Which practice involves giving something of value to entice a person to purchase a policy?

The practice of giving something of value to entice a person to purchase a policy is known as rebating. This involves offering a portion of the commission or a benefit to a potential policyholder as a way to encourage them to buy insurance. Rebating is considered a prohibited practice in many jurisdictions as it can undermine the integrity of the insurance market and can lead to unethical behavior, such as undervaluing the true cost of insurance coverage.

Underwriting refers to the process insurers use to evaluate the risk of insuring a potential policyholder, assessing their health history and other factors to determine the terms of coverage. Risk assessment also pertains to analyzing potential risks but does not involve enticing a person to purchase a policy through the offering of value. Premium financing is a method where the policyholder borrows funds to pay insurance premiums, rather than a tactic to persuade someone to buy a policy.

Understanding the definition and implications of rebating helps clarify why this practice stands apart from others in the insurance field and emphasizes the importance of maintaining ethical standards in sales practices.