Which of the following statements is incorrect regarding insurance practices?

The statement selected as the answer reflects a misunderstanding of the ethical standards and legal guidelines that govern insurance practices. While agents may engage in replacing policies, this practice must adhere to regulations that prioritize the interests of clients over the pursuit of commissions.

In many jurisdictions, it is considered unethical—and potentially illegal—for agents to prioritize their financial gain from policy replacements without ensuring that such replacements are in the best interest of the client. Misleading clients about the benefits of policies is an outright violation of ethical standards, as transparency is crucial for informed decision-making.

Furthermore, agents are required to disclose all terms and conditions of a policy before a sale. This requirement exists to protect consumers, ensuring they understand what they are purchasing and the implications of the policy they are considering.

Ultimately, while replacing policies can be legal under certain conditions, it must be done with full transparency and a genuine focus on serving the client’s best interests, rather than merely to earn a commission.