State RegulationsCO specificDifficulty 2/5
Producer Marcelle Duane in Boulder tells a client that her current life policy is 'worthless' and urges her to let it lapse and replace it, mainly so Marcelle can earn a new commission. Which unfair practice is this?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
C.R.S. 10-3-1104(1)(a) prohibits misrepresenting policy facts to induce a policyholder to lapse, forfeit, exchange, convert, or surrender insurance - Colorado's twisting prohibition. Earning a new commission is the classic motive, and the false statement about the existing policy's value completes the violation.
Why the other options are wrong
- B) Nothing of value was offered back to the policyholder; the inducement was the false statement, not a rebate.
- C) Unfair claim settlement provisions govern claim handling, and no claim exists in this scenario.
- D) No economic pressure or boycott was used; the tool was misrepresentation about the policy.
Memory hook
Twisting = lying a policy into the grave.