Current through Reg. 50, No. 13; March 28, 2025
(a) The following acts or practices by an
insurer or insurance agent constitute corrupt practices, improper influences or
inducements and are 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. The foregoing includes, but is not
limited to, using or assisting in using a service member's "MyPay" account or
other similar internet or electronic medium for such purposes. This subsection
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
section, a formal banking relationship is established when the depository
institution:
(A) 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. Section
4301 et seq. and the regulations promulgated
thereunder; and
(B) permits the
service member to make deposits and withdrawals unrelated to the payment or
processing of insurance premiums;
(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 subsection (a)(2) of this section;
(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 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 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 is solicited;
or
(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.
(b) The following acts or practices by an
insurer or insurance agent 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 agent or product offered is affiliated, connected or
associated with, endorsed, sponsored, sanctioned or recommended by the U.S.
Government, the United States Armed Forces, or any state or federal agency or
government entity. Examples of prohibited insurance agent titles include, but
are not limited to, "Battalion Insurance Counselor," "Unit Insurance Advisor,"
"Servicemen's Group Life Insurance Conversion Consultant" or "Veteran's
Benefits Counselor." Nothing in this subchapter shall 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. Such designations include, but are
not limited to, Chartered Life Underwriter (CLU), Chartered Financial
Consultant (ChFC), Certified Financial Planner (CFP), Master of Science In
Financial Services (MSFS), or Masters of Science Financial Planning
(MS).
(2) 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 agent 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.
(c) The following acts or practices by an
insurer or insurance agent 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; or
(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 agent regarding SGLI or VGLI are declared
to be false, misleading, deceptive or unfair:
(1) 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;
(2) 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; 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
shall take effect upon or after the service member's separation from the United
States Armed Forces.
(e)
The following acts or practices by an insurer and/or insurance agent regarding
disclosure are 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 agent, 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, 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," Pub. L. No.
109-290, p.16; or
(5) 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:
(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. 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 Chapter 21, Subchapter N of this
title (relating to 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 agent with respect to the sale of certain life insurance
products are declared to be false, misleading, deceptive or unfair:
(1) 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;
(2)
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.
(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, but are not limited to: 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.
(3) excluding individually issued
annuities, offering for sale or selling any life insurance contract which
includes a side fund:
(A) unless interest
credited accrues from the date of deposit to the date of withdrawal and permits
withdrawals without limit or penalty;
(B) 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 10 and for every fifth policy year
thereafter ending at age 100, policy maturity or final expiration;
and
(C) which by default diverts or
transfers funds accumulated in the side fund to pay, reduce or offset any
premiums due.
(4)
excluding individually issued annuities, 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 the requirements of the Insurance Code Chapter 1105; or
(5) 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.