State RegulationsNY specificDifficulty 1/5
A New York life agent wants to give a newly insured client a thank-you gift card when the policy is delivered. Under New York's anti-rebating law, what is the most the agent may spend on the gift without violating the rule?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under N.Y. Ins. Law §2324(a)(1), an agent may not offer anything of value as an inducement to purchase or continue insurance, but advertising articles and similar gifts to an insured are tolerated so long as they do not exceed $25 in value. A modest $25 gift card stays within the exception, while anything larger operates as an unlawful rebate. Each rebating violation can cost the agent up to $500.
Why the other options are wrong
- A) The 5% figure is the §2324(f) cap on commission an agent may retain on the agent's own policies, not a gift allowance for insureds.
- B) $500 is the maximum penalty for a rebating violation under §2324, not the ceiling on permissible gifts.
- D) $5,000 is the maximum penalty for an insurer's failure to report a terminated producer under §2112(i), not a gift limit.
Memory hook
Gifts to insureds: $25 is the ceiling — anything more is a rebate.