Life · Chapter 21 · Replacement
Replacement (Florida Definition)
Definition
A transaction in which a new policy or contract is purchased and it is known to the proposing insurer or its agent that, because of the transaction, an existing policy or contract will be: (1) lapsed, forfeited, surrendered, or partially surrendered; (2) converted to reduced paid-up insurance, continued as extended-term insurance, or otherwise reduced in value through nonforfeiture benefits or other policy values; (3) amended to reduce benefits or the term coverage would remain in force or benefits would be paid; or (4) reissued with a reduced cash value or used in a financed purchase.
In plain English
New policy in, old policy harmed in any of four ways — and the seller knows it. That's a replacement, and the replacement rules switch on.
Exam tip
Replacement is legal when the rules are followed — don't confuse it with twisting or churning, which are illegal misrepresentation-driven replacements.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms