Which statement best describes the effect of pre-existing conditions on policy replacement?

• A. They are always covered automatically.
• B. Pre-existing conditions may be excluded or waiting periods apply.
• C. They are never considered in replacement policies.
• D. They become the sole basis of coverage in the new policy.

Answer: (B)

When a policy is replaced, underwriters assess any health issues that existed before the switch. Those pre-existing conditions may be excluded from the new policy or require a waiting period before coverage for them begins. This reflects how new underwriting evaluates risk at the time of replacement and can prevent immediate coverage for conditions that were present before the new policy took effect. The other ideas—that pre-existing conditions are automatically covered, never considered, or become the sole basis of coverage—don’t fit because underwriting generally allows for exclusions or waiting periods, and coverage terms are defined by the new policy rather than by the pre-existing condition alone.