Code of Maryland Regulations
Title 31 - MARYLAND INSURANCE ADMINISTRATION
Subtitle 09 - LIFE INSURANCE AND ANNUITIES
Chapter 31.09.13 - Military Sales Practices
Section 31.09.13.07 - Practices Declared False, Misleading, Deceptive, or Unfair Regardless of Location
Universal Citation: MD Code Reg 31.09.13.07
Current through Register Vol. 51, No. 19, September 20, 2024
A. The following acts or practices by an insurer or insurance producer constitute corrupt practices, improper influences, or inducements, regardless of location, and therefore, are prohibited as 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 or annuity, which acts include but are not limited to:
(a) Using or assisting in using a service member's "MyPay" account; or
(b) Using another similar internet or electronic medium for such purposes.
(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.
(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 §A(2) of this regulation;
(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 or annuity 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 or annuity 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 to any event where an application for life insurance or annuity is solicited; and
(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 or annuity.
B. Section A(1) of this regulation does not prohibit:
(1) Assisting a service member by providing insurer information; or
(2) Premium information necessary to complete any allotment form.
C. For purposes of §B(2) of this regulation, a formal banking relationship is established when the depository institution:
(1) Provides the service member a deposit agreement and periodic statements and makes the disclosures required by the Truth in Savings Act, 12 U.S.C. §
4301 et seq. (2007), and the regulations promulgated under it; and
(2) Permits the service member to make deposits and withdrawals unrelated to the payment or processing of insurance premiums.
D. Prohibited Practices-Source.
(1) The following acts or practices by an insurer or insurance producer regarding source, sponsorship, approval, or affiliation are prohibited as false, misleading, deceptive, or unfair:
(a) 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, any state or federal agency, or government entity; and
(b) 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.
(2) Examples of prohibited insurance producer titles under §D(1)(a) of this regulation include, but are not limited to:
(a) Battalion Insurance Counselor;
(b) Unit Insurance Advisor;
(c) Servicemen's Group Life Insurance Conversion Consultant; or
(d) Veteran's Benefits Counselor.
(3) Nothing in this chapter may 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, including:
(a) Chartered Life Underwriter (CLU);
(b) Chartered Financial Consultant (ChFC);
(c) Certified Financial Planner (CFP);
(d) Master of Science In Financial Services (MSFS); or
(e) Masters of Science Financial Planning (MS).
E. Prohibited Practices-Costs and Returns. The following acts or practices by an insurer or insurance producer regarding premiums, costs, or investment returns are prohibited as false, misleading, deceptive, or unfair:
(1) Using or describing the credited interest rate on a life insurance policy or annuity contract in a manner that implies that the credited interest rate is a net return on premium paid; and
(2) Misrepresenting the mortality costs of a life insurance product, including stating or implying that the product costs nothing or is free.
F. The following acts or practices by an insurer or insurance producer regarding SGLI or VGLI are false, misleading, deceptive, or unfair:
(1) Making any false, misleading, or deceptive representations regarding the availability, suitability, amount, cost, exclusions, or limitations to coverage provided to a service member or dependents by SGLI or VGLI;
(2) Making any false, misleading, or deceptive representations regarding conversion requirements, including the costs of coverage, exclusions, or limitations to coverage of SGLI or VGLI to private insurers; or
(3) Suggesting, recommending, or encouraging a service member to cancel or terminate his or her SGLI policy, or issuing a life insurance policy which replaces an existing SGLI policy unless the replacement will take effect upon or after the service member's separation from the United States Armed Forces.
G. The following acts or practices by an insurer or insurance producer regarding disclosure are prohibited as 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 done for the purpose of soliciting the purchase of life insurance or annuity;
(2) Failing to disclose that a solicitation for the sale of life insurance or annuity will be made when establishing a specific appointment for an in-person, face-to-face meeting with a prospective purchaser;
(3) 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 § 10 of the "Military Personnel Financial Services Protection Act," Pub. L. No. 109-290, p.16; and
(5) 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, that:
(i) Shall clearly and concisely set out the type of life insurance, the death benefit applied for, and its expected first year cost; or
(ii) May be satisfied by a basic illustration that meets the requirements of COMAR 31.09.09 which shall be considered sufficient to meet this requirement for a written disclosure.
H. Definitions.
(1) In this section, the following terms have the meanings indicated.
(2) Terms Defined.
(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:
(i) The death gratuity;
(ii) Funeral reimbursement;
(iii) Transition assistance;
(iv) Survivor and dependents' educational assistance;
(v) Dependency and indemnity compensation;
(vi) TRICARE healthcare benefits;
(vii) Survivor housing benefits and allowances;
(viii) Federal income tax forgiveness; and
(ix) Social Security survivor benefits.
(3) The following acts or practices by an insurer or insurance producer with respect to the sale of certain life insurance products or annuities are false, misleading, deceptive, or unfair:
(a) Recommending the purchase of any life insurance product which 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;
(b) Offering for sale or selling a life insurance product which includes a side fund to a service member in pay grades E-4 and below who is currently enrolled in SGLI, 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;
(c) Offering for sale or selling any life insurance contract which includes a side fund unless:
(i) Interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;
(ii) The applicant has been provided with a schedule of effective rates of return based upon cash flows of the combined product that satisfies the following requirements;
(iii) 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;
(iv) The schedule is 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
(v) By default funds accumulated in the side fund are diverted and transferred to pay, reduce, or offset any premiums due;
(d) Offering for sale or selling any life insurance contract which 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; and
(e) 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 which may be excluded.
Disclaimer: These regulations may not be the most recent version. Maryland may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
