A. Any person who does not comply with the applicable requirements of this article is subject to penalties prescribed under sections 20-220, 20-295 and 20-456. Violations include:

Terms Used In Arizona Laws 20-1241.08

  • Action: includes any matter or proceeding in a court, civil or criminal. See Arizona Laws 1-215
  • Answer: The formal written statement by a defendant responding to a civil complaint and setting forth the grounds for defense.
  • Contract: A legal written agreement that becomes binding when signed.
  • Contract: means a contract for the purchase of an annuity. See Arizona Laws 20-1241
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Existing insurer: means the insurer whose policy or contract is or will be replaced. See Arizona Laws 20-1241
  • Illustration: means a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years. See Arizona Laws 20-1241
  • Person: includes a corporation, company, partnership, firm, association or society, as well as a natural person. See Arizona Laws 1-215
  • Policy summary: means a description of a policy or contract that meets the requirements in Section 20-1241. See Arizona Laws 20-1241
  • replacement: means a transaction in which a new policy or contract is to be purchased and it is known or should be known to the proposing insurance producer, or to the proposing insurer if there is no insurance producer, that by reason of the transaction an existing policy or contract has been or is to be:

    (a) Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated. See Arizona Laws 20-1241

  • Replacing insurer: means the insurer that issues or proposes to issue a new policy or contract that replaces an existing policy or contract or is a financed purchase. See Arizona Laws 20-1241
  • Restitution: The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action.
  • Sales material: means a sales illustration and any other written, printed or electronically presented information that is created, completed or provided by an insurer or insurance producer, that is used in the presentation to the policy or contract owner and that is related to the policy or contract purchased. See Arizona Laws 20-1241

1. Any deceptive or misleading information set forth in sales material.

2. When completing an application, failing to ask the applicant the pertinent questions regarding the possibility of financing or replacement.

3. The intentional incorrect recording of an answer.

4. Advising an applicant to respond negatively to any question regarding replacement in order to prevent notice to the existing insurer.

5. Advising a policy or contract owner to write directly to the company in such a way as to attempt to obscure the identity of the replacing insurance producer or company.

B. A policy or contract owner may replace existing life insurance or annuities after indicating in or as part of an application for new coverage that replacement is not intended. A pattern of such action by a policy or contract owner who buys new coverage from the same producer is deemed prima facie evidence of the insurance producer’s knowledge that replacement was intended in connection with the transaction and of the insurance producer’s intent to violate this article.

C. If the requirements of this article have not been met, the replacing insurer shall provide the policy owner an in-force illustration, if available, a policy summary for the replacement policy or the available disclosure document for the replacement contract and the appropriate notice regarding replacements prescribed in Section 20-1241.03.

D. The director may impose the following penalties for a violation of this article either separately or in combination:

1. Revocation or suspension of an insurance producer’s or company’s license.

2. Civil monetary penalties.

3. Forfeiture of any commissions or compensation paid to an insurance producer as a result of the transaction in connection with which the violations occurred.

4. If the director has determined that the violations were material to the sale, the insurer may be required to make restitution, restoration of policy or contract values and interest at the maximum lawful rate on the amount refunded in cash.

  Previous section
Next section  
 Article 1.1 Contents