State RegulationsNC specificDifficulty 2/5
To close a sale of an accident and health policy, a producer offers the applicant a gift card as an inducement to buy the policy now. The gift card is not specified in the policy. How is this treated under North Carolina law?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under G.S. 58-33-85(a) and (b), neither an insurer nor a producer may offer or give any rebate, discount, special favor, or other valuable consideration not specified in the policy as an inducement to purchase insurance, and the insured may not knowingly accept such an inducement. The exception for producer compensation covers ordinary commissions and fees for licensed services, not side payments to swing a sale. Insurer approval cannot legalize conduct the statute forbids outright.
Why the other options are wrong
- A) G.S. 58-33-85 contains no de minimis dollar exception; any valuable consideration not specified in the policy is prohibited.
- C) The compensation exception under G.S. 58-33-85(b) covers commissions and compensation paid to licensed producers for their services, not inducements handed to the applicant.
- D) Insurer approval does not authorize rebating; the prohibition in G.S. 58-33-85(a) applies regardless of internal company consent.
Memory hook
Sweeteners off-policy = rebating, and the buyer is guilty too.