Which ethical sales practice did Trudy violate by offering a cash gift card for purchasing a life insurance policy?

The practice that Trudy violated by offering a cash gift card for purchasing a life insurance policy is rebating. Rebating refers to the return of a portion of the premium paid by the policyholder as an inducement to purchase a policy. Insurance regulators typically prohibit rebating because it can lead to unfair competition, where certain agents or companies gain business not through the value of their products or services but through financial incentives that may undermine the integrity of the insurance process.

In this case, offering a cash gift card as a form of incentive to purchase a policy is considered a rebate because it essentially provides a financial benefit to the consumer beyond the standard terms of the insurance being sold. This practice can distort the market and is often regulated or outright banned in many jurisdictions to ensure fair practices among agents and brokers.

Understanding rebating is crucial as it highlights the importance of ethical practices within the insurance industry. Agents are encouraged to adhere to legal guidelines and ethical standards to maintain consumer trust and ensure the stability of the insurance marketplace.