C is correct. Hawaiʻi provides an important consumer protection when replacement occurs between policies issued by the same insurer or insurers under common ownership or control . In such a transaction, the replacing insurer must give credit for the time that has already elapsed under the existing contract's incontestability and suicide periods , up to the face amount of the existing policy or contract.

This prevents an insured who has already satisfied part or all of these protective periods from unnecessarily starting over solely because coverage is replaced within the same insurer or affiliated insurance group. If the new policy provides a larger face amount, however, the statutory credit applies only up to the existing policy's amount; incremental coverage can remain subject to the provisions governing the newly issued insurance.

Option A ignores this Hawaiʻi-specific replacement safeguard. Option B has no relationship to incontestability or suicide provisions. Option D incorrectly makes beneficiary continuity a condition; the statutory rule concerns the insurer relationship, replacement transaction, elapsed period, and existing face amount.

Replacement questions are particularly important because new contestability, surrender-charge, and suicide provisions can materially affect a policyowner.

Reference topics: HRS §431:10D-505; Replacement; Incontestability; Suicide Provision; Replacing Insurer Duties.

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