State RegulationsCO specificDifficulty 1/5
To properly establish suitability for a life insurance recommendation in Colorado, a producer should base the recommendation primarily on what?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under the suitability standards administered by the Colorado Division of Insurance, a producer must form a reasonable basis for the recommendation from information about the applicant's financial situation, needs, and insurance objectives. A recommendation that ignores this information cannot be shown to be suitable, and the producer may face discipline by the Commissioner of Insurance.
Why the other options are wrong
- A) The commission the producer will earn is irrelevant to suitability and, if it drives the recommendation, is evidence of an unsuitable sale.
- B) The likely underwriting classification affects whether coverage is issued, not whether the product recommended is appropriate for the applicant's needs.
- C) A producer's past sales experience with other clients is not a substitute for evaluating the current applicant's financial situation and objectives.
Memory hook
No facts, no fit — suitability starts with the applicant's situation.