State RegulationsNY specificDifficulty 1/5
Under New York law, how may a producer properly be compensated for selling a long-term care insurance policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Reg 193 (11 NYCRR Part 58) and the New York Insurance Law, permitted compensation for a long-term care sale is the commission the insurer pays the licensed producer for the policy placed. Anything that turns into a special inducement for the applicant - such as a rebate of commission or premium - or compensation routed to unlicensed persons or third-party kickbacks steps outside the permitted arrangement.
Why the other options are wrong
- A) Rebating commission to the applicant is an unlawful inducement, not compensation; the source of the money does not legalize the rebate.
- B) Producers are compensated by the insurer through the commission structure, not by charging applicants a private fee to buy.
- D) Payments from care providers for steered business are kickbacks, not permitted producer compensation; the only clean payment runs from the insurer to the licensed producer.
Memory hook
The insurer pays the licensed producer - the only clean money in the deal.