New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following informal opinion on November 15, 2005, representing the position of the New York State Insurance Department.

Re: Promotional Gifts

Question Presented

May a life insurance agent or broker give a promotional novelty item that is worth $10.00 to prospective clients without violating New York Insurance Law?

Conclusion

With respect to life, accident and health insurance, an agent or broker subject to the provisions of N.Y. Ins. Law § 4224(c) (McKinney’s Supp. 2005), may not distribute promotional novelties in connection with the sale of life, accident and health insurance unless it is specified in the policy or contract as it would constitute an inducement to purchase such insurance in violation of N.Y. Ins. Law § 4224(c) (McKinney’s Supp. 2005), even if the recipient of such promotional novelty did not purchase a life or accident and health insurance policy.

Facts

The inquirer received by mail from an investment company selling life insurance, an offer to receive a $10 gift card for an oil company that sells gasoline in exchange for attending a meeting at which a ". . . Life Insurance Review" would be performed for the recipient. From the letter, it appears that the recipient would receive the $10 gift card even if he or she did not purchase life insurance.

Analysis

With respect to life, accident and health insurance, N.Y. Ins. Law § 4224(c) (McKinney’s Supp. 2005) states:

No such life insurance company and no such savings and insurance bank and no officer, agent, solicitor or representative thereof and no such insurer doing in this state the business of accident and health insurance and no officer, agent, solicitor or representative thereof, and no licensed insurance broker and no employee or other representative of any such insurer, agent or broker, 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 or policy of accident and health insurance, 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. (emphasis added).

Accordingly, with respect to life, accident and health insurance, an agent or broker subject to the provisions of N.Y. Ins. Law § 4224(c) (McKinney’s Supp. 2005), may not distribute promotional novelties in connection with the sale of life, accident and health insurance unless it is specified in the policy or contract as it would constitute an inducement to purchase such insurance in violation of N.Y. Ins. Law § 4224(c) (McKinney’s Supp. 2005), even if the recipient of such promotional novelty did not purchase a life or accident and health insurance policy.

Please see the Department’s website at www.ins.state.ny.us for additional opinions on this subject.

For further information one may contact Senior Attorney Susan A. Dess at the New York City Office.