What limitation does a producer face regarding compensation when replacing a Medicare Supplement policy?

When a producer is involved in the replacement of a Medicare Supplement policy, they face specific limitations regarding the compensation they can earn from the replacement. Specifically, the compensation cannot exceed the renewal commission of the original policy.

This limitation is in place to protect consumers from aggressive sales tactics that may push them to switch their policies unnecessarily. By ensuring that compensation does not exceed the renewal commission of the original policy, the regulatory framework seeks to discourage producers from incentivizing clients to make changes that may not be in their best interest just for higher commissions. This helps maintain stability in the insurance market and ensures that consumers are treated fairly when considering changes to their coverage.