The Office of General Counsel issued the following opinion on May 31, 2005 representing the position of the New York State Insurance Department.
Re: Prize Give Away Limitation
Is there a dollar limitation on a prize offered by a life insurance producer in a raffle that is open to the public and not conditioned on the purchase of insurance?
There is no dollar limitation on the prize as long as the raffle is open to the public and not an inducement for, or interdependent with, the purchase of insurance.
Inquirer, a life insurance producer, wishes to hold a raffle at a "health fair" that is open to the general public. The winning prize is a $100 U.S. Savings Bond. To enter the raffle, participants will fill out an entry form that will be available at the inquirers booth. Participants will have an option to ask for further information on insurance on the entry form but are not required to do so. The winner will be randomly selected from the pool of participants. Purchasing or showing interest in purchasing insurance will not be a condition to winning the prize.
N.Y. Ins. Law § 4224(c) (McKinney Supp. 2003), in relevant part, states:
(c) No such life insurance company . . . and no officer, agent, solicitor or representative thereof . . . shall pay, allow or give, or offer to pay, allow or give, directly or indirectly, as an inducement to any person to insure, or shall give, sell or purchase, or offer to give, sell or purchase, as such inducement, or interdependent with any policy of life insurance or annuity contract . . . any stocks, bonds, or other securities, or any dividends or profits accruing or to accrue thereon, or any valuable consideration or inducement whatever not specified in such policy or contract; nor shall any person in this state knowingly receive as such inducement, any rebate of premium or policy fee or any special favor or advantage in the dividends or other benefits to accrue on any such policy or contract, or knowingly receive any paid employment or contract for services of any kind, or any valuable consideration or inducement whatever which is not specified in such policy or contract.
Under § 4224, there is no dollar limitation to a prize as long as the raffle is open to the general public and the ability to win or enter in the raffle is not an inducement for, or interdependent with, the purchase of insurance.
In the present situation, the participants of this raffle may ask for information on insurance on the entry form but need not apply for insurance. This is not an inducement to buy insurance since the prize will not depend on the application for or purchase of insurance. Therefore, from the information provided, this raffle will not violate the provisions of § 4224.
Accordingly, under the given facts, there are no dollar limitations on a prize given in a raffle by a life insurance producer as long as the raffle is open to the general public and is not an inducement or interdependent with the purchase of insurance.
For further information you may contact Principal Attorney Alan Rachlin at the New York City office.