A. In General. If a replacement is involved in a transaction, the replacing insurer shall:
(1) Verify that the required forms are received and are in compliance with this chapter;
(2) Notify any other existing insurer that may be affected by the proposed replacement within 5 business days after:
(a) Receipt of a completed application indicating replacement at the home office of the replacing insurer; or
(b) A replacement is identified, if not indicated on the application;
(3) Mail to an existing insurer a copy of the available illustration or life insurance policy summary for the proposed life insurance policy or available disclosure document for the proposed annuity contract within 5 business days after a request from the existing insurer;
(4) Be able to produce copies of the notification regarding replacement required by Regulation .04C of this chapter, indexed by insurance producer, for at least 5 years or until the next regular market conduct examination by the insurance department of an insurer's state of domicile, whichever is later; and
(5) Provide to the owner of the life insurance policy or annuity contract notice of the right to return the life insurance policy or annuity contract within 30 days after the delivery of the life insurance policy or annuity contract and receive:
(a) An unconditional full refund of all premiums or considerations paid on the life insurance policy or annuity contract, including any life insurance policy fees or charges; or
(b) In the case of a variable life insurance policy or variable annuity contract, a payment of:
(i) The cash surrender value provided under the variable life insurance policy or variable annuity contract; and
(ii) The fees and other charges deducted from the gross premiums or considerations or imposed under the variable life insurance policy or variable annuity contract, including surrender charges.
B. Registered Contract. With respect to a registered contract, an insurer need not comply with §A(3) of this regulation if the insurer provides to the existing insurer, within 5 business days after a request from the existing insurer:
(1) Premium or annuity contract contribution amounts; and
(2) Identification of the appropriate prospectus or offering circular.
C. Replacing Insurer and Existing Insurer Are the Same. If the replacing insurer and the existing insurer in a transaction are the same, or subsidiaries or affiliates under common ownership or control, the replacing insurer:
(1) Shall allow credit for the period of time that has elapsed under the incontestability and suicide period of the replaced life insurance policy or annuity contract up to the face amount of the existing life insurance policy or existing annuity contract; and
(2) With regard to financed purchases, may limit the credit to the amount that the face amount of the existing life insurance policy is reduced by the use of existing life insurance policy values to fund the new life insurance policy or annuity contract.
D. Insurer that Requires Use of Approved Sales Material. If an insurer prohibits the use of sales material other than materials approved by the insurer, as an alternative to the requirements made of an insurer under Regulation .04F of this chapter, the insurer may:
(1) Require with each application a statement signed by the insurance producer that:
(a) The insurance producer used only insurer-approved sales material; and
(b) Copies of all sales material were left with the applicant in accordance with Regulation .04E of this chapter;
(2) Within 10 days after the issuance of the life insurance policy or annuity contract:
(a) Notify the applicant by written or by verbal communication by a person whose duties are separate from the marketing area of the insurer, that the insurance producer has stated that copies of all sales material have been left with the applicant in accordance with Regulation .04E of this chapter;
(b) Provide the applicant with a toll-free telephone number to contact insurer personnel involved in the compliance function if copies of all sales material have not been left with the applicant; and
(c) Stress to the applicant the importance of retaining copies of the sales material for future reference; and
(3) Be able to produce a copy of the letter or other verification in the life insurance policy or annuity contract file for at least 5 years after the termination or expiration of the life insurance policy or annuity contract.