State RegulationsNC specificDifficulty 2/5
A producer offers a prospective client in Charlotte a cash rebate out of the producer's own commission as an inducement to buy a policy. Under G.S. 58-33-85, this offer is:
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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, neither an insurer nor a producer may pay or offer any rebate, discount, premium reduction, special favor or other valuable consideration not specified in the policy as an inducement, and the insured may not knowingly accept one. The permitted exceptions — the producer's ordinary compensation and participating-policy dividends — do not cover a cash kickback tied to closing the sale.
Why the other options are wrong
- A) Disclosure does not cure rebating; the inducement itself is unlawful regardless of paperwork.
- C) No first-policy exception exists in G.S. 58-33-85.
- D) Participating-policy dividends are an exception to the prohibition, not a reason the rebate becomes mandatory.
Memory hook
Cash back to close the sale = rebating. Nobody may accept it.