State RegulationsAZ specificDifficulty 2/5
A producer runs a promotion offering a valuable gift to anyone who submits a life insurance application during the month. Under A.R.S. 20-452, this arrangement is:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
A.R.S. 20-452 addresses prohibited inducements: offering merchandise or other valuable consideration as an inducement to procure insurance, beyond what the policy itself provides, is prohibited. A promotion that rewards applicants for applying is an unlawful inducement regardless of who funds the gift.
Why the other options are wrong
- A) Disclosure to the insurer does not authorize an inducement prohibited by A.R.S. 20-452.
- C) The source of the funds is irrelevant; the offer of value to procure insurance is the violation.
- D) Rebating under A.R.S. 20-449 means returning premiums or policy benefits; a gift for applying is an inducement under A.R.S. 20-452.
Memory hook
Gifts for applications buy business — that's a prohibited inducement, A.R.S. 20-452.