Common use of Exchanges and Replacements Clause in Contracts

Exchanges and Replacements. 1. To be eligible for reinsurance under this Agreement, a policy resulting from an internal exchange or replacement (an "Exchanged Policy") must be underwritten by the Company in accordance with the portions of its Underwriting Guidelines applicable to exchanges and replacements. An Exchanged Policy may be covered under this Agreement as follows: a. If the Company's guidelines would consider an Exchanged Policy to be "new business" and the Exchanged Policy uses an underlying policy form, then it may be submitted as "new business" if it meets the following criteria: i) the Company has obtained complete and current underwriting evidence on the full ultimate amount; ii) the full normal commissions are paid for the new plan; and iii) the Suicide and Contestable provisions apply as if the policy were newly issued. b. Notwithstanding the foregoing, exchanges from single life products into a joint-last-survivor product will not be reinsured hereunder. 2. If the Company's guidelines do not treat the policy as new business and the replacement utilizes an underlying policy, the Exchanged Policy will continue to be ceded to the Reinsurer on a "point-in-scale" basis utilizing the YRT Rates shown in Exhibit B (the rates will be based on the original issue age, underwriting class and duration since the issuance of the original policy). 3. If the Company's guidelines do not treat the policy as new business and the replacement does not utilize an underlying policy, no coverage is available under this Agreement. 4. The Reinsurer's approval to exchange or replace the policy will be required if the original policy was reinsured on a facultative basis.