State RegulationsNC specificDifficulty 1/5
To induce an applicant in Raleigh to buy a life policy, a producer offers to return part of her own commission as a cash payment. The inducement is not specified in the policy contract. Under G.S. 58-33-85, this practice is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under G.S. 58-33-85(a) and (b), neither insurers nor producers may offer or give any rebate, discount, credit, premium reduction, special favor, or other valuable consideration not specified in the policy as an inducement to purchase insurance, and the statute also bars the insured from knowingly accepting such an inducement. Returning commission as cash for the purchase is a classic prohibited rebate.
Why the other options are wrong
- B) Written consent has no legalizing effect here; the written-consent rule in the rebate statute concerns service fees charged above the premium, not commission kickbacks.
- C) There is no pre-clearance procedure that makes a rebate lawful; the prohibition is absolute for anything not specified in the policy.
- D) The statute contains no de minimis exception, so even small rebates of commission as inducements are prohibited.
Memory hook
Cash back to close the sale = rebating, banned for giver and taker.