcetate {mso-style-link:"Balloon Text Char"; margin:0in; margin-bottom:.0001pt; font-size:8.0pt; font-family:"Tahoma",serif;} span.FooterChar {mso-style-name:"Footer Char"; mso-style-link:Footer; font-family:"Arial",sans-serif;} span.BalloonTextChar {mso-style-name:"Balloon Text Char"; mso-style-link:"Balloon Text"; font-family:"Tahoma",serif;} .MsoChpDefault {font-size:10.0pt;} @page WordSection1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in;} div.WordSection1 {page:WordSection1;} --> </style> </head> <body lang=EN-US link=blue vlink=purple> <div class=WordSection1> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal>&nbsp;</p> <p class=MsoNormal>&nbsp;</p> <p class=MsoFooter><span style='font-family:"Times New Roman",serif'>&nbsp;</span></p> <p class=MsoNormal>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal align=center style='text-align:center'>DEPARTMENT OF LABOR AND REGULATION</p> <p class=MsoNormal align=center style='text-align:center'>&nbsp;</p> <p class=MsoNormal align=center style='text-align:center'>DIVISION OF INSURANCE</p> <p class=MsoNormal align=center style='text-align:center'>&nbsp;</p> <p class=MsoNormal align=center style='text-align:center'>&nbsp;</p> <p class=MsoNormal align=center style='text-align:center'>&nbsp;</p> <p class=MsoNormal align=center style='text-align:center'>&nbsp;</p> <p class=MsoNormal align=center style='text-align:center'>SAMPLE REPLACEMENT NOTICE</p> <p class=MsoNormal align=center style='text-align:center'>&nbsp;</p> <p class=MsoNormal align=center style='text-align:center'>&nbsp;</p> <p class=MsoNormal align=center style='text-align:center'>Chapter 20:06:08</p> <p class=MsoNormal align=center style='text-align:center'>&nbsp;</p> <p class=MsoNormal align=center style='text-align:center'>APPENDIX D</p> <p class=MsoNormal align=center style='text-align:center'>&nbsp;</p> <p class=MsoNormal align=center style='text-align:center'>SEE:&nbsp; &#167; 20:06:08:41</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Source:</b> 33 SDR 230, effective July 2, 2007; 39 SDR 55, effective October 4, 2012</p> <span style='font-size:12.0pt;font-family:"Times New Roman",serif'><br clear=all style='page-break-before:always'> </span> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>IMPORTANT NOTICE REGARDING REPLACEMENTS</p> <p class=MsoNormal style='text-align:justify'>IMPORTANT NOTICE:</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>REPLACEMENT OF LIFE INSURANCE OR ANNUITIES </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>This document must be signed by the applicant and the producer, if there is one, and a copy left with the applicant. </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>You are contemplating the purchase of a life insurance policy or annuity contract. In some cases this purchase may involve discontinuing or changing an existing policy or contract. If so, a replacement is occurring. Financed purchases are also considered replacements.</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>A replacement occurs when a new policy or contract is purchased and, in connection with the sale, you discontinue making premium payments on the existing policy or contract, or an existing policy or contract is surrendered, forfeited, assigned to the replacing insurer, otherwise terminated, or used in a financed purchase.</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>A financed purchase occurs when the purchase of a new life insurance policy involves the use of funds obtained by the withdrawal or surrender of or by borrowing some or all of the policy values, including accumulated dividends, of an existing policy to pay all or part of any premium or payment due on the new policy. A financed purchase is a replacement.</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>You should carefully consider whether a replacement is in your best interests. You will pay acquisition costs and there may be surrender costs deducted from your policy or contract. You may be able to make changes to your existing policy or contract to meet your insurance needs at less cost. A financed purchase will reduce the value of your existing policy and may reduce the amount paid upon the death of the insured.</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>We want you to understand the effects of replacements before you make your purchase decision and ask that you answer the following questions and consider the questions on the back of this form.</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>1. Are you considering discontinuing making premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing policy or contract? ____________________ YES ____________________ NO </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>2. Are you considering using funds from your existing policies or contracts to pay premiums due on the new policy or contract? ____________________ YES ____________________ NO </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>If you answered &quot;yes&quot; to either of the above questions, list each existing policy or contract you are contemplating replacing (include the name of the insurer, the insured or annuitant, and the policy or contract number if available) and whether each policy or contract will be replaced or used as a source of financing:</p> <p class=MsoNormal style='text-align:justify'>_____________________________________________________________</p> <p class=MsoNormal style='text-align:justify'>_____________________________________________________________</p> <p class=MsoNormal style='text-align:justify'>_____________________________________________________________</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Make sure you know the facts. Contact your existing company or its agent for information about the old policy or contract. If you request one, an in force illustration, policy summary or available disclosure documents must be sent to you by the existing insurer. Ask for and retain all sales material used by the agent in the sales presentation. Be sure that you are making an informed decision.</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>The existing policy or contract is being replaced because ____________________:</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>I certify that the responses herein are, to the best of my knowledge, accurate:</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>I do not want this notice read aloud to me. ____________________ (Applicants must initial only if they do not want the notice read aloud.)</p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>A replacement may not be in your best interest, or your decision could be a good one. You should make a careful comparison of the costs and benefits of your existing policy or contract and the proposed policy or contract. One way to do this is to ask the company or agent that sold you your existing policy or contract to provide you with information concerning your existing policy or contract. This may include an illustration of how your existing policy or contract is working now and how it would perform in the future based on certain assumptions. Illustrations should not, however, be used as a sole basis to compare policies or contracts. You should discuss the following with your agent to determine whether replacement or financing your purchase makes sense: </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>PREMIUMS: Are they affordable? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Could they change? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>You're older are premiums higher for the proposed new policy? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>How long will you have to pay premiums on the new policy? On the old policy? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>POLICY VALUES: New policies usually take longer to build cash values and to pay dividends. </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Acquisition costs for the old policy may have been paid, you will incur costs for the new one. </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>What surrender charges do the policies have? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>What expense and sales charges will you pay on the new policy? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Does the new policy provide more insurance coverage?&nbsp; </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>INSURABILITY: If your health has changed since you bought your old policy, the new one could cost you more, or you could be turned down. </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>You may need a medical exam for a new policy. </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Claims on most new policies for up to the first two years can be denied based on inaccurate statements. </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Suicide limitations may begin anew on the new coverage.&nbsp; </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>IF YOU ARE KEEPING THE OLD POLICY AS WELL AS THE NEW POLICY: </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>How are premiums for both policies being paid? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>How will the premiums on your existing policy be affected? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Will a loan be deducted from death benefits? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>What values from the old policy are being used to pay premiums? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>IF YOU ARE SURRENDERING AN ANNUITY OR INTEREST SENSITIVE LIFE PRODUCT: </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Will you pay surrender charges on your old contract? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>What are the interest rate guarantees for the new contract? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Have you compared the contract charges or other policy expenses? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>OTHER ISSUES TO CONSIDER FOR ALL TRANSACTIONS: </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>What are the tax consequences of buying the new policy? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Is this a tax free exchange? (See your tax advisor.) </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Is there a benefit from favorable &quot;grandfathered&quot; treatment of the old policy under the federal tax code? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>Will the existing insurer be willing to modify the old policy? </p> <p class=MsoNormal style='text-align:justify'>&nbsp;</p> <p class=MsoNormal style='text-align:justify'>How does the quality and financial stability of the new company compare with your existing company?</p> </div> </body> </html>