Karen the producer pays for her client's initial premium payment as an incentive for purchase. This act is considered a

• A. rebate
• B. kickback
• C. finder's fee
• D. bonus

Answer: (A)

Rebating is offering something of value to induce a person to purchase insurance. When a producer pays the client's initial premium, that’s exactly an inducement of this kind—giving part of the premium back to the applicant to influence the purchase. In Louisiana, such practices are prohibited because they distort fair competition and can unduly sway decisions.

This isn’t a kickback, which would be a payment to the producer or others who help obtain the sale. It isn’t a finder’s fee, which is compensation for referring a client. It isn’t a generic bonus, which isn’t tied to returning part of the insured’s premium to induce a sale. The act described fits the concept of rebating.