Final answer:
An agent inducing a client to buy an unnecessary policy for commission is guilty of fraud.
Step-by-step explanation:
An agent who induces a client to use the cash value of an existing policy to buy an unnecessary additional policy for the purpose of generating commission is guilty of Fraud. This is a deceptive practice aimed at financial gain through misleading the client and taking advantage of their trust.
In the insurance industry, such actions are considered fraudulent because the agent is prioritizing their own financial interests over the best interests of the client. By encouraging the purchase of an unnecessary policy, the agent is knowingly deceiving the client and engaging in unethical behavior.
This type of fraudulent behavior not only harms the client financially but also erodes trust in the insurance industry. It is important for clients to be vigilant and seek advice from trusted sources before making any financial decisions related to insurance policies.