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Hawaii life insurance replacement practice questions

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Replacement has its own line in the Hawaii part of the Life exam. The outline lists HRS 431:10D-501 through 509, broken into the definition, the duties of producers, the duties of insurers that use producers, the duties of replacing insurers, and the duties of the existing insurer. [1] That block sits inside the 12-question "Hawaii laws and rules pertinent to life insurance only" section. [1] Here is what the law says, followed by ten practice questions.

What is Hawaii's definition of life insurance replacement?

HRS 431:10D-502 defines replacement as a transaction where a new policy or contract is to be bought, and the proposing producer (or insurer, if there is no producer) knows or should know that because of it, an existing policy or contract has been or will be: [2]

  1. lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise ended;
  2. converted to reduced paid-up insurance, continued as extended term, or otherwise reduced in value by using nonforfeiture benefits or other policy values;
  3. amended to reduce benefits or the time coverage stays in force;
  4. reissued with any reduction in cash value; or
  5. used in a financed purchase.

A financed purchase is buying a new policy with money from withdrawing, surrendering or borrowing against an existing policy's values. If that happens with the same policyholder and same company within four months before or thirteen months after the new policy's effective date, it is treated as prima facie evidence of intent to finance. [2]

Why the law exists

Section 501 says the purpose is to protect buyers by making sure they get the information they need to decide in their best interest, to reduce the chance of misrepresentation and incomplete disclosure, and to set penalties. [3] It does not apply to some transactions, including credit life, structured settlements, and non-convertible term that will expire in five years or less and cannot be renewed. [3]

Producer duties in brief (431:10D-503)

Insurer duties in brief

Practice questions

1. Which of these is a replacement under Hawaii law?
A. Buying a new policy and keeping the old one unchanged
B. Buying a new policy and converting the old one to reduced paid-up insurance
C. Adding a rider to an existing policy at the same insurer
D. Buying a first policy with no other coverage in force

Answer: B. Converting an existing policy to reduced paid-up insurance is listed in the definition. (431:10D-502) [2]

2. On the application, the applicant says they have no existing policies or contracts. What is the producer's remaining replacement duty?
Answer: None. If the answer is "no," the producer's duties with respect to replacement are complete. (431:10D-503(a)) [4]

3. Who must sign the statement about existing coverage?
Answer: Both the applicant and the producer. (431:10D-503(a)) [4]

4. When must the producer present and read the replacement notice?
Answer: No later than the time of taking the application. (431:10D-503(b)) [4]

5. A client uses a loan from an old policy to pay the new policy's premium, three months after the new policy takes effect. What is this called?
Answer: A financed purchase. Using the old policy's values within thirteen months after the new policy's effective date is prima facie evidence of intent to finance. (431:10D-502) [2]

6. How soon must the replacing insurer notify the existing insurer?
Answer: Within five business days of receiving a completed application that shows replacement. (431:10D-505(a)(2)) [5]

7. How long does the owner have to return a replacement policy for a full refund?
Answer: Thirty days from delivery. (431:10D-505(a)(4)) [5]

8. The replacing and existing insurers are affiliates under common control. What credit must the new policy give?
Answer: Credit for the time already passed under the old policy's incontestability and suicide periods, up to the old policy's face amount. (431:10D-505(b)) [5]

9. A producer tells an applicant to answer "no" to the replacement question so the old insurer is not notified. Is that allowed?
Answer: No. Advising an applicant to answer a replacement question negatively to prevent notice to the existing insurer is listed as a violation. (431:10D-508(a)(4)) [7]

10. Which of these is excluded from the replacement rules?
A. A whole life policy being surrendered for a new universal life policy
B. A non-convertible term policy that will expire in five years or less and cannot be renewed
C. An annuity being partially surrendered to fund a new life policy
D. A policy being reissued with less cash value

Answer: B. That kind of existing term coverage is listed as an exception. (431:10D-501(b)(8)) [3]

Study tips

More Hawaii law questions are in the free Hawaii insurance law practice test.

Prep Retention is independent and is not affiliated with Pearson VUE or the state.

Sources

Laws and exam documents quoted as of October 2026.

  1. Pearson VUE, Hawaii content outlines 121201 (effective January 1, 2026): https://www.pearsonvue.com/content/dam/VUE/vue/en/documents/publications/121201.pdf
  2. HRS 431:10D-502: https://data.capitol.hawaii.gov/hrscurrent/Vol09_Ch0431-0435H/HRS0431/HRS_0431-0010D-0502.htm
  3. HRS 431:10D-501: https://data.capitol.hawaii.gov/hrscurrent/Vol09_Ch0431-0435H/HRS0431/HRS_0431-0010D-0501.htm
  4. HRS 431:10D-503: https://data.capitol.hawaii.gov/hrscurrent/Vol09_Ch0431-0435H/HRS0431/HRS_0431-0010D-0503.htm
  5. HRS 431:10D-505: https://data.capitol.hawaii.gov/hrscurrent/Vol09_Ch0431-0435H/HRS0431/HRS_0431-0010D-0505.htm
  6. HRS 431:10D-506: https://data.capitol.hawaii.gov/hrscurrent/Vol09_Ch0431-0435H/HRS0431/HRS_0431-0010D-0506.htm
  7. HRS 431:10D-508: https://data.capitol.hawaii.gov/hrscurrent/Vol09_Ch0431-0435H/HRS0431/HRS_0431-0010D-0508.htm

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