State RegulationsCO specificDifficulty 2/5
A producer tells a favored applicant that, if he buys today, the producer will make sure his future dividends are larger than those paid to other identical policyholders. Under C.R.S. § 10-3-1104(1)(g), this is:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
C.R.S. § 10-3-1104(1)(g) prohibits promising a special favor or advantage in dividends or other benefits not specified in the contract. Promising one applicant larger dividends than identical policyholders receive is a selective inducement that is the practical equivalent of rebating, and it subjects the producer to action by the Colorado Commissioner of Insurance.
Why the other options are wrong
- A) Discretionary dividends cannot be promised selectively; the prohibition covers promised advantages as well as paid ones.
- B) There is no loan or debtor relationship, so the coercion-of-debtors statute does not apply.
- D) There is no timing exception; a promised dividend advantage is unlawful whenever it is to be paid.
Memory hook
Bigger dividends for friends equal rebate by promise.