Which of the following actions illustrates a producer engaging in an unfair trade practice of rebating?

Choosing the action of telling a client that his first premium will be waived if he purchased the insurance policy today showcases a producer engaging in an unfair trade practice of rebating. Rebating typically involves returning a portion of the premium to the policyholder as an incentive to purchase the insurance, which is considered unfair and potentially deceptive.

In many states, including Colorado, this practice is considered unethical because it can create an uneven playing field among insurance producers. It potentially misleads customers by suggesting they get a better deal than they actually do, undermining the integrity of the insurance market. This is specifically prohibited because it can induce customers to make choices based on short-term savings rather than the long-term value or necessity of the insurance coverage.

In contrast, offering a discount for referrals may not be categorized as rebating depending on state law, as it does not directly reduce the cost of the actual insurance policy in a way that rewards the client for choosing the insurer. Providing free financial advice with a policy purchase is a common practice that can enhance customer relations and does not imply any unfair financial advantage. Changing policy terms after purchase can raise other legal or ethical issues but does not exemplify rebating in the specific context of offering financial inducements related to premiums.