The promise of a discount in premium as an inducement to purchase insurance is an Unfair Trade Practice known as

• A. Twisting
• B. Replacing
• C. Rebating
• D. Coercion

Answer: (C)

Offering a premium discount to induce a purchase is rebating, an unfair trade practice. Rebating covers any inducement or valuable consideration offered to influence the purchase of insurance, such as premium reductions, gifts, or other incentives beyond what the policy terms and law allow. This is discouraged and often illegal because it can mislead consumers, distort fair competition, and encourage purchases based on the inducement rather than the policy’s true value.

Twisting involves misrepresentation to replace or switch an existing policy, usually to earn a commission or trigger a new sale, not simply offering a discount. Replacing is the act of persuading someone to surrender or lapse an existing policy in favor of a new one, which is a separate improper practice. Coercion is forcing someone to buy or replace insurance, which isn’t what’s described here.