What is it called when a buyer receives something of value as an inducement to purchase an insurance policy?

The term for when a buyer receives something of value as an inducement to purchase an insurance policy is known as "rebating." This practice involves providing a benefit or incentive to a policyholder that is not explicitly specified in the insurance contract, often to encourage them to buy a policy.

Rebating is heavily regulated and, in many jurisdictions, illegal because it can distort the true nature of the insurance agreement and lead to unethical marketing practices. The intent behind prohibiting rebating is to ensure that all policyholders are treated fairly and to maintain a level playing field among insurance providers. This maintains the integrity of the insurance market.

In contrast, incentivizing is more general and does not specifically refer to the insurance context. Commissions refer to the payment that agents receive for selling policies, and fee sharing typically pertains to arrangements between agents or brokers rather than direct inducements to purchasers. Understanding these distinctions helps ensure compliance with insurance laws and regulations while recognizing the ethical considerations in insurance sales practices.