Current through Register Vol. XLI, No. 38, September 20, 2024
5.1 The
information required to be disclosed by this rule may not be minimized, rendered
obscure, or presented in an ambiguous fashion or intermingled with the text of the
advertisement so as to be confusing or misleading.
5.2. An advertisement may not omit material
information or use words, phrases, statements, references or illustrations having
the capacity, tendency or effect of misleading or deceiving prospective purchasers
as to the nature or extent of any policy benefit payable, loss covered, premium
payable, or state or federal tax consequences. The fact that (a) the policy is made
available to a prospective insured for inspection prior to consummation of the sale,
(b) an offer is made to refund the premium if the purchaser is not satisfied or (c)
that the policy or contract includes a "free look" period that satisfies or exceeds
regulatory requirements, does not remedy misleading statements.
5.3. If an advertisement uses the terms
"non-medical," "no medical examination required," or similar terms where issue is
not guaranteed, the advertisement shall include a disclosure of equal prominence and
in juxtaposition thereto that issuance of the policy may depend upon the answers to
health questions in the application.
5.4. An advertisement may not use as the name or
title of a life insurance policy any phrase that does not include the words "life
insurance" unless accompanied by other language clearly indicating the policy is for
life insurance. An advertisement may not use as the name or title of an annuity
contract any phrase that does not include the word "annuity" unless accompanied by
other language clearly indicating the contract is an annuity. An annuity
advertisement may not refer to an annuity as a "CD annuity," or deceptively compare
an annuity to a certificate of deposit.
5.5. An advertisement must prominently describe
the type of policy advertised.
5.6. An
advertisement of an insurance policy marketed by direct response techniques may not
falsely state or imply that because there is no insurance producer or commission
involved there will be a cost savings to prospective purchasers. Justification for
any statement or implication of cost savings must be submitted and approved by the
Insurance Commissioner prior to dissemination of the advertisement.
5.7. An advertisement for a life insurance policy
containing graded or modified benefits must prominently display any limitation of
benefits. The advertisement must disclose that the premium is level and coverage
decreases or increases with age or duration. An advertisement of or for a life
insurance policy under which the death benefit varies with the length of time the
policy has been in force must accurately describe and clearly call attention to the
amount of minimum death benefit under the policy.
5.8. An advertisement for the types of policies
described in subsections 5.6 and 5.7 of this section may not use the words
"inexpensive," "low cost," or other phrase or words of similar import when the
policies being marketed are guaranteed issue.
5.9. Premiums
a.
An advertisement for a policy with non-level premiums shall prominently describe the
premium changes.
b. An advertisement for
a policy which reserves to the insurer the right to change the amount of the premium
during the policy term must prominently describe this feature. Failure to do so is
deemed to be deceptive and misleading and is prohibited.
c. An advertisement may not contain a statement or
representation that premiums paid for a life insurance policy can be withdrawn under
the terms of the policy. An advertisement may state that amounts paid into an
advance premium fund, which are intended to pay premiums at a future time, may be
withdrawn under the conditions of the prepayment agreement. An advertisement may
also refer to withdrawal rights under any unconditional premium refund
offer.
d. An advertisement that
represents that a pure endowment benefit has a "profit" or "return" on the premium
paid, rather than a policy benefit for which a specified premium is paid is deemed
to be deceptive and misleading and is prohibited.
e. An advertisement may not falsely represent or
imply in any way that premium payments will not be required for each year of the
policy in order to maintain the illustrated death benefits.
f. An advertisement may not use the term "vanish"
or "vanishing premium" or a similar term that implies the policy becomes paid up to
describe a plan using nonguaranteed elements to pay a portion of future
premiums.
5.10. Analogies
between a life insurance policy or annuity contract's cash values and savings
accounts or other investments and between premium payments and contributions to
savings accounts or other investments must be complete and accurate. An
advertisement may not emphasize the investment or tax features of a life insurance
policy to such a degree that the advertisement would mislead the purchaser to
believe the policy is anything other than life insurance.
5.11. An advertisement may not state or imply in
any way that interest charged on a policy loan or the reduction of death benefits by
the amount of outstanding policy loans is unfair, inequitable or in any manner an
incorrect or improper practice.
5.12.
Nonforfeiture values featured in any advertisement must be shown either for the
entire amount of the basic life policy death benefit or for each $1,000 of initial
death benefit.
5.13. The words "free,"
"no cost," "without cost," "no additional cost," "at no extra cost," or words of
similar import may not be used with respect to any benefit or service being made
available with a policy unless true. If there is no charge to the insured, the
identity of the payor shall be prominently disclosed. An advertisement may specify
the charge for a benefit or a service or may state that a charge is included in the
premium or use other appropriate language.
5.14. No insurance producer may use terms such as
"financial planner," "investment adviser," "financial consultant" or "financial
counseling" to imply that he or she is generally engaged in an advisory business in
which compensation is unrelated to sales unless that actually is the case. This
provision does not preclude persons who hold some form of formal recognized
financial planning or consultant designation from using this designation even when
they are only selling insurance. This provision also does not preclude an insurance
producer from citing his or her membership in a recognized trade or professional
association having such terms as part of its name, as long as the fact that the
producer is authorized only to sell insurance products is disclosed. This provision
does not permit persons to charge an additional fee for services that are
customarily associated with the solicitation, negotiation or servicing of
policies.
5.15. Nonguaranteed Elements
a. An advertisement may not use or describe
nonguaranteed elements 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 nonguaranteed elements is
guaranteed. Unless otherwise specified in 114 CSR 11C, if nonguaranteed elements are
illustrated, they shall be based on the insurer's current scale and the illustration
shall contain a statement to the effect that they are not to be construed as
guarantees or estimates of amounts to be paid in the future.
c. Unless otherwise specified in 114 CSR 11C, an
advertisement that includes any illustrations or statements containing or based upon
nonguaranteed elements shall set forth, with equal prominence comparable
illustrations or statements containing or based upon the guaranteed policy
elements.
d. An advertisement may not
use or describe determinable policy elements in a manner that is misleading or has
the capacity or tendency to mislead.
e.
Advertisement may describe determinable policy elements as guaranteed but not
determinable at issue. This description should include an explanation of how these
elements operate, and their limitations, if any.
f. If an advertisement refers to any nonguaranteed
policy element, it shall indicate that the insurer reserves the right to change any
such element at any time and for any reason. However, if an insurer has agreed to
limit this right in any way; such as, for example, if it has agreed to change these
elements only at certain intervals or only if there is a change in the insurer's
current or anticipated experience, the advertisement may indicate any such
limitation on the insurer's right.
g. An
advertisement may not refer to dividends as "tax-free" or use words of similar
import, unless the tax treatment of dividends is fully explained and the nature of
the dividend as a return of premium is indicated clearly.
h. 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
that time and the conditions required for that to occur.
An advertisement may not state that a purchaser of a policy will
share in or receive a stated percentage or portion of the earnings on the general
account assets of the company.
5.16. Testimonials, Appraisals, Analysis, or
Endorsements by Third Parties
a. Testimonials,
appraisals or analysis used in advertisements must be genuine; represent the current
opinion of the author; be applicable to the policy advertised, if any; and be
accurately reproduced with sufficient completeness to avoid misleading or deceiving
prospective insureds as to the nature or scope of the testimonial, appraisal,
analysis or endorsement. In using testimonials, appraisals or analysis; the insurer
or insurance producer makes as its own all the statements contained therein, and
these statements are subject to all the provisions of this rule.
b. If the individual making a testimonial,
appraisal, analysis or an endorsement has a financial interest in the insurer or
related entity as a stockholder, director, officer, employee or otherwise, or
receives any benefit directly or indirectly other than required union scale wages,
that fact shall be prominently disclosed in the advertisement.
c. An advertisement may not state or imply that an
insurer or a policy has been approved or endorsed by a group of individuals,
society, association or other organization unless such is the fact and unless any
proprietary relationship between an organization and the insurer is disclosed. If
the entity making the endorsement or testimonial is owned, controlled or managed by
the insurer, or receives any payment or other consideration from the insurer for
making an endorsement or testimonial, that fact shall be disclosed in the
advertisement.
d. When an endorsement
refers to benefits received under a policy for a specific claim, the claim date,
including claim number, date of loss and other pertinent information shall be
retained by the insurer for inspection for a period of five (5) years after the
discontinuance of its use or publication.
5.17. An advertisement may not contain statistical
information relating to any insurer or policy unless it accurately reflects recent
and relevant facts. The source of any statistics used in advertisement shall be
identified.
5.18. Policies Sold to
Students
a. The envelope in which insurance
solicitation material is contained may be addressed to the parents of students. The
address may not include any combination of words which imply that the correspondence
is from a school, college, university or other education or training institution nor
may it imply that the institution has endorsed the material or supplied the insurer
with information about the student unless such is a correct and truthful
statement.
b. All advertisements
including, but not limited to, informational flyers used in the solicitation of
insurance shall be identified clearly as coming from an insurer or insurance
producer, if such is the case, and these entities shall be clearly identified as
such.
c. The return address on the
envelope may not imply that the soliciting insurer or insurance producer is
affiliated with a university, college, school or other educational or training
institution, unless true.
5.19. Introductory, Initial or Special Offers and
Enrollment Periods
a. An advertisement of an
individual policy or combination of policies may not state or imply that the policy
or combination of policies is an introductory, initial or special offer, or that
applicants will receive substantial advantages not available at a later date, or
that the offer is available only to a specified group of individuals, unless that is
the fact. An advertisement may not describe an enrollment period as "special" or
"limited" or use similar words or phrases in describing it when the insurer uses
successive enrollment periods as its usual method of marketing its
policies.
b. An advertisement may not
state or imply 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.
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 reduced initial premium. A reduced initial or
first year premium may not be described as constituting free insurance for a period
of time. When insurer charges an initial premium that differs in amount from the
amount of the renewal premium payable on the same mode, all references to the
reduced initial premium shall be followed by an asterisk or other appropriate symbol
that refers the reader to that specific portion of the advertisement that contains
the full rate schedule for the policy being advertised.
d. An enrollment period during which a particular
insurance policy may be purchased on an individual basis may not be offered within
this state unless there has been a lapse of not less than six (6) months between the
close of the immediately preceding enrollment period for the same policy and the
opening of the new enrollment period. The advertisement shall specify the date by
which the applicant must mail the application, which shall be not less than ten (10)
days and not more than forty (40) days from the date on which the enrollment period
is advertised for the first time. This rule applies to all advertising media -i.e.,
mail, newspapers, radio, television, magazines and periodicals -by any one insurer
or insurance producer. The phrase "any one insurer" includes all the affiliated
companies of a group of insurance companies under common management or control. This
rule does not apply to the use of a termination or cutoff date beyond which an
individual application for a guaranteed issue policy will not be accepted by an
insurer in those instances where the application has been sent to the applicant in
response to his or her request. It is also inapplicable to solicitations of
employees or members of a particular group or association that otherwise would be
eligible under specified provisions of the insurance code for group, blanket or
franchise insurance. In cases where an insurance product is marketed on a direct
mail basis to prospective insureds by reason of some common relationship with a
sponsoring organization, this rule shall be applied separately to each sponsoring
organization.
5.20. An
advertisement of a particular policy may not state or imply that prospective
insureds shall be or become members of a special class, group, or quasi-group and as
such enjoy special rates, dividends or underwriting privileges, unless that is the
fact.
5.21. An advertisement may not
make unfair or incomplete comparisons of policies, benefits, dividends or rates of
other insurers. An advertisement may not disparage other insurers, insurance
producers, policies, services or methods of marketing.
5.22. For individual deferred annuity products or
deposit funds, the following shall apply:
a. Any
illustrations or statements containing or based upon nonguaranteed interest rates
shall likewise set forth with equal prominence comparable illustrations or
statements containing or based upon the guaranteed accumulation interest rates. The
nonguaranteed interest rate may not be greater than those currently being credited
by the company unless the nonguaranteed rates have been publicly declared by the
company with an effective date for new issues not more than three (3) months
subsequent to the date of declaration.
b. If an advertisement states the net premium
accumulation interest rate, whether guaranteed or not, it shall also disclose in
close proximity thereto and with equal prominence, the actual relationship between
the gross and the net premiums.
c. If
the contract does not provide a cash surrender benefit prior to commencement of
payment of annuity benefits, an illustration or statement concerning the contract
shall prominently state that cash surrender benefits are not provided.
d. Any illustrations, depictions or statements
containing or based on determinable policy elements shall likewise set forth with
equal prominence comparable illustrations, depictions or statements containing or
based on guaranteed policy elements.
5.23. An advertisement of a life insurance policy
or annuity that illustrates nonguaranteed values shall only do so in accordance with
current applicable state law relative to illustrating such values for life insurance
policies and annuity contracts.
