What is the term for cash surrendering an existing whole life policy and purchasing a new one?

The correct term for cash surrendering an existing whole life policy and purchasing a new one is "Replacement." In the context of insurance, replacement refers to the process where an existing insurance policy is terminated (surrendered for its cash value) to fund a new insurance policy. This action is often taken by policyholders to gain better benefits, lower premiums, or more desirable terms in the new policy.

Replacement is a critical concept in insurance regulations because it often requires specific disclosures to be made to ensure that policyholders understand the implications of surrendering their existing policies, including potential loss of benefits and the need for comprehensive comparisons. In this context, insurance companies and agents are responsible for guiding clients appropriately through the replacement process.

The other options are terms that do not accurately describe this situation. "Conversion" generally pertains to switching from one type of coverage to another within the same insurer without surrendering the existing policy. "Reallocation" usually refers to redistributing investments within a policy rather than terminating one for another. "Refinancing" typically relates to debt agreements, not insurance policies, and thus is not applicable in this context.