Current through Register Vol. 48, No. 12, March 22, 2024
a) The
following acts or practices by an insurer or insurance producer constitute
corrupt practices or improper influences or inducements and are declared to be
false, misleading, deceptive or unfair:
1)
Submitting, processing or assisting in the submission or processing of any
allotment form or similar device used by the United States Armed Forces to
direct a service member's pay to a third party for the purchase of life
insurance. The foregoing includes, but is not limited to, using or assisting in
using a service member's MyPay account or other similar internet or electronic
medium for such purposes. This subsection (a)(1) does not prohibit assisting a
service member by providing insurer or premium information necessary to
complete any allotment form.
2)
Knowingly receiving funds from a service member for the payment of premium from
a depository institution with which the service member has no formal banking
relationship. For purposes of this Section, a formal banking relationship is
established when the depository institution:
A) provides the service member a deposit
agreement and periodic statements and makes the disclosures required by the
Truth in Savings Act (
12 USC 4301
et seq.) and the regulations promulgated under that Act; and
B) permits the service member to make
deposits and withdrawals unrelated to the payment or processing of insurance
premiums.
3) Employing
any device or method or entering into any agreement whereby funds received from
a service member by allotment for the payment of insurance premiums are
identified on the service member's Leave and Earnings Statement or equivalent
or successor form as "Savings" or "Checking" and where the service member has
no formal banking relationship as defined in subsection (a)(2).
4) Entering into any agreement with a
depository institution for the purpose of receiving funds from a service member
whereby the depository institution, with or without compensation, agrees to
accept direct deposits from a service member with whom it has no formal banking
relationship.
5) Using DoD
personnel, directly or indirectly, as a representative or agent in any official
or unofficial capacity, with or without compensation, with respect to the
solicitation or sale of life insurance to service members who are junior in
rank or grade, or to the family members of such personnel.
6) Offering or giving anything of value,
directly or indirectly, to DoD personnel to procure their assistance in
encouraging, assisting or facilitating the solicitation or sale of life
insurance to another service member.
7) Knowingly offering or giving anything of
value to a service member with a pay grade of E-4 or below for his or her
attendance at any event where an application for life insurance is
solicited.
8) Advising a service
member with a pay grade of E-4 or below to change his or her income tax
withholding or State of legal residence for the sole purpose of increasing
disposable income to purchase life insurance.
b) The following acts or practices by an
insurer or insurance producer lead to confusion regarding source, sponsorship,
approval or affiliation and are declared to be false, misleading, deceptive or
unfair:
1) Making any representation, or
using any device, title, descriptive name or identifier that has the tendency
or capacity to confuse or mislead a service member into believing that the
insurer, insurance producer or product offered is affiliated, connected or
associated with, endorsed, sponsored, sanctioned or recommended by the U.S.
Government, the United States Armed Forces, or any state or federal agency or
government entity. Examples of prohibited insurance producer titles include,
but are not limited to, "Battalion Insurance Counselor", "Unit Insurance
Advisor", "Servicemen's Group Life Insurance Conversion Consultant" or
"Veteran's Benefits Counselor". Nothing in this subsection (b)(1) shall be
construed to prohibit a person from using a professional designation awarded
after the successful completion of a course of instruction in the business of
insurance by an accredited institution of higher learning. Such designations
include, but are not limited to, Chartered Life Underwriter (CLU), Chartered
Financial Consultant (ChFC), Certified Financial Planner (CFP), Master of
Science in Financial Services (MSFS), or Masters of Science in Financial
Planning (MS).
2) Soliciting the
purchase of any life insurance product through the use of or in conjunction
with any third party organization that promotes the welfare of or assists
members of the United States Armed Forces in a manner that has the tendency or
capacity to confuse or mislead a service member into believing that either the
insurer, insurance producer or insurance product is affiliated, connected or
associated with, endorsed, sponsored, sanctioned or recommended by the U.S.
Government or the United States Armed Forces.
c) The following acts or practices by an
insurer or insurance producer lead to confusion regarding premiums, costs or
investment returns and are declared to be false, misleading, deceptive or
unfair:
1) Using or describing the credited
interest rate on a life insurance policy in a manner that implies that the
credited interest rate is a net return on premium paid.
2) Excluding individually issued annuities,
misrepresenting the mortality costs of a life insurance product, including
stating or implying that the product "costs nothing" or is "free".
d) The following acts or practices
by an insurer or insurance producer regarding SGLI or VGLI are declared to be
false, misleading, deceptive or unfair:
1)
Making any representation regarding the availability, suitability, amount,
cost, exclusions or limitations to coverage provided to a service member or
dependents by SGLI or VGLI, which is false, misleading or deceptive.
2) Making any representation regarding
conversion requirements, including the costs of coverage, or exclusions or
limitations to coverage of SGLI or VGLI to private insurers that is false,
misleading or deceptive.
3)
Suggesting, recommending or encouraging a service member to cancel or terminate
his or her SGLI policy or issuing a life insurance policy that replaces an
existing SGLI policy unless the replacement shall take effect upon or after the
service member's separation from the United States Armed Forces.
e) The following acts or practices
by an insurer and or insurance producer regarding disclosure are declared to be
false, misleading, deceptive or unfair:
1)
Deploying, using or contracting for any lead generating materials designed
exclusively for use with service members that do not clearly and conspicuously
disclose that the recipient will be contacted by an insurance producer, if that
is the case, for the purpose of soliciting the purchase of life
insurance.
2) Failing to disclose
that a solicitation for the sale of life insurance will be made when
establishing a specific appointment for an in-person, face-to-face meeting with
a prospective purchaser.
3)
Excluding individually issued annuities, failing to clearly and conspicuously
disclose the fact that the product being sold is life insurance.
4) Failing to make, at the time of sale or
offer to an individual known to be a service member, the written disclosures
required by Section 10 of the Military Personnel Financial Services Protection
Act ( Pub. L. No.
109-290, p.16).
5) Excluding individually issued annuities,
when the sale is conducted in-person face-to-face with an individual known to
be a service member, failing to provide the applicant at the time the
application is taken:
A) an explanation of
any free look period with instructions on how to cancel if a policy is issued;
and
B) either a copy of the
application or a written disclosure. The copy of the application or the written
disclosure shall clearly and concisely set out the type of life insurance, the
death benefit applied for and its expected first year cost. A basic
illustration that meets the requirements of 50 Ill. Adm. Code 1406 shall be
deemed sufficient to meet this requirement for a written disclosure.
f) The following acts
or practices by an insurer or insurance producer with respect to the sale of
certain life insurance products are declared to be false, misleading, deceptive
or unfair:
1) Excluding individually issued
annuities, recommending the purchase of any life insurance product that
includes a side fund to a service member in pay grades E-4 and below unless the
insurer has reasonable grounds for believing that the life insurance death
benefit, standing alone, is suitable.
2) Offering for sale or selling a life
insurance product that includes a side fund to a service member in pay grades
E-4 and below who is currently enrolled in SGLI is presumed unsuitable, unless,
after the completion of a needs assessment, the insurer demonstrates that the
applicant's SGLI death benefit, together with any other military survivor
benefits, savings and investments, survivor income, and other life insurance
are insufficient to meet the applicant's insurable needs for life insurance.
A) "Insurable needs" are the risks associated
with premature death taking into consideration the financial obligations and
immediate and future cash needs of the applicant's estate and/or survivors or
dependents.
B) "Other military
survivor benefits" include, but are not limited to: the Death Gratuity, Funeral
Reimbursement, Transition Assistance, Survivor and Dependents' Educational
Assistance, Dependency and Indemnity Compensation, TRICARE Healthcare benefits,
Survivor Housing Benefits and Allowances, Federal Income Tax Forgiveness, and
Social Security Survivor Benefits.
3) Excluding individually issued annuities,
offering for sale or selling any life insurance contract that includes a side
fund:
A) unless interest credited accrues from
the date of deposit to the date of withdrawal and permits withdrawals without
limit or penalty;
B) unless the
applicant has been provided with a schedule of effective rates of return based
upon cash flows of the combined product. For this disclosure, the effective
rate of return will consider all premiums and cash contributions made by the
policyholder and all cash accumulations and cash surrender values available to
the policyholder in addition to life insurance coverage. This schedule will be
provided for at least each policy year from 1 to 10 and for every fifth policy
year thereafter ending at age 100, policy maturity or final expiration;
and
C) that by default diverts or
transfers funds accumulated in the side fund to pay, reduce or offset any
premiums due.
4)
Excluding individually issued annuities, offering for sale or selling any life
insurance contract that, after considering all policy benefits, including but
not limited to endowment, return of premium or persistency, does not comply
with standard nonforfeiture law for life insurance.
5) Selling any life insurance product to an
individual known to be a service member that excludes coverage if the insured's
death is related to war, declared or undeclared, or any act related to military
service except for an accidental death coverage, e.g., double indemnity, which
may be excluded.