State RegulationsCO specificDifficulty 3/5
Which practice is permitted under Colorado's rebate restrictions?
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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) permits paying dividends out of nonparticipating surplus under the terms of the policy, along with retrospective group-rate adjustments, while banning rebates of premium and inducements of valuable consideration outside the contract. A surplus dividend is a contractual entitlement, not an unlawful inducement.
Why the other options are wrong
- A) Offering stocks, bonds, or other securities as an inducement to purchase is expressly prohibited by the rebate statute.
- C) Selective returns of premium as an inducement are the core conduct the rebate prohibition outlaws.
- D) Valuable consideration not specified in the contract is exactly what the statute forbids offering.
Memory hook
Surplus dividends are earned by contract, not given as bait.