State RegulationsCO specificDifficulty 3/5
A Denver producer offers to pay one month of the client's premium out of her own commission as an inducement to buy a life policy. Under C.R.S. § 10-3-1104(1)(g), this offer is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
C.R.S. § 10-3-1104(1)(g) prohibits rebating — offering any valuable consideration not specified in the contract as an inducement to purchase insurance. Paying a month of premium out of the producer's commission is a rebate, and in Colorado both the offer and the acceptance of a rebate are unlawful.
Why the other options are wrong
- B) The source of the funds, even the producer's own commission, does not matter; the inducement itself is prohibited.
- C) A policy dividend must come from the insurer under the terms of the contract, not from a producer's side payment.
- D) Disclosure cannot cure a rebate; the inducement is unlawful whether or not it appears on the application.
Memory hook
Your commission is not a coupon.