Sarah, a licensed agent, recommends a new permanent life insurance policy to her client, David, which will replace his existing universal life policy. David has expressed concerns about the surrender charges on his current policy and the lower initial premiums of the new policy, which Sarah highlighted. What document is Sarah legally obligated to provide to David as part of this replacement process?

Question: Sarah, a licensed agent, recommends a new permanent life insurance policy to her client, David, which will replace his existing universal life policy. David has expressed concerns about the surrender charges on his current policy and the lower initial premiums of the new policy, which Sarah highlighted. What document is Sarah legally obligated to provide to David as part of this replacement process?

Answer options: ✅ A Life Insurance Replacement Declaration (LIRD)

• A Needs Analysis Summary
• A Policy Illustration for the new policy only
• David's original policy contract

Correct answer: A Life Insurance Replacement Declaration (LIRD)

Explanation: When an existing life insurance policy is replaced, the agent is legally obligated to provide the client with a Life Insurance Replacement Declaration (LIRD) to ensure full disclosure of the implications of replacement, as per CISRO guidance.