PassSprint

One rule, 2 ways the exam asks it. Same knowledge point, different phrasing — work through all of them, because the exam rarely reuses the wording.

State RegulationsCO specificDifficulty 3/5

Which payment is permitted under C.R.S. § 10-2-702 even though the recipient is not an actively licensed producer?

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Answer & full 3-part explanation (select an option above, or peek)

Why C is correct

C.R.S. § 10-2-702 carves out exceptions to the licensed-producer payment rule: renewal or deferred commissions may be paid to persons entitled to them, an assignment may be made to the producer's own partnership or corporation, and entities that do not themselves sell, solicit, or negotiate insurance may receive compensation. The prohibition targets payment for the licensed activities themselves.

Why the other options are wrong

  • A) Negotiating an application is a licensed activity, so paying an unlicensed person for it violates C.R.S. § 10-2-702.
  • B) Soliciting a new policy is a licensed activity; the renewal and deferred-commission exception does not cover a first commission for new solicitation by an unlicensed person.
  • D) Paying an unlicensed employee for referrals tied to the sale of insurance is valuable consideration not authorized by C.R.S. § 10-2-702.

Memory hook

Renewals, deferreds, and non-selling entities can be paid; solicitors cannot.

State RegulationsCO specificDifficulty 3/5

Under C.R.S. § 10-2-702, which arrangement is a permitted exception to the ban on paying commissions or other valuable consideration to unlicensed persons?

Select an option to reveal the answer and the full 3-part explanation — free, no signup.

Answer & full 3-part explanation (select an option above, or peek)

Why A is correct

C.R.S. § 10-2-702(1),(2) permits payment of renewal or deferred commissions to persons entitled to them even if the person is no longer licensed, and it also allows assignment of commissions to the producer's own partnership or corporation and payment to entities that do not themselves sell, solicit, or negotiate. The core rule remains intact: compensation for selling, soliciting, or negotiating requires a license held at the time of the services.

Why the other options are wrong

  • B) A bonus tied to referrals that produced new policies is valuable consideration for unlicensed solicitation, which C.R.S. § 10-2-702 forbids.
  • C) Negotiating a sale is licensed activity under C.R.S. § 10-2-702, so sharing commission with an unlicensed marketer violates the statute.
  • D) Discussing coverage options with an applicant is solicitation or negotiation, and paying an unlicensed person for it is prohibited by C.R.S. § 10-2-702.

Memory hook

Renewals owed and your own firm are the license-free lanes.

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