Final answer:
The arrangement is likely illegal as it could be considered a kickback under RESPA. The legality can vary by jurisdiction and whether the services are disclosed and authentic.
Step-by-step explanation:
In the scenario where a real estate broker pays a life insurance broker a referral fee of $50 for each dealt that goes to closing, the legality of this arrangement largely depends on the policies and regulations of the jurisdiction in which they are operating. Generally, in most cases, referral fees between real estate and insurance professionals for business that is not within the scope of their practice can be considered an illegal act of kickback under the Real Estate Settlement Procedures Act (RESPA). It's not specifically about the amount here, but rather the act itself and the disclosure to the parties involved.
If the fee is a payment for a service actually rendered, it must be disclosed in writing to all parties and the service performed must be substantive and actual. Thus, Option B might provide some legal ground, but even then, the specifics can vary. In any case, the insurance broker would need to abide by the licensing and regulation standards for both insurance and real estate functions if they were to accept such fees legally.