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?
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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.