State RegulationsCO specificDifficulty 2/5
Under C.R.S. § 10-2-401, a person who is not licensed may place certain insurance through a fraternal benefit society without holding a producer license. What is the limit on this activity?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
C.R.S. § 10-2-401(3)(b) exempts from licensing the placing of life insurance not exceeding $50,000 in face amount, or other insurance on not more than 25 individuals, when the person receives no compensation. The no-compensation condition is essential — receiving any commission or valuable consideration for the placement removes the exemption.
Why the other options are wrong
- A) A commission defeats the exemption under C.R.S. § 10-2-401(3)(b); the placement must be made without any compensation.
- B) An extra service fee is compensation, so it destroys the exemption even when the group has 25 or fewer individuals.
- D) The exemption is capped at $50,000 of life face amount or 25 individuals; family coverage alone does not lift the cap.
Memory hook
Fraternal favor: $50,000 life or 25 people, and zero pay.