State RegulationsGA specificDifficulty 1/5
A Georgia producer offers a client a cash payment out of the producer's own commission as an inducement to purchase a life policy. What is this practice called, and how is it treated in Georgia?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under O.C.G.A. § 33-6-4(b)(8)(B), it is an unfair trade practice to give or offer, directly or indirectly, a rebate of premiums or any valuable consideration not specified in the contract as an inducement to purchase insurance. A cash payment out of commissions is exactly such an inducement, and it remains a prohibited rebate regardless of how the producer funds it or how small the amount is.
Why the other options are wrong
- A) Twisting means inducing a policyholder to lapse or surrender a policy through misrepresentation, which is a different practice; disclosure does not legalize a commission rebate either.
- C) Defamation involves false and malicious statements about a competitor or another person in the insurance business, not cash inducements to buyers.
- D) Coercion involves forcing or intimidating parties in insurance transactions; there is no de minimis exemption that permits commission rebates.
Memory hook
Never buy business with your commission.