Final answer:
If a new annuity provides no greater financial benefit than the existing annuity, the practice is considered an unnecessary replacement, which is deemed unethical in the insurance industry.
Step-by-step explanation:
If Paul is sold a new annuity and it holds no greater financial benefit for him than the existing contract, this practice is indeed considered an unnecessary replacement. In the insurance industry, replacing one annuity with another can often result in considerable fees and may not always be in the best interest of the client. For this reason, financial advisors are expected to adhere to ethical standards that ensure any replacement of annuities should only be done if it presents a clear benefit to the policyholder, such as improved financial outcomes, better features, or more suitable terms for the client's current situation.
When these conditions are not met, the practice is deemed unethical and is a disservice to the client. Therefore, the statement is true: it is considered an unnecessary replacement if a new policy is sold without providing greater financial benefit over an existing contract.