New Jersey Life Insurance Exam Practice Question
A producer assists an insured in converting a life policy to Reduced Paid-Up insurance in order to buy a new policy. This action is BEST known as
Correct Answer: D
Rationale: In this scenario, the action of converting a life policy to Reduced Paid-Up insurance to facilitate the purchase of a new policy is best classified as replacement. Replacement involves replacing an existing insurance policy with a new one, which can have implications for coverage and benefits.
Option A, solicitation, refers to the act of seeking clients or selling policies, which does not specifically address policy conversion. Option B, rebating, involves offering a portion of the premium back to the insured, which is illegal in many jurisdictions. Option C, twisting, describes misleading a policyholder to switch policies, but the scenario indicates a legitimate conversion process. Thus, replacement accurately captures the essence of the action taken.
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