What Is Life Insurance Rebating? 
Life insurance rebating occurs when life insurance agents pay part of their commission to their clients in exchange for writing a life insurance policy on them . The rebating may also take the form of gifts , trips , or discounts . It is used as a way to provide an incentive for people to buy from them . Life insurance rebating is illegal according to state insurance laws in all but two states , and is considered an unethical way to do business . Fines and penalties are high , so that most life insurance agents shy away from offering any type of gift at all to clients who have placed policies with them , even though small tokens of appreciation are legal in most states . 