State RegulationsCO specificDifficulty 2/5
To close a sale in Denver, a producer tells an applicant that a life policy pays dividends every year that are "guaranteed to grow," knowing the policy contains no guaranteed dividends. Under C.R.S. § 10-3-1104(1)(a), this is:
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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 the benefits, dividends, or terms of a policy. Asserting that dividends are guaranteed when the contract makes them discretionary is a direct misstatement of benefits that misleads the applicant about what the policy will pay, and it exposes the producer and insurer to Division enforcement for an unfair trade practice.
Why the other options are wrong
- B) Misstatements about guaranteed dividends are not puffery; they are factual misrepresentations of policy terms.
- C) Rebating involves returning value to induce purchase, not misdescribing what the policy provides.
- D) The coercion-of-debtors statute governs loan conditions, not sales statements about dividends.
Memory hook
If the contract doesn't guarantee it, your tongue can't either.