State RegulationsIL specificDifficulty 3/5
An accident and health producer offers an applicant a merchandise gift card as an inducement to purchase a policy, telling the applicant that 'small gifts like this are always allowed.' Under Illinois law, what is the status of this offer?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Illinois takes a hard line on rebating. 215 ILCS 5/151 prohibits any rebate of premium or commission, or any thing of value not specified in the policy, and the statute contains no merchandise-dollar exception for small gifts; its narrow exceptions concern items such as child passenger restraint systems. Moreover, 215 ILCS 5/153 makes accepting a rebate unlawful as well, so the applicant's acceptance is no safe harbor. The Illinois Department of Insurance treats both giving and receiving as violations.
Why the other options are wrong
- A) Illinois law provides no small-value merchandise exception; the gift card is a thing of value not specified in the policy and is therefore a prohibited rebate.
- B) No home-office approval can authorize a statutory prohibition; rebating is unlawful regardless of internal company sign-off.
- D) The violation occurs with the offer itself, and no statutory text conditions unlawfulness on repeat gifts within a year.
Memory hook
No gift loophole in Illinois: anything of value not in the policy is a rebate (5/151).