CARD Q024
A producer offers part of a commission as an inducement to buy insurance. Which issue must be checked under the state’s law?
- The policy’s mortality table alone
- The insurer’s annuity payout option
- Rebating restrictions and any permitted exceptions
- The insured’s beneficiary class
Rebating restrictions and any permitted exceptions
Rebating rules regulate inducements outside policy terms. Allowed gifts, conditions, and exceptions vary; one national dollar limit would be misleading.
Why each choice is right or wrong
A. The policy’s mortality table alone
Incorrect. Mortality tables do not determine whether an outside sales inducement is permitted.
B. The insurer’s annuity payout option
Incorrect. Annuity payout choices do not govern this commission inducement.
C. Rebating restrictions and any permitted exceptions
Correct. Rebating rules regulate inducements outside policy terms. Allowed gifts, conditions, and exceptions vary; one national dollar limit would be misleading.
D. The insured’s beneficiary class
Incorrect. Beneficiary classification does not decide rebating legality.
Review the related terms
Use these lessons to revisit the concepts and try additional practice questions.