(a) Each insurer shall:

1. (1) inform and train its insurance agents and the insurance brokers that place business with the insurer with respect to the requirements of this Part;
2. (2) require with or as part of each application, a completed “Definition of Replacement” signed by the applicant and insurance agent or broker;
3. (3) maintain signed and completed copies of the “Definition of Replacement” in accordance with Part 243 of this Title (Regulation 152); and
4. (4) require with or as part of each application a statement signed by the insurance agent or broker as to whether, to the best of the agent’s or broker’s knowledge, replacement of a life insurance policy or annuity contract is involved in the transaction.

(b) Where a replacement has occurred or is likely to occur, the insurer replacing the life insurance policy or annuity contract shall:

1. (1) require with or as part of each application a list prepared by the insurance agent or broker representing, to the best of the agent’s or broker’s knowledge, all of the existing life insurance policies and annuity contracts proposed to be replaced;
2. (2) require with or as part of each application a copy of the sales material including any proposal, used in the sale of the life insurance policy or annuity contract, and proof of receipt by the applicant of the “IMPORTANT Notice Regarding Replacement or Change of Life Insurance Policies or Annuity Contracts”;
3. (3) prior to the delivery of the life insurance policy or annuity contract, require an accurate and complete “Disclosure Statement” signed by the insurance agent or broker in the form prescribed in appendices 10A or 10B to this Part, including the primary reason or reasons for recommending the new life insurance policy or annuity contract and why the existing life insurance policy or annuity contract cannot meet the applicant’s objectives;
4. (4) examine the sales material, including any proposal, used in the sale of the life insurance policy or annuity contract, and the “Disclosure Statement”, and ascertain that they are accurate and meet the requirements of the Insurance Law and regulations promulgated thereunder;
5. (5) deliver the completed “Disclosure Statement” to the policy or contract holder no later than the time of delivery of the policy or contract. The insurer may, at its discretion, require the “Disclosure Statement” to be signed by the applicant, a copy of which shall be provided to the applicant at the time the applicant signs the “Disclosure Statement”;
6. (6) within 10 days of the delivery of the life insurance policy or annuity contract, furnish to the insurer that issued the coverage that is being replaced the completed “Disclosure Statement” and a list of the sales material, including any proposal, used in the sale of the life insurance policy or annuity contract with an offer to provide a copy of such material within 10 days of a request for the material;
7. (7) submit annual electronic reports by February 1st of each year to the superintendent, indicating which insurers, if any, have failed to provide the information as required in paragraph (c)(2) of this section;
8. (8) maintain copies of: the sales material, including any proposal, used in the sale of the life insurance policy or annuity contract; proof of receipt by the applicant of the “IMPORTANT Notice Regarding Replacement or Change of Life Insurance Policies or Annuity Contracts”; the signed and completed “Disclosure Statement”; and the notification of replacement to the insurer that issued the life insurance policy or annuity contract that is to be replaced, indexed by insurance agent and broker, in accordance with Part 243 of this Title (Regulation 152);
9. (9) treat the proposed life insurance policy or annuity contract in all respects as if it were a new issuance of the life insurance policy or annuity contract subject to no differences in underwriting or in other considerations including premium discount, interest rate credit, insurance agent or broker compensation or expenses, or incentives such as bonuses or other inducements to agents or brokers. This provision, however, shall not prevent an insurer from paying lower compensation or expenses to agents or brokers on the proposed life insurance policy or annuity contract; and
10. (10) if an initial “Disclosure Statement” was provided to the applicant prior to the delivery of the life insurance policy or annuity contract and the life insurance policy or annuity contract is issued other than as applied for, then the insurer shall provide the owner a revised “Disclosure Statement” that conforms to the life insurance policy or annuity contract as issued no later than the time of delivery of the policy or contract, except that a revised “Disclosure Statement” does not need to be provided where there are changes in the amount of expected initial or additional premiums and any changes in amounts of exchanges pursuant to section 1035 of the Internal Revenue Code, rollovers or transfers if the changes do not impact the key benefits and features of the life insurance policy or annuity contract as applied for.

(c) Where a replacement has occurred or is likely to occur, the insurer that issued the life insurance policy or annuity contract that is to be replaced shall:

1. (1) upon notice that its existing coverage may be replaced, maintain copies of such notification, indexed by insurer notifying it of such replacement, in accordance with Part 243 of this Title (Regulation 152); and
2. (2) within 20 days of receipt of a request from a licensee of the department, for information necessary for completion of the “Disclosure Statement” with respect to the life insurance policy or annuity contract proposed to be replaced, together with proper authorization from the applicant, furnish the required information simultaneously to the insurance agent or broker of record of the existing life insurance policy or annuity contract being replaced and the agent or broker and insurer replacing the life insurance policy or annuity contract. This information shall include the insurer's customer service telephone number, the current status of the existing life insurance policy or annuity contract and the currently illustrated dividends/interest and other non-guaranteed costs and benefits.

(d) Any insurer that issues a replacement life insurance policy or annuity contract shall provide to the policy or contract owner the right to return the policy or contract within 60 days from the date of delivery of such policy or contract and receive an unconditional full refund of all premiums or considerations paid on it, or in the case of a variable or market value adjustment policy or contract, a payment of the cash surrender benefits provided under the policy or contract, plus the amount of all fees and other charges deducted from gross considerations or imposed under the policy or contract. Payment of such refund shall be made within 10 days following receipt of the policy or contract for cancellation in accordance with the right to cancellation provision of the policy or contract. During this period, an insurer that issued the policy or contract that has been replaced shall reinstate or restore, without underwriting or a new contestable or suicide period, such policy or contract as of the date of replacement, upon receipt by the insurer that issued the policy or contract has been replaced of:

1. (1) written proof that the replacement policy or contract that has been canceled, including the date of cancellation;
2. (2) any funds, previously released under such replaced policy or contract; and
3. (3) any premium or consideration due on the original policy or contract which shall be calculated from the paid-to-date. The insurer that issued the policy or contract that has been replaced shall reinstate or restore the original policy or contract to its former status to the extent possible and in accordance with its published reinstatement rules to the extent that such rules are not inconsistent with the provisions of this Part.