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Key Takeaways

  • North Dakota requires detailed written notice when replacing life insurance or annuities
  • Producers must provide comparison of existing and proposed coverage
  • Replacing insurer must maintain replacement records
  • Twisting and churning are prohibited replacement practices
  • New contestability and suicide periods begin with replacement policies
Last updated: January 2026

North Dakota Replacement Rules

Replacement occurs when a new life insurance policy or annuity is purchased with the intent to terminate, surrender, or reduce coverage under an existing policy. North Dakota has regulations to protect consumers from unsuitable replacements.

Definition of Replacement

A replacement occurs when a new policy is purchased and:

  • An existing policy is lapsed, forfeited, or surrendered
  • Policy values are reduced or borrowed
  • Coverage is converted or reduced
  • Policy is reissued with reduced values
  • Policy is amended to reduce benefits

Required Disclosures

Replacement Notice

The producer must provide the applicant with a Replacement Notice that includes:

ItemRequirement
ComparisonSide-by-side of existing and new policy
Surrender ValuesCurrent and projected values
Death BenefitsComparison of coverage amounts
Premium CostsCost difference over time
Surrender ChargesCharges for early termination
New ContestabilityNew 2-year period starts

Prohibited Practices

Twisting

Twisting is misrepresenting the terms of an existing policy to induce replacement:

  • Falsely claiming existing policy is "worthless"
  • Misrepresenting surrender values
  • Hiding costs of replacement
  • Exaggerating benefits of new policy

Churning

Churning is excessive replacement to generate commissions:

  • Multiple replacements in short periods
  • Pattern of replacements in producer's book
  • Ignoring client's best interests
  • Creating new surrender charge periods

Records Retention

North Dakota requires maintenance of replacement records for regulatory examination purposes.

Test Your Knowledge

What is the term for misrepresenting an existing policy to induce replacement in North Dakota?

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Up Next

3.1 North Dakota Health Insurance Policy Requirements

Chapter 3: North Dakota Health Insurance Laws