State RegulationsNJ specificDifficulty 1/5
A producer offers to give a prospective buyer a cash kickback out of the producer's own commission if the buyer purchases a policy through him. What is this practice called?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Rebating means offering a prospective buyer any part of the producer's commission or anything of value not specified in the policy as an inducement to purchase. The New Jersey Department of Banking and Insurance treats rebating as an unfair trade practice because it distorts fair competition and treats customers unequally. A producer who rebates risks disciplinary action by the department.
Why the other options are wrong
- A) Twisting involves misrepresenting policy terms to induce replacement of an existing policy, not offering a commission share.
- B) Defamation is making false derogatory statements about a competitor, which has not occurred here.
- D) Coercion involves pressuring a customer through threats, such as tying credit to an insurance purchase; no pressure tactic appears in this fact pattern.
Memory hook
Sharing your commission to close the sale is rebating — the department calls it unfair.