What is the transaction called when a new life insurance policy is purchased and an existing policy is surrendered?

The transaction involved in purchasing a new life insurance policy while simultaneously surrendering an existing one is known as replacement. This term is specifically used in the insurance industry to describe the process whereby a policyholder replaces an old life insurance policy with a new one.

Replacement can occur for various reasons, such as obtaining better coverage, lower premiums, or updated policy features that better suit the policyholder’s current needs. It is important for agents and clients to be aware of the implications of replacement, including possible loss of benefits from the old policy, changes in terms and conditions, and any potential tax impacts.

The other terms in the options do not accurately describe this specific action. Reassessment refers to the evaluation of a policy’s worth or coverage, and while policy transition and exchange could relate to changing policies, they do not specifically denote the act of surrendering one policy to obtain another.