State RegulationsPA specificDifficulty 2/5
A Pennsylvania producer promises an applicant season tickets to a local team if the applicant buys a life policy from her. The tickets are not mentioned in the policy. What has the producer done?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Valuables offered to induce an insurance purchase are unlawful inducements. Under 40 P.S. § 1171.5(a)(8), offering any valuable consideration or inducement not specified in the policy as an incentive to buy insurance is an unfair trade practice, and 40 P.S. § 310.45 prohibits such rebates independently. The tickets cost the producer personal money, but that does not matter: the inducement is tied to the sale. The Pennsylvania Insurance Department can discipline the producer and impose penalties for the violation.
Why the other options are wrong
- A) Defamation involves false and maliciously critical statements about another insurer's finances; nothing here disparages any competitor.
- C) Twisting requires the inducement of a policyholder to drop existing coverage in favor of new coverage; here there is no existing policy being displaced.
- D) A gift tied to the purchase is precisely the kind of inducement Pennsylvania law forbids; the fact that it is personal property rather than a premium credit does not create an exception.
Memory hook
Tickets are bait, and bait buys trouble: any not-in-the-policy inducement is an unlawful rebate.