Florida Life and Health Insurance License Practice Test

How is Life insurance replacement defined in Florida?

1. Buying a new policy with enhanced benefits

2. Exchanging one policy for another with the same insurer

3. A transaction where a new policy is bought and an old policy is discontinued

4. Transferring policy ownership

The correct answer is: A transaction where a new policy is bought and an old policy is discontinued

Life insurance replacement in Florida is defined as a transaction where a new policy is bought and an old policy is discontinued. Option A is incorrect because buying a new policy with enhanced benefits may not necessarily involve discontinuing an old policy. Option B may seem like a close choice, but exchanging one policy for another with the same insurer is not a replacement, as the insurance company remains the same. Option D is incorrect as transferring policy ownership is different from a complete replacement of a policy. Therefore, the best answer is C as it accurately describes what life insurance replacement entails.