Final answer:
Nellie is engaging in premium rebating by offering a free term rider with the purchase of a permanent life insurance policy, which is a prohibited sales practice in the insurance industry.
Step-by-step explanation:
When Nellie offers to add a term rider free of charge if a customer buys a permanent life insurance policy, she is engaging in premium rebating. Premium rebating is a prohibited sales practice in the insurance industry where an insurer provides an inducement to purchase an insurance policy by offering a rebate of premiums or other benefits that are not set forth in the policy itself. This can create unfair competition and can be considered unlawful in many jurisdictions.