State RegulationsCO specificDifficulty 2/5
A Colorado life producer writes a substantial volume of policies on the producer's own life and the lives of close family members. During a 12-month period, the aggregate premiums on this controlled business grow. At what point is the producer's license deemed misused under C.R.S. § 10-2-401?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
C.R.S. § 10-2-401(4) and (5) deem the license misused if, during any 12-month period, the aggregate premiums on controlled business exceed the aggregate premiums on all other business of the licensee. Writing controlled business is lawful; it becomes misuse only when it outgrows everything else combined.
Why the other options are wrong
- A) The 25% figure is not the Colorado controlled-business test; C.R.S. § 10-2-401 compares controlled business with all other business.
- B) No dollar threshold appears in C.R.S. § 10-2-401; the test is comparative premium volume over a 12-month period.
- D) Issuing a policy on the producer's own life is permitted; misuse depends on the 12-month premium comparison under C.R.S. § 10-2-401.
Memory hook
Controlled business is fine until it outweighs all the rest.