Section 4. Filing Requirements for
Advertising of Life Settlements.
(1) This
section shall apply to advertising of life settlement contracts, or related
products or services intended for dissemination in Kentucky, including Internet
advertising viewed by persons located in Kentucky.
(2) A life settlement licensee shall
establish and maintain a system of control over the content, form, and method
of dissemination of advertisements of its contracts, products, and services. A
system of control shall include routine notification, at least once a year, to
persons authorized by the life settlement licensee to disseminate
advertisements, of the requirements and procedures for review by the department
prior to the use of any advertisements not furnished by the life settlement
licensee.
(3) A life settlement
licensee shall provide a copy of any advertising for life settlements intended
for use in Kentucky whether through written, radio, or television medium to the
commissioner for review in accordance with
KRS
304.12-020.
(4) An advertisement shall be truthful and
not misleading in fact or by implication. The form and content of an
advertisement shall be sufficiently complete and clear to avoid deception. It
shall not have the capacity or tendency to mislead or deceive. If an
advertisement has the capacity or tendency to mislead or deceive shall be
determined by the commissioner from the overall impression that the
advertisement may be reasonably expected to create upon a person of average
education or intelligence within the segment of the public to which it is
directed.
(5) The information
required to be disclosed under this section shall not be minimized, rendered
obscure, or presented in an ambiguous fashion or intermingled with the text of
the advertisement so as to be confusing or misleading.
(6) The following rules shall govern the
advertisement of life settlements:
(a) An
advertisement shall not omit material information or use words, phrases,
statements, references, or illustrations if the omission or use has the
capacity, tendency, or effect of misleading or deceiving owners as to the
nature or extent of any benefit, loss covered, premium payable, or state or
federal tax consequence. It shall not be a remedy of misleading statements to
make the life settlement contract available for inspection prior to completion
of the sale, or offering to refund the payment if the owner is not satisfied,
or including in the life settlement contract a "free look" period that
satisfies or exceeds legal requirements.
(b) An advertisement shall not use the name
or title of a life insurer or a life insurance policy unless the advertisement
has been approved by the insurer.
(c) An advertisement shall not state or imply
that interest charged on an accelerated death benefit or a policy loan is
unfair, inequitable, or in any manner an incorrect or improper
practice.
(d) The words "free," "no
cost," "without cost," "no additional cost," "at no extra cost," or words of
similar import shall not be used with respect to a benefit or service unless
true. An advertisement may specify the charge for a benefit or a service, may
state that a charge is included in the payment, or may use other similar
language.
(e) When a testimonial,
appraisal, endorsement, or analysis is used in an advertisement, the
testimonial, appraisal, endorsement, or analysis shall:
1. Be genuine;
2. Represent the current opinion of the
author;
3. Be applicable to the
life settlement contract product or service advertised;
4. Be accurately reproduced with sufficient
completeness to avoid misleading or deceiving prospective owners as to the
nature or scope of the testimonial, appraisal, analysis, or
endorsement;
5. Prominently
disclose in the advertisement if the individual making the testimonial,
appraisal, analysis, or endorsement has a financial interest in the life
settlement provider or related entity as a stockholder, director, officer,
employee, or otherwise, or receives a benefit other than required union scale
wages; and
6. Not state or imply
that a life settlement contract benefit or service has been approved or
endorsed by a group of individuals, society, association, or other organization
unless that is the fact and unless any relationship between an organization and
the life settlement licensee is disclosed. If the entity making the endorsement
or testimonial is owned, controlled, or managed by the life settlement
licensee, or receives any payment or other consideration from the life
settlement licensee for making an endorsement or testimonial, that fact shall
be disclosed in the advertisement.
(f) In using testimonials, appraisals,
endorsements, or analysis, the life settlement licensee shall make as its own
all the statements contained therein, and the statements shall be subject to
all the provisions of this section.
(g) If an endorsement refers to benefits
received under a life settlement contract, all pertinent information shall be
retained for a period of not less than five (5) years following creation of the
material or the completion of the purpose for which it was created, whichever
shall occur last.
(h) An
advertisement shall not contain statistical information unless it accurately
reflects recent and relevant facts. The source of all statistics used in an
advertisement shall be identified.
(i) An advertisement shall not disparage
insurers, life settlement providers, life settlement brokers, insurance
producers, policies, services, or methods of marketing.
(j) The name of the life settlement licensee
shall be identified in all advertisements about the licensee or its life
settlement contracts, products, or services, and if any specific life
settlement contract is advertised, the life settlement contract shall be
identified by form number or some other appropriate description. If an
application is part of the advertisement, the name of the life settlement
provider shall be shown on the application.
(k) An advertisement shall not use a trade
name, group designation, name of the parent company of a life settlement
licensee, name of a particular division of the life settlement licensee,
service mark, slogan, symbol, or other device, or reference without disclosing
the name of the life settlement licensee if the advertisement would have the
capacity or tendency to mislead or deceive as to the true identity of the life
settlement licensee or create the impression that a company other than the life
settlement licensee would have any responsibility for the financial obligation
under a life settlement contract.
(l) An advertisement shall not use any
combination of words, symbols, or physical materials that by their content,
phraseology, shape, color, or other characteristics are so similar to a
combination of words, symbols, or physical materials used by a government
program or agency, or otherwise appear to be of such a nature, that they tend
to mislead prospective owners into believing that the solicitation is in some
manner connected with a government program or agency.
(m) An advertisement may state that a life
settlement licensee is licensed in the state where the advertisement appears if
it does not exaggerate that fact or suggest or imply that competing life
settlement licensees may not be so licensed. The advertisement may ask the
audience to consult the licensee's Web site or contact the department to find
out if Kentucky requires licensing and, if so, whether the life settlement
provider or life settlement broker is licensed.
(n) An advertisement shall not create the
impression that the life settlement provider, its financial condition or
status, the payment of its claims, or the merits, desirability, or advisability
of its life settlement contracts are recommended or endorsed by a government
entity.
(o) The name of the actual
licensee shall be stated in all of its advertisements. An advertisement shall
not use a trade name, group designation, name of an affiliate or controlling
entity of the licensee, service mark, slogan, symbol, or other device in a
manner that would have the capacity or tendency to mislead or deceive as to the
true identity of the actual licensee or create the false impression that an
affiliate or controlling entity would have responsibility for the financial
obligation of the licensee.
(p) An
advertisement shall not create the impression that a division or agency of the
state or U. S. government endorses, approves, or favors:
1. A life settlement licensee or its business
practices or methods of operation;
2. The merits, desirability, or advisability
of a life settlement contract;
3. A
life settlement contract; or
4. A
life insurance policy or life insurer.
(q) If the advertiser emphasizes the speed
with which the settlement will occur, the advertising shall disclose the
average time frame from completed application to the date of offer and from
acceptance of the offer to receipt of the funds by the owner.
(r) If the advertising emphasizes the dollar
amounts available to owners, the advertising shall disclose the average
purchase price as a percent of face value obtained by owners contracting with
the licensee during the past six (6) months.