When a life insurance agent recommends replacing an existing policy with a new one, what is a key disclosure requirement they must fulfill?

Question: When a life insurance agent recommends replacing an existing policy with a new one, what is a key disclosure requirement they must fulfill?

Answer options: ✅ Provide the client with a detailed comparison statement outlining the advantages and disadvantages of the replacement.

• Obtain a signed waiver from the client acknowledging they understand the replacement is voluntary.
• Inform the client that a replacement is always financially beneficial.
• Submit the new policy application directly to the insurer without disclosing the replacement to the existing insurer.

Correct answer: Provide the client with a detailed comparison statement outlining the advantages and disadvantages of the replacement.

Explanation: Life insurance regulations in Canada require agents to provide a detailed comparison statement to clients when recommending a replacement policy. This ensures the client understands the potential impact, including any loss of benefits or increased costs, before making a decision.