Is it illegal for an insurance representative ot pay youto take out a policy?

UPDATED: Mar 3, 2011

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Is it illegal for an insurance representative ot pay youto take out a policy?

If a man was paid by an insurance representative to take out a life insurance policy in order for the representative to earn a substantial bonus due to the number of clients he had, is what he did illegal? Is what the representative did illegal? What could be the penalties for this for both the representative and the man? Could it involve jail time?

Asked on March 3, 2011 under Criminal Law, Minnesota


MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

There are varying forms of insurance fraud but more importantly here, there are also many strict laws in each state concerning the licensure and regulation of insurance producers and agents. The enforcing agency (whether it be the local prosecutor, or state attorney general or insurance department) must determine first the accurate facts and see exactly how the insured obtained the insurance, how he got paid and by what means. The payment of compensation to someone who is not a licensed insurance agent may be considered (dependent on the circumstances) an unfair and deceptive act. You could simply file a tip with the Department of Insurance in Minnesota and you can also look up any enforcement actions that agency has file against insurance companies. Falsifying a sale of an insurance policy to manipulate a commission could be seen as a criminal act and could also be suitable by the agency to file an administrative enforcement action against the agent.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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