(1)
Form
and content of advertisements. The format and content of an
advertisement shall be truthful and sufficiently complete and clear to avoid
deception or the capacity or tendency to misrepresent or deceive. Whether an
advertisement has a capacity or tendency to misrepresent or deceive shall be
determined by the overall impression that the advertisement may be reasonably
expected to create upon an individual in the segment of the public to which it
is primarily directed and who has average education, intelligence and
familiarity with insurance terminology for products in that market.
Information regarding exceptions, limitations, reductions and
other restrictions required to be disclosed by this rule shall not be
minimized, rendered obscure or presented in an ambiguous fashion or
intermingled with the context of the advertisements so as to be confusing or
misleading.
(2)
Prohibited terms and disclosure requirements for health
insurance.
a. No advertisement shall
contain or use words or phrases such as "all"; "full"; "complete";
"comprehensive"; "unlimited"; "up to"; "as high as"; "this policy will help
fill some of the gaps that Medicare and your present insurance leave out";
"this policy will help to replace your income" (when used to express loss of
time benefits); or similar words and phrases in a manner that exaggerates any
benefits beyond the terms of the policy.
b. No advertisement shall contain
descriptions of a policy limitation, exception, or reduction, worded in a
positive manner to imply that it is a benefit, such as describing a waiting
period as a "benefit builder" or stating "even preexisting conditions are
covered after two years." Words and phrases used in an advertisement to
describe such policy limitations, exceptions and reductions shall fairly and
accurately describe the negative features of such limitations, exceptions and
reductions of the policy offered.
c. No advertisement of a benefit for which
payment is conditional upon confinement in a hospital or similar facility shall
use words or phrases such as "tax free," "extra cash" and substantially similar
phrases that have the capacity, tendency or effect of misleading the public
into believing that the policy advertised will, in some way, enable an
individual to make a profit from being hospitalized.
d. No advertisement shall use the words
"only"; "just"; "merely"; "minimum" or similar words or phrases to describe the
applicability of any exceptions and reductions, such as: "This policy is
subject to the following minimum exceptions and reductions."
e. An advertisement that refers to either a
dollar amount, or a period of time for which any benefit is payable, or the
cost of the policy, or specific policy benefit, or the loss for which such
benefit is payable, shall also disclose those exceptions, reductions, and
limitations affecting the basic provisions of the policy without which the
advertisement would have the capacity or tendency to mislead or
deceive.
f. An advertisement may
contain a brief description of coverage in an invitation to inquire so long as
it is limited to a brief description of the loss for which benefits are
payable. The brief description may not refer to the cost of the
policy.
g. An advertisement for a
policy that contains a waiting, elimination, probationary, or similar time
period between the effective date of the policy and the effective date of
coverage under the policy or a time period between the date a loss occurs and
the date benefits begin to accrue for such loss shall prominently disclose the
existence of such periods.
h. An
invitation to inquire shall contain a provision in the following or
substantially similar form: "This policy has [exclusions] [limitations]
[reduction of benefits] [terms under which the policy may be continued in force
or discontinued]. For costs and complete details of the coverage, call [or
write] your insurance agent or the company [whichever is
applicable]."
(3)
Prohibited terms in life insurance and annuity policies. No
advertisement for a life insurance or annuity policy shall use the terms
"investment," "investment plan," "founder's plan," "charter plan," "expansion
plan," "profit," "profits," "profit sharing," "interest plan," "savings,"
"savings plan," "retirement plan," or other similar term that has the capacity
or tendency to mislead an insured or prospective insured to believe that the
insurer is offering something other than an insurance policy or some benefit
not available to other individuals of the same class and equal expectation of
life. An advertisement shall not state that there are "no more premiums" or
that premiums will "vanish" or "disappear" or use similar terms when such
statement is not based on the guaranteed rates.
(4)
Exclusions, limitations,
exceptions and reductions. Words and phrases used in an advertisement
to describe policy exclusions, limitations, exceptions and reductions shall
clearly, prominently and accurately indicate the negative or limited nature of
the exclusions, limitations, exceptions and reductions.
An advertisement for a policy providing benefits for
specified illnesses only, such as cancer, or other policies providing benefits
that are limited in nature shall clearly and conspicuously in prominent type
state the limited nature of the policy. The statement shall be worded in
language identical to or substantially similar to the following: "THIS IS A
LIMITED POLICY," "THIS POLICY PROVIDES LIMITED BENEFITS," or "THIS IS A
CANCER-ONLY POLICY."
(5)
Use of statistics. An advertisement shall not contain
statistical information relating to any insurer or policy unless it accurately
reflects recent and relevant facts. The source of any such statistics used in
an advertisement shall be identified therein.
(6)
Introductory, initial or special
offers.
a. An advertisement shall
not directly or by implication represent that a policy is an introductory,
initial or special offer, or that a person will receive advantages not
available at a later date, or that the offer is available only to a specified
group of persons, unless such is the fact.
b. An advertisement shall 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. When an insurer
charges an initial premium that differs in amount from the amount of the
renewal premium payable on the same mode, the advertisement shall not display
the amount of the reduced initial premium either more frequently or more
prominently than the renewal premium, and both the initial reduced premium and
the renewal premium must be stated in each portion of the advertisement where
the initial reduced premium appears. This paragraph shall not apply to annual
renewable term policies.
(7)
Testimonials or endorsements by
third parties.
a. Testimonials used
in advertisements must be genuine, represent the current opinion of the author,
be applicable to the policy advertised and be accurately reproduced. The
insurer, in using a testimonial, makes as its own all of the statements
contained therein, and the advertisement, including such statement, is subject
to these rules.
b. If the person
making a testimonial or an endorsement has a financial interest in the insurer
or a related entity as a stockholder, director, officer, employee, or
otherwise, such fact shall be disclosed in the advertisement. If a person is
compensated for making a testimonial or endorsement, such fact shall be
disclosed in the advertisement by language substantially as follows: "Paid
Endorsement." The payment of substantial amounts, directly or indirectly, for
"travel and entertainment" for filming or recording of TV or radio
advertisements constitutes compensation and requires disclosure.
c. An advertisement that states or implies
that an insurer or an insurance product has been approved or endorsed by any
person or other organizations must also disclose any proprietary or other
relationship between the parties.
(8)
Disparaging and incomplete
comparisons and statements. An advertisement shall not directly or
indirectly make unfair or incomplete comparisons of policies or benefits or
comparisons of noncomparable policies of other insurers, and shall not
disparage other insurers, their policies, services or business methods, and
shall not disparage or unfairly minimize competing methods of marketing
insurance. An advertisement shall not contain statements that are untrue in
fact, or by implication misleading, with respect to the assets, corporate
structure, financial standing, age or relative position of an insurer in the
insurance business.
(9)
Identity of insurer.
a. The
name of the actual insurer shall be clearly identified in all advertisements
for a particular policy. An advertisement shall not use a trade name, insurance
group designation, name of a parent company, name of a particular company
division, service mark, slogan, symbol or other device that would have the
capacity and tendency to misrepresent the true identity of an
insurer.
b. No advertisement shall
use any combination of words, symbols, or physical materials that by its
content, phraseology, shape, color or other characteristics is so similar to
combinations of words, symbols, or physical materials used by a municipal,
state or federal agency that it would lead a reasonable individual to believe
that the advertisement is approved, endorsed or accredited by an agency of the
municipal, state, or federal government.
(10)
Disclosure requirements for life
insurance and annuities.
a. An
advertisement for a policy containing graded or modified benefits shall
prominently display any limitation of benefits. If the premium is level and
coverage decreases or increases with age or duration, such fact shall be
prominently disclosed.
b. An
advertisement for a policy with nonlevel premiums shall prominently describe
the premium changes.
c. Dividends.
(1) An advertisement shall not state or imply
that the payment or amount of dividends is guaranteed. If dividends for an
annuity are illustrated, the illustration must be based on the insurer's
illustrated scale and must contain a statement that the illustration is not to
be construed as a guarantee or estimate of dividends to be paid in the
future.
(2) An advertisement shall
not state or imply that the illustrated scale under a participating policy or
pure endowments will be or can be sufficient at any future time to ensure,
without the further payment of premiums, the receipt of benefits, such as a
paid-up policy, unless the advertisement clearly and precisely explains (1)
what benefits or coverage would be provided at such time and (2) under what
conditions this would occur.
d. An advertisement of a deferred annuity
shall not state the net premium accumulation interest rate unless it discloses
in close proximity thereto and with equal prominence the actual relationship
between the gross and net premiums.
e. An advertisement that states the projected
values of a policy must use the guaranteed interest rates in determining such
projected values and, in addition, may show other projected values based on
interest rates that comply with the illustrated scale. Any statements
containing or based upon an interest rate higher than the guaranteed
accumulation interest rates shall likewise set forth with equal prominence
comparable statements containing or based upon the guaranteed accumulation
interest rates. If the policy does not contain a provision for a guaranteed
interest rate, any advertisement showing projected values must clearly state
that the rates are not guaranteed. This subrule does not apply to an
illustration or supplemental illustration subject to the provisions of the Life
Insurance Illustrations Model Regulation, 191-Chapter 14.
f. An advertisement or presentation that does
not recognize the time value of money through the use of appropriate interest
adjustments shall not be used for comparing the cost of two or more life
insurance policies. Such advertisement may be used for the purpose of
demonstrating the cash flow pattern of a policy if such advertisement is
accompanied by a statement disclosing that the advertisement does not recognize
that, because of interest, a dollar in the future may not have the same value
as a dollar at the time of the presentation.
g. An advertisement of benefits shall not
display guaranteed and nonguaranteed benefits as a single sum unless they are
also shown separately in close proximity thereto.
h. A statement regarding the use of life
insurance cost indexes shall include an explanation that the indexes are useful
only for the comparison of the relative costs of two or more similar
policies.
i. A life insurance cost
index that reflects dividends or an equivalent level annual dividend shall be
accompanied by a statement that it is based on the insurer's illustrated scale
and is not guaranteed.
(11)
Special offers.
Advertisements, applications, requests for additional information and similar
materials are prohibited if they state or imply that the recipient has been
individually selected to be offered insurance or has had the recipient's
eligibility for the insurance individually determined in advance when the
advertisement is directed to all individuals in a group or to all individuals
whose names appear on a mailing list.
(12)
Disclosure requirement.
In an advertisement that is an invitation to contract for an accident and
sickness insurance policy that is guaranteed renewable, cancelable or renewable
at the option of the company, the advertisement shall disclose that the insurer
has the right to increase premium rates if the policy so provides.
(13)
Group or quasi-group
implications.
a. An advertisement of
a particular policy shall not state or imply that prospective insureds become
group or quasi-group members covered under a group policy and, as members,
enjoy special rates or underwriting privileges, unless that is the
fact.
b. This rule prohibits the
solicitation of a particular class, such as governmental employees, by use of
advertisements that state or imply that the class membership entitles the
member to reduced rates on a group or other basis when, in fact, the policy
being advertised is sold only on an individual basis at regular
rates.
c. Advertisements that
indicate that a particular coverage or policy is exclusively for "preferred
risks" or a particular segment of the population or that a particular segment
of the population is an acceptable risk, when the distinctions are not
maintained in the issuance of policies, are prohibited.
d. An advertisement to join an association,
trust or discretionary group that is also an invitation to contract for
insurance coverage shall clearly disclose that the applicant will be purchasing
both membership in the association, trust or discretionary group and insurance
coverage. The insurer shall solicit insurance coverage on a separate and
distinct application that requires a separate signature. The separate and
distinct application required need not be on a separate document or contained
in a separate mailing. The insurance program shall be presented so as not to
conceal the fact that the prospective members are purchasing insurance as well
as applying for membership, if that is the case. Similarly, the use of terms
such as "enroll" or "join" to imply group or blanket insurance coverage is
prohibited when that is not the fact.
e. Advertisements for group or franchise
group plans that provide a common benefit or a common combination of benefits
shall not imply that the insurance coverage is tailored or designed
specifically for that group, unless that is the fact.
(14)
Compliance with Medicare
supplement advertising rules. Insurers and producers shall comply with
the Medicare supplement advertising rules set forth in 191-Chapter
37.