For how long must an insurance company maintain records of life insurance replacement activity?

Insurance companies are required to maintain records of life insurance replacement activity for a period of five years. This requirement is in place to ensure transparency and accountability in the life insurance market. By retaining these records, the insurance companies can provide necessary documentation for regulatory audits and protect themselves against potential disputes or claims related to replacement activity.

Keeping records for five years allows regulators to trace the circumstances surrounding life insurance replacements, such as the sale of new policies that replace existing ones, ensuring that consumers are not harmed by inadequate advice or misrepresentation during the process. This duration aligns with best practices in record-keeping within the insurance industry, focusing on consumer protection and maintaining a fair market.

The other answer choices do not meet this regulatory requirement, as two years, three years, and seven years all exceed or fall short of the mandated five-year period.