Final answer:
The statement about needing to provide special forms during life insurance replacement is true, not false. These forms ensure that policyholders are informed about the implications of replacing their policy, including changes in benefits and coverage.
Step-by-step explanation:
The statement 'Special forms must be given to clients electing to replace coverage' is actually true, not false, concerning the replacement of life insurance. When a policyholder decides to replace their life insurance policy with a new one, the insurer is required to provide the client with specific forms that outline the details of the new coverage and the implications of replacing their current policy. This is a critical part of the process as it ensures that clients are fully informed about the changes that the replacement entails, including any potential loss of benefits, new exclusions, or differences in coverage.
It is essential for clients to understand the terms and consequences of replacing their policy, such as the possibility of being subject to a new contestability period or losing accrued benefits. Therefore, the provision of special forms is mandated by regulations to protect the consumer. The falsehood in the statement could relate to other aspects of life insurance replacement, such as incorrectly suggesting no regulatory guidelines or consumer protection measures are in place.