Under no loss no gain laws, a replacing policy must cover ongoing claims for the policy it replaces.

• A. Pay all future premiums for the replaced policy
• B. Pay ongoing claims under the policy it replaces
• C. Provide a full refund of premiums paid
• D. Underwrite new health questions

Answer: (B)

Under no loss no gain laws, the protection for the insured hinges on keeping benefits intact when coverage is replaced. When a policy is replaced, the company taking over must assume responsibility for ongoing claims under the policy it is replacing. This means any claims that have already occurred or are in progress under the old policy, and would still be payable, continue to be covered by the new insurer. The aim is to prevent the insured from losing benefits simply because their policy changed hands.

So the replacing policy must pay ongoing claims under the policy it replaces. The other options don’t align with this protective purpose: future premiums for the replaced policy aren’t mandated by this rule, a full premium refund would ignore ongoing obligations and benefits, and underwriting new health questions relates to evaluating new applications rather than honoring existing, in-progress claims.