Indiana Laws and Regulations for Life and Health Insurance Sales Practice Test 2026 - Free Practice Questions and Study Guide

Rebating in the context of insurance refers to the practice of providing premium reductions or rebates as an inducement to encourage a potential client to purchase a policy. This practice involves returning a portion of the premium or providing other financial incentives to the policyholder, which can be seen as a way to lure customers into making a purchase. In many states, including Indiana, rebating is strictly regulated or prohibited altogether because it can undermine the integrity of the insurance market and lead to unfair competition among agents.

The other options focus on different aspects of insurance policies, such as offering discounts, providing extra coverage, or revising terms. However, these do not align with the specific definition of rebating, which centers around the financial incentive aspect offered directly to potential customers to influence their buying decisions.