State RegulationsCO specificDifficulty 1/5
A producer tells a prospect that a life policy will pay large annual dividends, knowing the insurer has never declared any. This conduct 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)(a) prohibits misrepresenting the benefits, advantages, conditions, or terms of any policy, including untrue or exaggerated dividend statements. Promising dividends the insurer has never declared misleads the applicant about the policy's value and is an unfair method of competition in Colorado.
Why the other options are wrong
- B) Rebating involves giving back premium or other value to induce a sale, not making false benefit statements.
- C) Boycott and coercion involve pressure or group action against competitors or customers, not false dividend claims.
- D) Defamation concerns false statements about a competitor's financial condition, not misstatements about one's own product.
Memory hook
Promise dividends that never came? That is misrepresentation.