HLLQP - LIFE 12 FC - Ongoing Service questions with correct answers

What is churning? Answer Churning is an unethical practice whereby an agent advises a client to cancel a policy in order to sell a new one with the same insurer for the sole purpose of earning a commission. Note: This can even include a partial cancellation, such as borrowing against an existing policy to obtain the funds to buy a new policy. What form did the insurance industry create to reduce the odds of churning or twisting? Answer To protect client's from churning or twisting, most jurisdictions require the client to receives (and be required to sign) a life insurance replacement declaration (LIRD). The LIRD provides clients with the following: - A warning not to cancel existing coverage until new is in place. - A list of questions to which they should either know the answer or, if they do not know the answer, that they should ask their agent or someone else; the questions on the list are designed to force the client and agent to have a meaningful conversation about how this change is in the client's best interest. Both the client and agent or broker must sign the form. If a policyholder has collaterally assigned a life insurance insurance policy, can the policyholder exercise the APL non-forfeiture option? Answer No. The assignment prevents the policyholder from reducing any benefit of the policy without the lender's consent.