Offering cash payment or something of value to an applicant as an inducement to buy or maintain insurance is called

Offering cash payment or something of value to an applicant as an inducement to buy or maintain insurance is called

• A. Churning
• B. Rebating
• C. Tying
• D. Puffing

Answer: (B)

The concept being tested is inducements in insurance sales and why offering cash or something of value to an applicant to buy or keep insurance is prohibited. Offering cash or a valuable perk to influence an insurance purchase is called rebating. This practice is regulated or illegal in many jurisdictions because it can bias decision-making and undermine fair competition among applicants. Rebating specifically refers to giving financial incentives to induce the purchase or maintenance of a policy, which is why it’s the correct term here. To contrast, churning involves encouraging a policyholder to replace an existing policy to generate additional commissions, tying means making the sale of one product dependent on the purchase of another, and puffing is exaggerated or hyperbolic marketing that isn’t meant to mislead about the product’s features. These describe different improper practices, whereas rebating targets improper financial inducements.

The concept being tested is inducements in insurance sales and why offering cash or something of value to an applicant to buy or keep insurance is prohibited. Offering cash or a valuable perk to influence an insurance purchase is called rebating. This practice is regulated or illegal in many jurisdictions because it can bias decision-making and undermine fair competition among applicants. Rebating specifically refers to giving financial incentives to induce the purchase or maintenance of a policy, which is why it’s the correct term here.

To contrast, churning involves encouraging a policyholder to replace an existing policy to generate additional commissions, tying means making the sale of one product dependent on the purchase of another, and puffing is exaggerated or hyperbolic marketing that isn’t meant to mislead about the product’s features. These describe different improper practices, whereas rebating targets improper financial inducements.