What is Illinois' definition of a life insurance replacement?

The definition of life insurance replacement in Illinois refers specifically to a transaction in which a new policy is bought. This typically occurs when an individual decides to purchase a new life insurance policy while simultaneously canceling or allowing an existing one to terminate. The law aims to ensure that consumers are fully aware of the implications of replacing an existing policy, including any potential loss of benefits, cost differences, and possible delays in coverage.

In this context, option A accurately reflects the nature of life insurance replacement. Insurance regulations are designed to protect consumers in these transactions, requiring disclosures and ensuring that customers understand the consequences of moving from one policy to another. By emphasizing the characteristics of such transactions, the correct choice aligns with the legal framework that governs life insurance in Illinois.

Other options do not fit the legal definition. Cancelling a policy by an insurer, providing policy dividends, or discussing premium increases do not pertain to the act of replacing an existing life insurance policy with a new one.