When a producer offers something of value in return for the purchase of an insurance policy, which prohibited sales practice has been committed?

• A. Rebating
• B. Inducement
• C. Churning
• D. Twisting

Answer: (B)

Inducing someone to buy a policy by offering something of value is prohibited because it lets the agent influence the buyer’s decision with incentives rather than the policy’s merits. This practice is designed to keep purchasing decisions fair and based on the policy itself, not on gifts, kickbacks, or special deals.

In this case, offering anything of value in return for the purchase fits the concept of inducement. It’s a general term for using an incentive to steer the buyer toward buying. While rebating is another term you might hear for the same idea, the situation described—an agent giving something of value to secure a sale—is classified here as inducement.

Churning and twisting involve other improper practices (replacing policies to generate commissions or misrepresenting a policy during a replacement), which are different from offering an incentive to purchase.