State RegulationsNY specificDifficulty 3/5
A DFS investigation finds that a New York agent rebated part of a commission to an applicant to induce a life insurance purchase. Under N.Y. Ins. Law §2324, the maximum monetary penalty for this violation is:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under N.Y. Ins. Law §2324, each rebating violation exposes the offender to a penalty of up to $500, and an insurer or agent who knowingly pays a rebate to someone in violation is liable as well. The ban exists so that policies are sold on their merits rather than on secret side payments.
Why the other options are wrong
- A) $25 is the maximum gift value allowed under §2324's advertising and charitable exception — not a penalty figure.
- B) $5,000 per violation is the penalty for an insurer's failure to report a for-cause agent termination under §2112(i), a different duty.
- C) $50,000 comes from the minor-beneficiary insurance limits of §3207 and is not a rebating penalty.
Memory hook
Rebate = up to $500 per violation; do not confuse it with the $5,000 report-failure fine.