State RegulationsOH specificDifficulty 2/5
A Cincinnati producer offers a new life insurance client a cash kickback out of the first-year commission as thanks for buying, and the client accepts the money. Under Ohio law, who has committed a violation?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
ORC 3901.21(G) makes it an unfair practice not only to pay, give, or offer a rebate of premiums or any valuable consideration not specified in the contract as an inducement, but also to knowingly receive or accept such a rebate. The client who knowingly takes the kickback violates the statute just as the producer who pays it does, and the producer's conduct is additionally grounds for discipline under ORC 3905.14(B).
Why the other options are wrong
- A) The statute reaches both sides of the transaction; the ban on knowingly receiving or accepting rebates places liability on the client as well as the giving producer.
- B) Rebate liability does not stop at the company level; the individual producer's offer and the client's knowing acceptance each violate ORC 3901.21(G) on their own.
- C) Which party initiated the arrangement is irrelevant; the offer of a cash inducement and the knowing acceptance of it are each prohibited regardless of who suggested it.
Memory hook
In Ohio, taking a rebate is as illegal as making one.