Replacement notice is the formal written notification provided to both the client and, in many states, the existing insurer when a new policy sale will replace current coverage. The notice typically identifies the policies to be replaced, outlines the basic terms of the new contract, and warns about possible disadvantages such as new contestability periods, loss of benefits, and surrender charges. It may be a standalone document or part of a broader replacement disclosure package. Replacement notices allow existing insurers to contact policyowners about alternatives and give regulators insight into replacement activity patterns.

In practice, replacement notice forms are completed at the time of application when the advisor indicates that the new policy is a replacement under state definitions. Case managers ensure that notices are sent to existing carriers within required timeframes and that copies are retained in the agency's files. Existing insurers may respond with in-force illustrations, reduction options, or outreach to the policy owner. Advisors must be prepared to explain why replacement still makes sense in light of any offers to adjust the current policy. Precise handling of replacement notices demonstrates respect for regulatory requirements and transparency in client communications.