State RegulationsCO specificDifficulty 1/5
A producer offers to return part of the first-year premium to any applicant who buys a policy from him this month. Which practice is this?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
C.R.S. 10-3-1104(1)(g) prohibits rebating - returning any part of the premium, or giving any valuable consideration not specified in the contract, as an inducement to purchase insurance. The offer to give back premium money is the textbook violation, and both the producer and a knowingly accepting applicant can be implicated.
Why the other options are wrong
- A) Twisting is misrepresentation designed to induce lapse or replacement of an existing policy, not a return of premium.
- B) No statement about a competitor's financial condition was made.
- C) Controlled business concerns the proportion of a producer's own related business, not inducements to buyers.
Memory hook
Kick back the premium = rebating = banned.