Current through Register Vol. 54, No. 12, March 23, 2024
(a) The
following acts or practices by an insurer or insurance producer constitute
corrupt practices, improper influences or inducements and are deemed and
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, including using or assisting in using
a service member's "MyPay" account or other similar internet or electronic
medium for this purpose. This paragraph 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 paragraph, a formal banking relationship is
established when the depository institution does all of the following:
(i) 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.A. §§
4301-4313)
and the regulations promulgated thereunder.
(ii) Permits the service member to make
deposits and withdrawals unrelated to the payment or processing of insurance
premiums.
(3) Employing a
device or method or entering into an 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 when the service member has no
formal banking relationship as defined in paragraph (2).
(4) Entering into an 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) Directly or
indirectly using an active duty service member or a civilian, nonappropriated
fund, or special government employee of the Department of Defense, as a
representative or agent in an 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
the personnel.
(6) Offering or
giving anything of value, directly or indirectly, to an active duty service
member or a civilian, nonappropriated fund, or special government employee of
the Department of Defense to procure 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 whom the insurer or insurance
producer knows, or in the exercise of ordinary care should have known, has a
pay grade of E-4 or below for a service member's attendance to an 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 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 United States
Government, the United States Armed Forces, or any State or Federal agency or
government entity.
(i) Examples of titles
prohibited include "Battalion Insurance Counselor," "Unit Insurance Advisor,"
"Servicemen's Group Life Insurance Conversion Consultant" or "Veteran's
Benefits Counselor."
(ii)
Notwithstanding the prohibitions of this paragraph, a person may use 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. Examples include "Chartered Life Underwriter," "Chartered Financial
Consultant," "Certified Financial Planner," "Master of Science In Financial
Services" or "Master of Science In Financial Planning."
(2) Soliciting the purchase of a life
insurance product through the use of or in conjunction with a 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,
the United States Armed Forces or any State or Federal agency or governmental
entity.
(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 Servicemembers
Group Life Insurance or Veterans' Group Life Insurance are declared to be
false, misleading, deceptive or unfair:
(1)
Making a representation regarding the availability, suitability, amount, cost,
exclusions or limitations to coverage provided to a service member or
dependents by service members' group life insurance or veterans' group life
insurance, 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 Servicemembers' Group Life Insurance or Veterans'
Group Life Insurance to private insurers which is false, misleading or
deceptive.
(3) Suggesting,
recommending or encouraging a service member to cancel or terminate a
Servicemembers' Group Life Insurance policy or issuing a life insurance policy
which replaces an existing Servicemembers' Group Life Insurance policy unless
the replacement takes effect upon or after the service member's separation from
the United States Armed Forces.
(e) The following acts or practices by an
insurer or insurance producer, or both, regarding disclosure are deemed and
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 the written disclosures
required under section 10 of the Military Personnel Financial Services
Protection Act (10 U.S.C.
§
992 nt), at the time of sale or offer
to an individual who the insurer or insurance producer knows, or in the
exercise of ordinary care should have known, is a service member.
(5) Excluding individually issued annuities,
when the sale is conducted in-person face-to-face with an individual whom the
insurer or insurance producer knows, or in the exercise of ordinary care should
have known, to be a service member, failing to provide the applicant at the
time the application is taken with the following:
(i) An explanation of any free look period
with instructions on how to cancel if a policy is issued.
(ii) Either a copy of the application or a
written disclosure that clearly and concisely sets 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 sections 407-A and 408-A, of
The Insurance Company Law of 1921 (40 P. S. §§
625-7 and
625-8), regarding
illustrations and life insurance illustrations, 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 life insurance
products, excluding individually issued annuities, are deemed and declared to
be false, misleading, deceptive or unfair:
(1) Recommending the purchase of a 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.
(2) Offering for sale or selling any life
insurance contract which includes a side fund unless all the following
conditions are met:
(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. 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.
(iii) The contract does not, by default,
divert or transfer funds accumulated in the side fund to pay, reduce or offset
any premiums due.
(3)
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.
(g) The
following acts or practices by an insurer or insurance producer with respect to
the sale of life insurance products are deemed and declared to be false,
misleading, deceptive or unfair:
(1) 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 Service
Members' Group Life Insurance. This practice is presumed unfair unless the
following conditions are met:
(i) The insurer
conducts a needs assessment which includes consideration of the risks
associated with premature death, the financial obligations and immediate and
future cash needs of the applicant's estate, or survivors or dependents, or
both.
(ii) The insurer demonstrates
that the applicant's service members group life insurance death benefit,
together with 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. For purposes of this
subparagraph, "other military survivor benefits" include 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.
(2) Selling a life insurance product to an
individual whom the insurer or insurance producer knows, or in the exercise of
ordinary care should have known, to be a service member that excludes coverage
if the insured's death is related to war, declared or undeclared, or an act
related to military service except for an accidental death coverage, for
example, double indemnity, which may be excluded.