State RegulationsCO specificDifficulty 2/5
A producer in Colorado Springs offers to rebate two months of the client's first-year premium as an inducement to buy a life policy. Under C.R.S. § 10-3-1104, what is the status of this offer?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
C.R.S. § 10-3-1104(1)(g) prohibits rebating premiums or giving any valuable consideration not specified in the contract as an inducement to purchase. The permitted exceptions are narrow — such as dividends from nonparticipating surplus — and do not include premium rebates offered to win business.
Why the other options are wrong
- A) Disclosure does not cure a rebate; the practice is prohibited whether or not it is disclosed.
- C) There is no first-policy-year exception to the rebate prohibition.
- D) The client's age is irrelevant; the rebate prohibition applies to all applicants.
Memory hook
Rebating premiums buys trouble, not business.