Bank Representative Selling Insurance Products

D

The answer to this question is D. The bank representative may not require the customer to purchase the insurance from an affiliate of the institution.

This question is related to the sale of insurance products by banks, which is subject to regulations under the Community Reinvestment Act (CRA) and Consumer Financial Protection Bureau (CFPB). The CFPB has issued regulations that specify what banks and their representatives can and cannot do when selling insurance products.

Option A, pre-paying a portion of the initial premium, is generally allowed as long as the amount does not exceed 25% of the total premium.

Option B, completing an application for insurance on the premises, is also generally allowed, but the customer must be given the option to take the application with them and return it later.

Option C, obtaining a medical examination for life insurance coverage, may be required in certain circumstances, such as for large policies or for individuals with pre-existing conditions. However, the customer must be informed of this requirement before the examination takes place.

Option D, purchasing the insurance from an affiliate of the institution, is not allowed if it is a requirement for obtaining the loan or other financial product. This is known as tying, which is a prohibited practice under the CRA and other regulations.

In summary, while banks and their representatives are allowed to sell insurance products, they must comply with regulations that protect consumers from unfair practices such as tying and excessive upfront payments.