The following words and terms, when used in this chapter,
have the following meanings, unless the context clearly indicates
otherwise:
Commissioner-The Insurance Commissioner of
the Commonwealth.
Conservation-An attempt by the existing
insurer or its agent or broker to dissuade a policyowner from the replacement
of existing life insurance or annuity. The term does not include routine
administrative procedures, such as late payment reminders, late payment offers
or reinstatement offers.
Department-The Insurance Department of the
Commonwealth.
Direct-response sales-A sale of life
insurance or annuity where the insured does not utilize an agent in the sale or
delivery of the policy.
Existing insurer-The insurance company whose
policy is or will be changed or terminated in such a manner as described in the
definition of replacement.
Existing life insurance or annuity-A life
insurance or annuity in force, including life insurance under a binding or
conditional receipt or a life insurance policy or annuity that is within an
unconditional refund period.
Registered contract-Variable annuities,
variable life insurance under which the death benefits and cash values vary in
accordance with unit values of investments held in a separate account or
another contract issued by life insurance companies which is registered with
the Federal Securities and Exchange Commission.
Replacement-A transaction in which new life
insurance or a new annuity is to be purchased, and it is known or should be
known to the proposing agent, broker or proposing insurer if there is no agent,
that by reason of the transaction, existing life insurance or annuity has been
or is to be one of the following:
(i)
Lapsed, forfeited, surrendered, assigned to replacing insurer or otherwise
terminated.
(ii) Converted to
reduced paid-up insurance, continued as extended term insurance or otherwise
reduced in value by the use of nonforfeiture benefits, dividend cash values or
other policy cash values.
(iii)
Amended so as to effect either a reduction in benefits or in the term for which
coverage would otherwise remain in force or for which benefits would be
paid.
(iv) Reissued with a
reduction in cash value.
(v)
Pledged as collateral or subjected to borrowing, whether in a single loan or
under a schedule of borrowing over a period of time for amounts in the
aggregate exceeding 25% of the loan value set forth in the policy.
Replacing insurer-The insurance company that
issues or proposes to issue a new policy or contract which is a replacement of
existing life insurance or annuity.
