Arizona Insurance Laws and Rules Practice Exam

The advisable action when replacing a client's existing life insurance policy with a new one is to wait until the new policy is issued and delivered before surrendering the existing policy. This is important because it protects the client from lapsing in coverage, which can occur if the existing policy is surrendered too early.

By waiting until the new policy is in effect, the producer can ensure that the client has continuous insurance protection without any gaps. Additionally, this approach allows the client to review the new policy and ensure that it meets their needs and expectations before taking any action on the old policy. It underscores a commitment to responsible practice and the best interest of the client, which is a critical aspect of the insurance industry’s ethical standards.

This process also aligns with regulatory requirements designed to protect consumers during policy replacements, emphasizing the importance of clear communication and transparency in the process. Ensuring clients know they have coverage in place until the new policy is confirmed helps build trust and confidence between the producer and client.