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State RegulationsCO specificDifficulty 2/5

Under the suitability standards enforced in Colorado for life insurance and annuity recommendations, a producer's recommendation must be based primarily on:

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Answer & full 3-part explanation (select an option above, or peek)

Why D is correct

Colorado's suitability requirements, administered by the Colorado Division of Insurance and the Colorado Commissioner of Insurance, require that a recommendation rest on the applicant's financial situation, needs, and objectives — not on the producer's compensation or convenience. A recommendation that cannot be tied to the customer's circumstances is unsuitable by definition. This standard disciplines product placement across life insurance and annuity sales in the state.

Why the other options are wrong

  • A) Compensation is exactly what suitability rules screen out; the recommendation must serve the applicant, not the commission.
  • B) An insurer's sales goals impose no suitability duty on consumers and cannot justify a recommendation.
  • C) Administrative convenience for the agency has no place in a suitability analysis.

Memory hook

Suit the customer, not the seller — needs, finances, objectives first.

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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?

Select an option to reveal the answer and the full 3-part explanation — free, no signup.

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.

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