State RegulationsMI specificDifficulty 1/5
A Grand Rapids life producer offers an applicant a valuable gift that is not specified in the insurance contract, as an inducement to purchase the policy. Under the Michigan Insurance Code, this practice is:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
M.C.L. 500.2024 makes it unlawful, for life, annuity, and accident and health insurance, to give or offer anything of value not specified in the contract as an inducement to purchase. Timing does not cure the violation and insurer approval is irrelevant — the only statutory exception is the limited merchandise allowance in M.C.L. 500.2024a.
Why the other options are wrong
- A) Giving the gift after delivery is still rebating if it was offered as an inducement to purchase.
- B) Insurer approval does not authorize a rebate under M.C.L. 500.2024.
- C) Gifts used as purchase inducements are precisely what the anti-rebating statute forbids.
Memory hook
A gift to close the sale is a rebate — and rebates are banned.