State RegulationsNJ specificDifficulty 1/5
A producer offers a prospective client a television set, not specified in the policy, as an inducement to purchase an insurance policy. What is this practice called?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Rebating is offering any rebate, discount, gift, or thing of value not specified in the policy itself as an inducement to purchase insurance. The television set is exactly such an inducement. New Jersey treats rebating as an unfair trade practice, and the New Jersey Department of Banking and Insurance enforces the prohibition against producers who use anything beyond the policy's own benefits to close a sale.
Why the other options are wrong
- A) Twisting is inducing a policyholder to replace existing coverage by misrepresenting the new policy's terms; no replacement or misrepresentation occurred here.
- B) Commingling is mixing premium funds with personal funds; the television offer involves no handling of money.
- D) Defamation is making false statements about a competitor; nothing was said about another insurer or producer.
Memory hook
Free TV with the policy = rebate — if it isn't in the policy, don't give it.