What You Should Know
- Rebating is the practice of returning a portion of the premium of an insurance agent or broker's commission to the policyholder
- In most states, rebating is an illegal practice
- California, Florida, and Maine allow some variations of rebating, though it is still not an extremely common practice
If you are searching for a life insurance policy, you are likely to seek out any advantages or discounts you can find. Life insurance can be expensive, so it's always a nice incentive to find ways of saving money.
As you discover different ways you could save money on your life insurance, you may be curious to learn more about life insurance companies that allow rebates in the United States.
The truth is, most states have outlawed rebating as an illegal activity. So you will find it difficult to find a life insurance company that can legally offer you the option of rebating when you purchase a policy.
Insurance rebating laws by state vary, so you can always do some research to see if your state allows the practice. Life insurance rebates have been quite a popular form of recruitment for certain companies.
Because life insurance companies take insurance rebating laws very seriously, you will not be able to find a company that allows rebating in any state that has qualified it as an illegal practice.
Even if you can't find a company that will give you a life insurance rebate, you can still find affordable life insurance options in your state. If you have questions when it comes to purchasing life insurance, you can consult a life insurance guide to get more information.
One way to find affordable life insurance is to use an online quote tool to find and compare rates offered by different companies.
When you are looking online to find the best life insurance rates and options, don't forget to use our free quote tool above to see how multiple companies at once compare.
Typically, an example of rebating would be when the purchaser of a life insurance policy receives all or part of the commission an insurance agent would receive for sale as an incentive to purchase a policy with that specific insurance company.
In the vast majority of states, rebating is not allowed in the U.S. However, the National Association of Insurance Commissioners (NAIC) has previously called to legalize the practice of rebating because it doesn't allow for a level playing field when it comes to selling insurance products.
The NAIC has currently begun to question whether rebating should be allowed in certain ways or to certain degrees. But as of now, the rebating laws for each state are as follows:
|State||Legal or Illegal|
As you can see, the vast majority of states in the U.S. have outlawed rebating as a practice insurance companies can engage in. California, Florida, and Maine allow for rebates, but there are still parameters surrounding the practice.
Insurance anti-rebate laws are taken very seriously, and it is not common for potential policyholders to find a life insurance company that will offer an illegal rebate.
Because the act of rebating is considered an illegal practice in most states, you will not want to count on receiving a rebate when you sign up for a life insurance policy.
What is the maximum allowed value of a gift that an agent can give to an insured without violating California insurance rebating laws?
Even though rebates are technically legal in California, most life insurance companies—and insurance companies of any kind—have created several rules and parameters surrounding the idea of offering rebates to potential policyholders.
You may find that some companies are willing to offer gifts as a form of incentive when you sign up for a policy, but others will likely not make this a part of the deal when discussing your options for life insurance coverage.
If you live in California and are interested in purchasing life insurance, you would be better off focusing on other ways to receive discounts on your policy or find a cheaper policy with another company.
The bottom line to all of this is that you are highly unlikely to find a life insurance company that will offer you a rebate.
You may see that a company offers you a gift or incentive for purchasing a policy, but it is often not a great idea for you to buy a policy solely based on a small initial benefit.
Studies show that many people end up purchasing policies that are larger and more expensive than they should because they are not aware of how much life insurance they need.
But you are buying a life insurance policy that lasts years, if not your entire lifetime. So be sure you compare policies online to find rates you can afford and policy types that will best benefit you and your loved ones.
If you are searching to find the perfect life insurance policy, be sure to use our free tool below to compare rates and see what works best for you.