{"data":{"id":"us-ky/krs-304.12-030","jurisdiction":"us-ky","citation":"KRS 304.12-030","heading":"Replacement life insurance -- \"Twisting\" prohibited.","body":"(1) As used in this section:\n(a) \"Replacement\" means any transaction in which a new life insurance policy or\nannuity contract is to be purchased and it is known or should be known to the\nproposing producer, or to the proposing insurer if there is no producer, that by\nreason of the transaction, an existing life insurance policy or annuity contract\nhas been or is to be:\n1. Lapsed, forfeited, surrendered or partially surrendered, assigned to the\nreplacing insurer, or otherwise terminated;\n2. Converted to reduced p aid-up insurance, continued as extended term\ninsurance, or otherwise reduced in value by the use of nonforfeiture\nbenefits or other policy values;\n3. Amended so as to effect either a reduction in benefits or in the term for\nwhich coverage would otherwise r emain in force or for which benefits\nwould be paid;\n4. Reissued with any reduction in cash value; or\n5. Used in a financed purchase;\n(b) \"Existing insurer\" means the insurance company whose existing life insurance\npolicy or annuity contract is or will be c hanged or affected in a manner\ndescribed within the definition of replacement transaction;\n(c) \"Replacing insurer\" means the insurance company that issues or proposes to\nissue a new life insurance policy or annuity contract that replaces an existing\npolicy or contract or is a financed purchase;\n(d) \"Existing life insurance policy or annuity contract\" means any individual life\ninsurance policy or annuity in force, including a life insurance policy under a\nbinding or conditional receipt or a life insurance po licy or annuity contract\nthat is within an unconditional refund period;\n(e) \"Financed purchase\" means the purchase of a new policy involving the actual\nor intended use of funds obtained by the withdrawal or surrender of, or by\nborrowing from values of, an existing policy to pay all or part of any premium\ndue on the new policy. If a withdrawal, surrender, or borrowing involving the\npolicy values of an existing policy is used to pay premiums on a new policy\nowned by the same policyholder and issued by the sam e company within four\n(4) months before or thirteen (13) months after the effective date of the new\npolicy, it is prima facie evidence of the policyholder's intent to finance the\npurchase of the new policy with existing policy values. This prima facie\nstandard does not affect the monitoring obligations of the existing insurer; and\n(f) \"Direct-response solicitation\" means a solicitation through a sponsoring or\nendorsing entity or individual solely through mails, telephone, the Internet. or\nmass communication media.\n(2) No replacing insurer shall issue any life insurance policy or annuity contract in a\nreplacement transaction to replace an existing life insurance policy or annuity\ncontract unless the replacing insurer shall agree in writing with the insured that:\n(a) The new life insurance policy or annuity contract issued by the replacing\ninsurer will not be contestable by it in the event of such insured's death to any\ngreater extent than the existing life insurance policy or annuity contract would\nhave been contestable by the existing insurer had such replacement not taken\nplace provided, however, that this paragraph shall not apply to that amount of\ninsurance written and issued which exceeds the  amount of the existing life\ninsurance; and\n(b) The policy or contract owner shall have the right to return the policy or\ncontract within thirty (30) days of the delivery of the policy or contract and\nreceive an unconditional full refund of all premiums or  considerations paid on\nit, including any policy fees or charges, or in the case of a variable or market\nadjustment policy or contract, a payment of the cash surrender value provided\nunder the policy or contract plus the fees and other charges deducted fro m the\ngross premiums or considerations or imposed under such policy or contract.\n(3) Unless otherwise specifically included, subsection (2) of this section shall not apply\nto:\n(a) Credit life insurance;\n(b) Group life insurance or group annuities where the re is no direct solicitation of\nindividuals by an insurance producer. Direct solicitation shall not include any\ngroup meeting held by an insurance producer solely for the purpose of\neducating or enrolling individuals or, when initiated by an individual mem ber\nof the group, assisting with the selection of investment options offered by a\nsingle annuity provider in connection with enrolling that individual. The\ncommissioner shall promulgate administrative regulations for group life\ninsurance or group annuity c ertificates marketed through direct response\nsolicitation;\n(c) Group life insurance and annuities used to fund prearranged funeral contracts;\n(d) An application to the existing insurer that issued the existing policy or\ncontract when a contractual policy c hange or conversion privilege is being\nexercised, or when the existing policy or contract is being replaced by the\nsame insurer pursuant to a program filed with and approved by the\ncommissioner;\n(e) Existing life insurance that is a nonconvertible term lif e insurance policy\nwhich will expire in five (5) years or less and cannot be renewed; or\n(f) Proposed life insurance that is to replace life insurance under a binding or\nconditional receipt issued by the same company;\n(g) Policies or contracts used to fund:\n1. An employee pension or welfare benefit plan that is covered by the\nEmployee Retirement and Income Security Act (ERISA);\n2. A plan described by Sections 402(a), 401(k) or 403(b) of the Internal\nRevenue Code, where the plan, for purposes of ERISA, is es tablished or\nmaintained by an employer;\n3. A governmental or church plan defined in Section 414 of the Internal\nRevenue Code, a governmental or church welfare benefit plan, or a\ndeferred compensation plan of a state or local government or tax exempt\norganization under Section 457 of the Internal Revenue Code; or\n4. A nonqualified deferred compensation arrangement established or\nmaintained by an employer or plan sponsor.\nNotwithstanding the provisions of this paragraph, subsection (2) of this\nsection shall apply to policies or contracts used to fund any plan or\narrangement that is funded solely by contributions an employee elects to\nmake, whether on a pre -tax or after-tax basis, and where the insurer has been\nnotified that plan participants may choose from a mong two (2) or more\ninsurers and there is a direct solicitation of an individual employee by an\ninsurance producer for the purchase of a contract or policy. As used in this\nparagraph, direct solicitation shall not include any group meeting held by an\ninsurance producer solely for the purpose of educating individuals about the\nplan or arrangement or enrolling individuals in the plan or arrangement or,\nwhen initiated by an individual employee, assisting with the selection of\ninvestment options offered by a s ingle insurer in connection with enrolling\nthat individual employee;\n(h) Where new coverage is provided under a life insurance policy or contract and\nthe cost is borne wholly by the insured's employer or by an association of\nwhich the insured is a member;\n(i) Immediate annuities that are purchased with proceeds from an existing\ncontract. Immediate annuities purchased with proceeds from an existing\npolicy are not exempted from the requirements of this section; or\n(j) Structured settlements.\n(4) No person sha ll make or issue, or cause to be made or issued, any written or oral\nstatement of a material fact which is untrue or omit to state a material fact necessary\nin order to make the statements made, in the light of circumstances under which\nthey were made, not  misleading with respect to comparisons as to the terms,\nconditions, or benefits contained in any policy for the purpose of inducing or\nattempting or tending to induce the policyholder to lapse, forfeit, borrow against,\nsurrender, retain, exchange, modify,  convert, or otherwise affect or dispose of any\ninsurance policy.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=17013","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:41Z","sha256":"658a3b33f0a63f1c73131b4d1e63c3ccb5b3cfe702221ef580f6f95a55b0d02a","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.12-020","next":"us-ky/krs-304.12-035"},"notice":"GroundRules: Original legal text. Not legal advice."}