State RegulationsCO specificDifficulty 2/5
Which of the following is a permitted practice under C.R.S. 10-3-1104(1)(g), Colorado's rebate prohibition?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
C.R.S. 10-3-1104(1)(g) permits dividends out of nonparticipating surplus, along with industrial-plan expense allowances, retrospective group-rate adjustments, and HIV testing benefits under C.R.S. 10-3-1104.5. Rebated premiums, special out-of-contract favors, and stock inducements are on the prohibited side of the line.
Why the other options are wrong
- A) Offering stocks, bonds, or other securities as an inducement is expressly prohibited by the subsection.
- B) A special favor or advantage in dividends not specified in the contract is exactly what the subsection forbids.
- D) Returning part of the premium is the core definition of an illegal rebate in Colorado.
Memory hook
Surplus dividends okay - pocket money and shares are not.