Which of the following is not considered rebating?

Have you ever struggled to answer the question “which of the following is not considered rebating” in relation to the concept of Insurance? There’s no need to worry about it anymore. This post contains the correct answer to your question.

Which of the following is not considered rebating

Options:

  1. Sharing commissions with an agent licensed in the same line of business
  2. Returning premium to a client as an inducement for purchasing a policy
  3. Giving something of value to an insured in exchange for their business
  4. Offering special dividends

The Correct Answer Is:

  • Sharing commissions with an agent licensed in the same line of business

Answer Explanation:

In insurance, rebating is the returning of a portion of premium to an insured person or company. The rebate may be in cash, credits, or reduced rates. It is generally considered unethical for insurers to offer rebates, as it can create a situation where the insurer receives less premium than the full amount necessary to cover the risk. However, there are some circumstances in which rebating is allowed, such as when an insurance policy is canceled and the insurer owes the policyholder a refund of premium.

When a policyholder cancels their insurance policy before the end of the term, they are said to be “rebating.” The insurer then returns a pro-rata share of the unearned premium to the policyholder.The amount of premium returned is based on the number of days remaining in the policy term.

For example, if a policyholder cancels their insurance policy on day 30 of a 365-day term, they would receive (365-30)/365 X 100% = 91.5% of their unearned premium back. If a policyholder cancels their insurance policy after the grace period, they will not receive a return of premium. The grace period is typically 10-30 days after the policy’s effective date.

Conclusion

The answer to your question “which of the following is not considered rebating” should now be clear for you. I appreciate you coming here to find the answer to your question and best wishes for your preparation related to various Insurance topics.

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