State RegulationsCO specificDifficulty 3/5
A producer urges an Aurora client to drop an individual whole life policy and join his employer's group life plan, which the producer will be paid to place. Under Colorado Insurance Regulation 4-1-4, is this a replacement?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Colorado Insurance Regulation 4-1-4 excludes non-solicited group life from the replacement rules, but group coverage that a producer actively solicits and is compensated for placing is another matter. When solicited group coverage will displace an existing individual policy, the transaction is a replacement: the producer must submit the signed replacement statement and provide the Notice Regarding Replacement. The exclusion is narrow and does not shelter producer-driven switches into group plans.
Why the other options are wrong
- B) The exclusion reaches only non-solicited group life; producer-solicited group coverage that displaces an existing policy is covered.
- C) The regulation is not limited to individual-to-individual switches; solicited group coverage can be the replacing coverage.
- D) Relative premium cost is irrelevant; the trigger is that existing coverage is being replaced through a solicited transaction.
Memory hook
Solicited group counts; only quiet, non-solicited group life escapes the replacement rules.