To win new business in Kalamazoo, a life producer promises each applicant shares of stock in the insurer's parent company if the application is approved. Under the Michigan Insurance Code's inducement and rebating provisions (M.C.L. 500.2024), this offer is:

Why D is correct

M.C.L. 500.2024 of the Michigan Insurance Code prohibits giving, selling, or offering securities or any other consideration not specified in the policy as an inducement to purchase life, annuity, or accident and health coverage. The stock offer is valuable consideration outside the contract designed to swing the sale, so it is an unlawful inducement whether or not the insurer approves it, and it exposes both the producer and the insurer to director action.

Why the other options are wrong

• A) The prohibition reaches precisely this situation — valuable consideration outside the stated premium used to induce the purchase — so leaving the stock out of the premium makes no difference.
• B) There is no first-applicant exception; the only statutory exception is for merchandise with an invoice value not exceeding $5.00 under M.C.L. 500.2024a, and securities are not merchandise.
• C) Insurer consent cannot legalize what the statute itself forbids; the prohibition binds both the person giving and the person accepting the inducement.

Memory hook

Stock as a sweetener = unlawful inducement; only $5.00 merchandise gets a pass.