Minnesota Administrative Rules
Agency 120 - Commerce Department
Chapter 2753 - LIFE INSURANCE SALES TO ACTIVE DUTY MILITARY
Part 2753.0600 - PRACTICES DECLARED FALSE, MISLEADING, DECEPTIVE, OR UNFAIR REGARDLESS OF LOCATION
Universal Citation: MN Rules 2753.0600
Current through Register Vol. 49, No. 13, September 23, 2024
Subpart 1. Corrupt practices, improper influences, or inducements.
The following acts or practices by an insurer or insurance producer constitute corrupt practices, improper influences, or inducements and are declared to be false, misleading, deceptive, or unfair:
A. 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, including using or assisting in using
a service member's "MyPay" account or other similar Internet or electronic
medium for these purposes. This subpart does not prohibit assisting a service
member by providing insurer or premium information necessary to complete any
allotment form.
B. 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 part, 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, United States Code, title 12, section 4301, et seq., and
the regulations promulgated under that act; and
(2) permits the service member to make
deposits and withdrawals unrelated to the payment or processing of insurance
premiums.
C. 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 item B.
D. 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.
E. 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.
F. 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.
G. 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 is
solicited.
H. 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.
Subp. 2. Confusion regarding source, sponsorship, approval, or affiliation.
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:
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
United States government, the United States armed forces, or any state or
federal agency or government entity. Examples of prohibited insurance producer
titles include "Battalion Insurance Counselor," "Unit Insurance Advisor,"
"Servicemen's Group Life Insurance Conversion Consultant," or "Veteran's
Benefits Counselor."
Nothing in this subpart prohibits 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 Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), Master of Science in Financial Services (MSFS), or Master of Science Financial Planning (MS).
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 United
States government, or the United States armed forces.
Subp. 3. Confusion regarding premiums, costs, or investment returns.
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:
A. 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.
B. 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."
Subp. 4. Acts or practices regarding SGLI or VGLI.
The following acts or practices by an insurer or insurance producer regarding SGLI or VGLI are declared to be false, misleading, deceptive, or unfair:
A. 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.
B. Making any representation regarding
conversion requirements, including the costs of coverage, or exclusions or
limitations to coverage of SGLI or VGLI to private insurers which is false,
misleading, or deceptive.
C.
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 takes effect upon or
after the service member's separation from the United States armed
forces.
Subp. 5. Disclosure.
The following acts or practices by an insurer or insurance producer regarding disclosure are declared to be false, misleading, deceptive, or unfair:
A. 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.
B. 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.
C. Excluding
individually issued annuities, failing to clearly and conspicuously disclose
the fact that the product being sold is life insurance.
D. 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," Public Law Number 109-290.
E.
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:
(1) an explanation of any free look period
with instructions on how to cancel if a policy is issued; and
(2) 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 Minnesota Statutes, sections
61A.70 to
61A.745, shall be
deemed sufficient to meet this requirement for a written disclosure.
Subp. 6. Sale of certain life insurance products.
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:
A. Excluding individually issued annuities,
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, 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.
(1) "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 or
survivors or dependents.
(2) "Other
military survivor benefits" include: the death gratuity, funeral reimbursement,
transition assistance, survivor and dependents' educational assistance,
dependency and indemnity compensation, TRICARE health care benefits, survivor
housing benefits and allowances, federal income tax forgiveness, and Social
Security survivor benefits.
C. Excluding individually issued annuities,
offering for sale or selling any life insurance contract which includes a side
fund:
(1) unless interest credited accrues
from the date of deposit to the date of withdrawal and permits withdrawals
without limit or penalty;
(2)
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 one to ten and for
every fifth policy year thereafter ending at age 100, policy maturity or final
expiration; and
(3) which by
default diverts or transfers funds accumulated in the side fund to pay, reduce,
or offset any premiums due.
D. Excluding individually issued annuities,
offering for sale or selling any life insurance contract which after
considering all policy benefits, including endowment, return of premium, or
persistency, does not comply with standard nonforfeiture law for life
insurance.
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,
e.g., double indemnity, which may be excluded.
Statutory Authority: MS s 45.023; 79A.19
Disclaimer: These regulations may not be the most recent version. Minnesota 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.
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