State RegulationsNY specificDifficulty 2/5
A New York producer tells a long-term care applicant, 'Buy this policy today and I will refund part of my commission to you.' Under N.Y. Ins. Law §2324, this offer is:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under N.Y. Ins. Law §2324, offering anything of value as an inducement to purchase insurance that is not specified in the contract is rebating, and it is unlawful no matter whose money is used - a producer's own commission is still an inducement. A violation exposes the producer to a penalty of up to $500 per violation, and an insurer or agent who knowingly pays such an inducement is liable as well.
Why the other options are wrong
- A) The source of the funds is irrelevant; commission money spent to induce the applicant is still a prohibited rebate.
- C) Reporting the payment to the insurer does not cure an unlawful inducement; §2324 prohibits the offer itself.
- D) No age-based exception exists for rebating; the rule protects every applicant equally.
Memory hook
Rebate = any special inducement; 'it's my commission' is a confession, not a defense.