Life insurance replacement often involves which of the following actions?

Life insurance replacement commonly involves the action of purchasing a new policy while surrendering an existing one. This process occurs when an individual decides to replace their current life insurance coverage with a new policy, often in search of better terms, lower premiums, or improved benefits. The replacement can result in a new set of contractual obligations that might replace any existing coverage, which is why the surrender of the old policy is an integral part of this definition.

In Massachusetts, regulations regarding life insurance replacement emphasize the need for transparency and protection for consumers, ensuring that they understand the implications of replacing their existing policies. This includes potential loss of benefits or other valuable features that may not carry over with the new policy.

The other actions listed do not align with the typical definition of replacement in life insurance. Changing beneficiaries without altering the policy does not constitute a new purchase or replacement. Keeping both new and existing policies active would typically not be seen as replacement since it does not involve removing the existing coverage. Transferring ownership to a third party may change who benefits from the policy but does not involve purchasing a new policy or surrendering an existing one. Therefore, the act of purchasing a new policy while surrendering an existing one is the clearest representation of life insurance replacement.