§ 146d.6. Practices declared false, misleading, deceptive or unfair regardless of location.

 (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 menber’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.



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