State RegulationsVA specificDifficulty 3/5
A producer markets a life policy to several prospects using different incentives. Under Virginia's rebating statute, which incentive may the producer lawfully provide?
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
Va. Code § 38.2-509 prohibits giving anything of value not specified in the contract as an inducement, subject to seven enumerated exceptions, one of which covers advertising items of trivial value. A trivial-value branded calendar falls within that exception, while gift cards, commission refunds, and below-file premiums are things of value outside the contract and are classic rebates. The Virginia Bureau of Insurance enforces the line between the two.
Why the other options are wrong
- B) A gift card is a thing of value not specified in the contract; Virginia's statute contains no merchandise exception that would excuse it.
- C) Refunding commission to the applicant rebates part of the price of the policy, which Va. Code § 38.2-509 forbids.
- D) Discounting below the filed rate is rebating through the premium itself and is prohibited by Va. Code § 38.2-509.
Memory hook
Pens and calendars pass; gift cards and premium discounts do not.