State RegulationsTN specificDifficulty 1/5
Which of the following is an unlawful rebate under Tennessee insurance law?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
T.C.A. § 56-8-104 (Rebates) prohibits offering or giving any rebate of premiums, any special favor or advantage in dividends or benefits, or any valuable consideration not specified in the policy, as an inducement to purchase insurance. Returning a premium portion not provided for in the contract is the classic rebate; commissions, mid-term refunds of unearned premium, and equitable age-misstatement adjustments are ordinary and lawful practices.
Why the other options are wrong
- B) Contractual commissions are the producer's lawful compensation, not a rebate of the applicant's premium.
- C) A refund of unearned premium on cancellation is a contract right, not an inducement to purchase.
- D) Adjusting benefits for age misstatement is an equitable correction required by law, not a valuable consideration to induce a sale.
Memory hook
Anything sweet not printed in the policy is a rebate — and rebates are banned.