Current through Reg. 50, No. 13; March 28, 2025
As can be made applicable and as necessary the same or
similar test or standard as is stated hereafter within paragraph (1)(B) of this
section is to be used as the standard in the interpretation of the provisions
of this section.
(1) Identification of
policy.
(A) The form number or numbers of the
policy advertised shall be clearly identified in an "invitation to
contract."
(B) An advertisement in
respect of a life policy, endowment, or an annuity may not include the term
"savings," "investment," or other similar terms if used in referring to the
current, projected, or guaranteed rate of interest paid or credited to such
contracts to imply that the product advertised is something other than
insurance or an annuity using as a standard how it would appear to or be
identified by a reasonably prudent person under the circumstances.
(C) No advertisement may use the term
"investment," "investment plan," "founder's plan," "charter plan," "expansion
plan," "profit," "profits," "profit sharing," "interest plan," "savings,"
"savings plan," or other similar terms in connection with a policy in a context
or under such circumstances or conditions that have the capacity or tendency to
mislead purchasers of such policy to believe they will receive or that it is
possible that they will receive something other than a policy or some other
benefit or advantage that is not available to other persons of the same class
and equal expectation of life nor to that class of persons to whom essentially
the same hazards are attributable.
(2) Disclosure requirements.
(A) If an advertisement that is an
"invitation to contract" refers to a dollar amount, a period of time for which
a benefit is payable, a cost of the policy, a specific policy benefit or the
loss for which such benefit is payable, it shall expressly or specifically
disclose those exclusions and limitations affecting the payment of benefits
under the policy. Without this disclosure it is determined that the
advertisement would have the capacity and tendency to mislead or
deceive.
(B) No advertisement may
refer to a benefit payable under a "family group" policy if the full amount of
the benefit is not payable upon the occurrence of the contingency insured
against to each member of the family unless a clear and conspicuous disclosure
of such fact is made in the advertisement.
(C) No advertisement may be used which
represents or implies:
(i) that the condition
of the applicant's or insured's health prior to, or at the time of issuance of
a policy, or thereafter, will not be considered by the insurer in issuing the
policy or in determining its liability or benefits to be furnished or in the
settlement of a claim if such is not the fact; or
(ii) that an advertisement that uses
"non-medical," "no medical examination required," or similar language where the
advertised policy's issuance is not guaranteed must provide an equally
prominent disclosure in close conjunction to such language that issuance of the
policy may depend upon the answers to questions set forth in the
application.
(D) An
"invitation to contract" for a policy that provides coverage for loss due to
accident only for a specified period of time from its effective date shall
state this fact clearly and conspicuously.
(E) An "invitation to contract" advertisement
in respect of insurance coverage or benefits that by the terms of the policy
being advertised are limited to a certain age group or that are reduced at a
certain age shall clearly and conspicuously disclose such fact.
(F) An "invitation to contract" advertisement
that relates to a life insurance policy under which the death benefit varies
with the length of time the policy has been in force shall clearly and
conspicuously call attention to this fact. If the death benefit during a
specified period following the policy date of issue is limited to a return of
premiums paid on the policy, with or without interest at a stated rate, and
irrespective of whether the premiums are assumed to have always been paid
annually, each advertising of the policy by an insurer or agent shall explain
that the policy provides a deferred type of life insurance. The death benefit,
as referred to in this subparagraph, is the amount payable if death does not
result from accidental causes and if there are no exclusions applicable to the
policy on account of suicide, hazardous occupation, or aviation
hazard.
(G) If the current or
illustrated rate of interest is higher than the guaranteed interest rate, an
advertisement may not display the greater rate of interest with such prominence
as to render the guaranteed interest rate obscure.
(H) Current interest rates being paid or
promised to be paid by an insurer and guaranteed interest rates for specific
periods of time, as provided in the policy or annuity advertised, shall be
clearly and conspicuously disclosed and sufficiently complete and clear so as
not to have the capacity or tendency to mislead or deceive the insured or
prospective applicant.
(I) No
advertisement may represent a pure endowment benefit as earnings on premiums
invested or represent that a pure endowment benefit in a policy is other than a
guaranteed benefit for which a specific part or all of the premium is being
paid by the policyholder. For the purpose of this provision, coupons or other
devices for periodic payment of endowment benefit are included in the phrase "a
pure endowment benefit" without limitation on the meaning of such
phrase.
(J) An "invitation to
contract" advertisement shall clearly and conspicuously disclose any charges or
penalties such as administrative fees, surrender charges, and termination fees
contained in an annuity or life insurance policy on withdrawals made during
early contract or policy years.
(K)
Failure of an insurer or agent to disclose the nonforfeiture rights and policy
loan rights in an advertisement that compares life insurance policies shall be
an omission of a material fact and an incomplete comparison.
(L) Only the actual interest credited to an
endowment or coupon benefit in a life or annuity policy shall be characterized
as earnings or included with dividends or included with other earnings in an
advertisement.
(3)
Description of premiums and cost.
(A)
Consideration paid or to be paid for individual insurance and annuities
including policy fees, shall be described as premium, consideration, cost,
payments, annuity consideration, or purchase payment.
(B) Consideration paid or to be paid for
group insurance, including enrollment fees, dues, administrative fees,
membership fees, service fees, and other similar charges paid by the employees,
shall be disclosed in an invitation to contract advertisement as part of the
consideration and cost.
(C) An
advertisement may not offer a policy that utilizes a reduced initial premium
rate in a manner that overemphasizes the availability and the amount of the
initial reduced premium. If an insurer charges an initial premium that differs
in amount from the amount of the renewal premium payable, the advertisement may
not display the amount of the reduced initial premium more prominently than the
renewal premium.
(D) A reduced
initial or first year premium may not be described by an insurer as
constituting free insurance for a period of time.
(E) An advertisement of an insurance product
may not imply that it is "a low cost plan" or use other similar words or
phrases without a substantial present or past cost record for the policy
advertised or for a similar policy that demonstrates or verifies a composite of
lower production, administrative, and claim cost resulting in a low premium
rate to the public.
(F) The words
"deposits," "savings," "investment," or other phrases used to describe premiums
may not be so used by an insurer or agent as to hide or unfairly minimize the
cost of the hazards insured against.
(G) No part of a premium may be described as
a "deposit" if it is not guaranteed to be returned in full on demand of the
insured.
(H) An insurer or agent
may not make a billing of a premium for increased coverage or include the cost
of increased coverage in the premium for which a billing is made without first
disclosing the premium and details of the increased coverage and obtaining the
consent of the insured to such increase in coverage. This does not apply to
policies which contain provisions providing for automatic increases in benefits
or increases in coverages which are required by law.
(I) If the cost of home collection results in
a higher premium an advertisement shall state that fact.
(4) Dividends.
(A) An advertisement may not utilize or
describe dividends in a manner that is misleading or has the capacity or
tendency to mislead.
(B) An
advertisement may not state or imply that the payment or amount of dividends is
guaranteed. If dividends are illustrated, the illustration must conform to the
requirements of Subchapter N of this chapter (relating to Life Insurance
Illustrations).
(C) An
advertisement may not state or imply that illustrated dividends under either or
both a participating policy or pure endowment will be or can be sufficient at
any future time to assure without the future payment of premiums, the receipt
of benefits, such as a paid-up policy, unless the advertisement clearly and
precisely explains the benefits or coverage provided at such time and the
conditions required for that to occur.
(D) An insurer or agent may not, as an
inducement to purchase insurance circulate, publish, or otherwise exhibit to
any person who is an insured or prospective insured a form of director
resolution, stockholders resolution, or form of company action that states or
implies the action an insurer will take in the future as respects a declaration
of dividend or other such matter if the insurer, its directors, or its
stockholders are not bound to take the action stated or implied or if the
insurer does not presently have the earnings or the funds or assets to make
payments or to consummate the transaction in accordance with the appropriate
statutes and rules if any.
(5) Unlawful inducement. An insurer may not
make or include in any advertisement a statement or reference that implies that
the purchaser or prospective purchaser by purchasing a policy of insurance will
become a member of a limited group of persons who will or may receive special
advantages from the company not provided for in the policy or not authorized by
law or state or imply that the prospective insured will receive favored
treatment in the payment of dividends especially if the policy advertised is a
participating policy not available to persons holding other types of
participating or nonparticipating policies issued by the insurer to individuals
of the same class and equal expectation of life nor to that class of persons to
whom essentially the same hazards are attributable. This is not intended to
prohibit and does not prohibit the lawful payment of differing amounts of
dividends on different classes of policies. The term "class" relates to the
recognized underwriting classifications such as age, health, occupation, sex,
hazardous potential, and similar classifications that determine the nature of
the risk assumed, and the term "class" as used in this paragraph is not limited
to a particular plan or policy form or the date of issue of a policy.
(6) An insurer or agent may not as a
"twisting" or other device, inform any policyholder or prospective policyholder
that any insurer was required to change a policy or contract form or related
material to comply with the provisions of this division or other rules or
statutes. This section is ordered for such reasons as those stated in
§21.113(j) of this division (relating to Rules Pertaining Specifically to
Accident and Health Insurance Advertising and Health Maintenance Organization
Advertising).
(7) Deception as to
introductory, initial, or special offers.
(A)
An advertisement of a particular policy may not state or imply that prospective
policyholders become group or quasi-group members that, as such, enjoy special
rates or underwriting privileges ordinarily associated with group insurance as
recognized in the industry unless such is the fact.
(B) If an insured or prospective insured has
been provided a policy or coverage of insurance without first having paid a
premium or returned an application to the insurer or its agents or
representatives, the insurer, its agents, or representative may not make any
billing or attempt to collect a premium on such policy until such time as an
application or acknowledgment of acceptance by the insured is received. When
coverage is issued prior to such acceptance, it shall be accompanied by a
written statement describing it as follows:
(i) giving the facts concerning the delivery
of the policy and whether or not the policy was requested by the insured;
and
(ii) stating that the insured
is under no obligation to pay the insurer if he does not want to initiate or
continue the coverage; and
(iii)
clearly stating when coverage will be effective.
(C) An advertisement by an insurer may not
state or imply, that a policy or combination of policies is an introductory,
initial, special, or limited offer and that applicants will receive advantages
by accepting the offer or that such advantages will not be available at a later
date unless such is the fact. An advertisement may not contain phrases
describing an enrollment period as "special," "limited," or similar words or
phrases if the insurer uses such enrollment periods as the usual method of
advertising insurance.
(i) An enrollment
period during which "a particular insurance product" may be purchased on an
individual basis may not be offered within this state unless there has been a
lapse of not less than three months between the close of the immediately
preceding enrollment period for the same or substantially the same product and
the opening of the new enrollment period. The advertisement shall indicate the
date by which the applicant must mail the application which may not be less
than 10 days and not more than 40 days from the date that such enrollment
period is advertised for the first time. This section applies to all
advertising media: i.e., mail, newspaper, radio, television, magazine, and
periodicals. It is inapplicable to solicitation of employees or members of a
particular group or association which otherwise would be eligible under
specific provisions of the Insurance Code for group, blanket, or franchise
insurance. This section applies to all affiliated companies under common
management or control. The phrase "a particular insurance product" as used
herein is an insurance policy that provides substantially different benefits
than those contained in any other policy. Different terms of renewability, an
increase or decrease in the dollar amounts of benefits, or an increase or
decrease in any elimination period or waiting period from those available
during an enrollment period for another policy are not sufficient to constitute
the product being offered as a different product eligible for concurrent or
overlapping enrollment periods.
(ii) There may not be a statement or
implication to the effect that only a specific number of policies will be sold,
or that a time is fixed for the discontinuance of the sale of the particular
policy advertised because of special advantages available in the
policy.