Which of the following is a requirement for Medigap policies in terms of commissions?

Medigap policies, which are designed to supplement Medicare coverage, have specific regulations regarding commissions to ensure fair practices and protect consumers. One important requirement is that sales commissions for Medigap policies cannot exceed 200% of the renewal commissions.

This regulation is in place to discourage agents from focusing solely on new policy sales at the expense of ongoing service to policyholders. By capping sales commissions relative to renewal commissions, the aim is to encourage agents to maintain relationships with existing clients and promote better service and support for policyholders.

In terms of the other options, one states that sales commissions must exceed 200% of renewal commissions, which contradicts the regulatory intent of promoting balanced commission structures. Another suggests that renewal commissions must be variable; while they may fluctuate, there is no specific requirement mandating variability. The last option about replacement sales commissions implies a preference for replacement of policies over new sales, which is not aligned with the goals of the Medigap commission structure.

Understanding this requirement helps ensure that agents provide ongoing support to Medigap policyholders while maintaining ethical sales practices.