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What is the term used when an agent offers incentives to prospective clients for purchasing insurance?

  1. Kickback

  2. Rebating

  3. Incentivizing

  4. Commission

The correct answer is: Rebating

The term that describes when an agent offers incentives to prospective clients for purchasing insurance is referred to as rebating. Rebating typically involves providing a portion of the agent's commission or some other tangible benefit to entice individuals to buy a policy. This practice is strictly regulated in many jurisdictions to ensure fairness within the industry and to prevent unethical behaviors that could compromise the integrity of the insurance market. In contrast, kickbacks generally refer to a form of illegal compensation that is given secretly to an agent, which is not permissible in a professional business setting. Incentivizing, while it might seem similar, doesn't specifically denote the practice of offering financial benefits contingent on the purchase of insurance. Commission refers to the compensation an agent earns from the sale of a policy, not to the act of offering incentives to clients themselves. Thus, rebating is the correct and precise term that encompasses the act of providing incentives to encourage the purchase of insurance.