State RegulationsMI specificDifficulty 2/5
Under the Michigan Insurance Code, which of the following is NOT an unlawful rebate?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
M.C.L. 500.2024a creates a narrow exception to the anti-rebating rule: giving merchandise with an invoice value not exceeding $5.00 to each life insurance applicant is not an unlawful rebate. Anything above that value, and any return of premium or payment of the applicant's premium, remains a rebate prohibited by M.C.L. 500.2024.
Why the other options are wrong
- B) $100.00 far exceeds the $5.00 merchandise ceiling set by M.C.L. 500.2024a.
- C) Returning part of the premium is a classic rebate prohibited by M.C.L. 500.2024.
- D) Paying the applicant's premium is value not specified in the contract and is prohibited as an inducement.
Memory hook
Five-dollar trinkets are tolerated; anything richer is a rebate.