Insurance companies are regulated both by the federal government and the state government. These regulations are designed to protect the integrity of a company as well as consumer rights.
Regulation 60 is a consumer protection law in the State of New York that pertains to the replacement of life insurance and annuity contracts. Regulation 60 requires that insurance companies give out specific information and disclosure to consumers wanting to replace their existing policy with a new one.
Agents are required to submit a "Definition of Replacement" form for every life insurance or life annuity sale. When a replacement is proposed that would cause the buyer to surrender, lapse or change the status of an existing policy, the replacing company must prepare a comparative analysis of the existing and proposed life insurance policies for the buyer. The process usually takes about three weeks. The agent and policy holder must review the form and both parties must sign the disclosure to verify that all parties have understood the requirements and have signed off in agreement.
Regulation 60 Protects Consumers
The main goal of Regulation 60 is to make sure consumers understand why they are replacing their existing policy for a new one. Life insurance jargon is, typically, difficult for the average consumer to understand. Regulation 60 enables consumers to make a side-by-side comparative study of the features of the existing life insurance product against the features of the proposed policy, in a format that is easy to read and understand. Regulation 60 includes projections and additional disclosures that include the main reason why the policy is being replaced and why the existing policy does not meet the applicant's needs.
With recent cases of abuse of investors' interest being reported, Regulation 60 protects buyers from making an unwise decision choice. It protects the consumer from misrepresentation of a policy, misleading sale tactics, ambiguous terms, and falsified comparisons. Regulation 60 forces insurers to inform their clients about the pros and cons of a life policy so that consumers are able to make an informed decision.
Before You Replace Your Old Life Insurance Policy
While it is good to review your life insurance policy periodically, frequent changing of life insurance policies is not usually recommended since insurance products incur heavy upfront expenses. Very often, your existing life insurance carrier may be able to incorporate the changes you desire into your existing contract. In any case, you should consult your tax advisor to check if there are any unfavorable implications associated with the replacing of your existing life insurance policy with a new one.
Get Great Life Insurance Quotes Online and Compare
With that said, there are may be life insurance products that can offer you significantly better benefits than your existing policy. With online life insurance quote providers, you can easily check out multiple life insurance quotes from the best life insurance carriers, for free and without any obligations. Comparative studies make it easier for you to review product features and make an informed decision.
Replacing your existing life policy with a new one may be a good decision, or it may be a bad one. Make sure you understand the facts and study carefully the disclosure statement to comprehend the advantages and the disadvantages a change in policy would entail.