State RegulationsCO specificDifficulty 3/5
A variable life policy delivered in Aurora is returned by the policyholder during the 15-day free-look period. Under C.R.S. § 10-7-302(1)(g), what refund is due?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
C.R.S. § 10-7-302(1)(g) gives Colorado life policyholders a 15-day right to return the policy for a refund of premium, but for variable life the refund is measured differently: the account value as of the return date, plus policy fees. Because the policyholder's money is held in a separate account whose value fluctuates with the investments, the statute refunds what the account actually holds rather than a fixed premium figure. The free-look right itself still applies fully to variable life.
Why the other options are wrong
- A) Dividend credits are not part of the variable life refund; the measure is account value plus policy fees.
- C) Surrender charges do not reduce the free-look refund; the statute sets the measure as account value plus policy fees.
- D) Variable life policyholders do have the free-look right; only the refund formula differs from ordinary life insurance.
Memory hook
Variable refunds what the variable account holds — value plus fees, not flat premium.