To induce an applicant to purchase an annuity, a Tennessee producer offers to sell her shares of stock he owns at a below-market price, as a separate side deal outside the contract. Under T.C.A. § 56-8-104, giving, selling, or offering securities as an inducement to purchase insurance is:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
T.C.A. § 56-8-104's rebating prohibition expressly includes giving, selling, or offering to give or sell stocks, bonds, or other securities as an inducement to purchase insurance. A below-market sale is still an offer of securities tied to the insurance purchase, and the value conveyed is valuable consideration not specified in the policy. The separate regulation of securities markets does not authorize insurance producers to use securities as sales incentives, and the Tennessee Department of Commerce & Insurance enforces the ban against both giving and selling arrangements.
Why the other options are wrong
- A) Separate securities regulation does not matter; the statute specifically names stocks, bonds, and securities as forbidden insurance inducements.
- C) The applicant paying something for the shares does not cure the violation; a below-market sale still conveys value as an inducement outside the contract.
- D) The statute reaches giving, selling, or offering securities, so charged or discounted transactions are prohibited as well as free giveaways.
Memory hook
Stocks, bonds, securities as a sales sweetener? The rebate statute names them outright.