Colorado Life Producer License Practice Test

When must a producer provide a disclosure statement?

1. Before the policy is issued

2. At the time of the claim

3. Before any policy replacement

4. After the client completes a health exam

The correct answer is: Before any policy replacement

A producer must provide a disclosure statement before any policy replacement to ensure that the client is fully informed about the implications of replacing their existing insurance policy. This requirement is in place to protect consumers by promoting transparency and allowing them to understand how the new policy compares to their current one, including differences in coverage, benefits, and potential drawbacks. By providing this disclosure prior to a replacement, producers not only adhere to ethical guidelines but also fulfill legal obligations that ensure consumers make informed decisions about their insurance needs. This practice helps to mitigate the risk of policy replacements that may not serve the best interests of the client.