State RegulationsCO specificDifficulty 2/5
A producer in Denver tells a client that her current life policy has far worse terms than it actually does, to persuade her to lapse it and buy a new policy. How is this practice treated under Colorado law?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Misrepresenting policy terms to induce a lapse, forfeiture, exchange, conversion, or surrender is an unfair trade practice under C.R.S. § 10-3-1104, enforced by the Colorado Division of Insurance. A written, factual policy comparison that permits an informed decision is allowed, but false statements about the current policy are not.
Why the other options are wrong
- A) The client's written consent does not authorize misrepresentation.
- B) Producers may make truthful, factual comparisons, but false or maliciously critical statements are prohibited.
- D) The prohibition applies regardless of licensure status; it does not depend on the producer being unlicensed.
Memory hook
Truthful comparison ok; twisted facts to force a lapse = unfair practice.