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?

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.

Why D is correct

C.R.S. § 10-3-1104(1)(a) makes it an unfair method of competition to misrepresent a policy's benefits or terms in order to induce a policyholder to lapse, forfeit, surrender, or exchange a policy. False statements that a policy is worthless, made to force a replacement, are the twisting pattern the Colorado Division of Insurance enforces against.

Why the other options are wrong

• A) The statements were false and made to induce a lapse, so the written factual-comparison safe harbor does not apply.
• B) Unfair claims practices concern the handling of claims, not misrepresentation used to induce a replacement.
• C) Controlled business concerns a producer's own policies, not misrepresentation made to a client.

Memory hook

Worthless today, twisted forever — false lapse talk is twisting.