Sec. 3 AAC 26.440 - Unfair or deceptive acts or practices regardless of location

ยง 3 AAC 26.440. Unfair or deceptive acts or practices regardless of location

An insurer or insurance producer engages in an unfair or deceptive act or practice if the insurer or insurance producer

(1) submits, processes, or assists in the submission or processing of an allotment form or similar device used by the United States armed forces in order 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 those purposes, except for assisting a service member by providing insurer or premium information necessary to complete an allotment form;

(2) knowingly receives money from a service member for the payment of premium from a depository institution with which the service member does not have a formal banking relationship; for purposes of this paragraph, 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 12 U.S.C. 4301 - 4313 (Truth in Savings Act); and

(B) permits the service member to make deposits and withdrawals unrelated to the payment or processing of insurance premiums;

(3) employs a device or method or enters into an agreement in which money received from a service member by allotment for the payment of insurance premiums is identified on the service member's Leave and Earnings Statement or equivalent or successor form as "savings" or "checking" and for which the service member has no formal banking relationship as described in (2) of this section;

(4) enters into an agreement with a depository institution for the purpose of receiving money from a service member in which the depository institution agrees to accept direct deposits from a service member with whom it does not have a formal banking relationship as described in (2) of this section;

(5) uses United States Department of Defense personnel to act as representatives or agents in a solicitation or sale of life insurance to a service member who is junior in rank or grade or to a family member of the service member;

(6) offers or gives anything of value to United States Department of Defense personnel to procure their assistance in encouraging, assisting, or facilitating the solicitation or sale of life insurance to another service member;

(7) knowingly offers or gives anything of value to a service member in a pay grade of E-4 or below to attend an event where an application for life insurance is solicited;

(8) advises a service member in a pay grade of E-4 or below to change the service member's income tax withholding or state of legal residence for the sole purpose of increasing disposable income to purchase life insurance;

(9) makes a representation, or uses a device, title, descriptive name, or identifier that has the tendency or capacity to confuse or mislead a service member to believe that the insurer, insurance producer, or insurance product offered is affiliated, connected, or associated with, or endorsed, sponsored, sanctioned, or recommended by the United States government, the United States armed forces, a state or federal agency, or a government entity; the use of 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 is permissible;

(10) 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, solicits the purchase of a life insurance product in a manner that has the tendency or capacity to confuse or mislead a service member to believe that the insurer, insurance producer, or insurance product offered is affiliated, connected, or associated with, or endorsed, sponsored, sanctioned, or recommended by the United States government or the United States armed forces;

(11) uses or describes 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;

(12) except for individually issued annuities, misrepresents the mortality costs of a life insurance product, including stating or implying that the product is free;

(13) makes a representation that is false, misleading, or deceptive regarding the availability, suitability, amount, or cost of, or exclusions or limitations to coverage provided to a service member or a service member's dependents by Servicemembers' Group Life Insurance or Veterans' Group Life Insurance;

(14) makes a representation that is false, misleading, or deceptive regarding conversion requirements, including the costs of coverage or exclusions or limitations to coverage, of Servicemembers' Group Life Insurance or Veterans' Group Life Insurance;

(15) suggests, recommends, or encourages a service member to cancel or terminate the service member's Servicemembers' Group Life Insurance policy or issues a life insurance policy that replaces an existing Servicemembers' Group Life Insurance policy unless the replacement policy will take effect on or after the service member's separation from the United States armed forces;

(16) deploys, uses, or contracts for lead-generating materials that are designed exclusively for use with service members, and that do not clearly and conspicuously disclose, if true, that the recipient will be contacted by an insurance producer for the purpose of soliciting the purchase of life insurance;

(17) when establishing a specific appointment for an in-person, face-to-face meeting with a prospective purchaser, fails to disclose that a solicitation for the sale of life insurance will be made;

(18) except for individually issued annuities, fails to clearly and conspicuously disclose that the product being sold is life insurance;

(19) fails to make, at the time of sale or offer to an individual known to be a service member, the written disclosures required by sec. 10, P.L. 109-290 (Military Personnel Financial Services Protection Act);

(20) except for individually issued annuities, when the sale is conducted in-person, face-to-face with an individual known to be a service member, at the time the application is taken, fails to provide the service member

(A) an explanation of a 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 that clearly and concisely describes the type of life insurance, the death benefit applied for, and its expected first year cost; a basic illustration that complies with the requirements of 3 AAC 28.820 meets the requirement for a written disclosure in this subparagraph;

(21) except for individually issued annuities, recommends the purchase of a life insurance product that includes a side fund to a service member in a pay grade of E-4 or below unless the insurer has reasonable grounds to believe that the life insurance death benefit, on its own, is suitable;

(22) offers for sale or sells a life insurance product that includes a side fund to a service member in a pay grade of E-4 or below who is currently enrolled in Servicemembers' Group Life Insurance, unless, after the completion of a needs assessment, the insurer or insurance producer demonstrates that the service member's Servicemembers' Group Life Insurance death benefit, together with other military survivor benefits, savings, investments, survivor income, and other life insurance are insufficient to meet the service member's insurable needs for life insurance; for purposes of this paragraph,

(A) "insurable needs" are the risks associated with premature death, taking into consideration the financial obligations and immediate and future cash needs of the service member's estate, survivors, and dependents; and

(B) "other military survivor benefits" include

(i) a death gratuity under 10 U.S.C. 1475;

(ii) funeral reimbursement under 10 U.S.C. 1482 or 38 U.S.C. 2301- 2308;

(iii) transition assistance;

(iv) survivor and dependents' educational assistance under 38 U.S.C. 3500 - 3566;

(v) dependency and indemnity compensation under 38 U.S.C. 1301 - 1323;

(vi) TRICARE health care benefits under 10 U.S.C. 1071 - 1110 for survivors;

(vii) survivor housing benefits and allowances;

(viii) federal income tax forgiveness; and

(ix) social security survivor benefits under 42 U.S.C. 401 - 434;

(23) except for individually issued annuities, offers for sale or sells a life insurance contract that 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 insurer or insurance producer provides the service member a schedule of effective rates of return, based upon cash flows of the combined product in which the effective rate of return includes all premiums and cash contributions made by the policyholder and all cash accumulations and cash surrender value available to the policyholder in addition to life insurance coverage; the insurer or insurance producer must provide a schedule for each year of the first 10 policy years and every fifth policy year thereafter ending at age 100, policy maturity, or final expiration, whichever occurs last; and

(C) that, by default, diverts or transfers money accumulated in the side fund to pay, reduce, or offset any premium due;

(24) except for individually issued annuities, offers for sale or sells a life insurance contract that, after considering all policy benefits, including endowment, and return of premium, does not comply with AS 21.45.300 (standard nonforfeiture law for life insurance);

(25) sells, to an individual known to be a service member, a life insurance product that excludes coverage if the insured's death is related to declared or undeclared war or an act related to military service, except for accidental death coverage.

(Eff. 12/28/2008, Register 188)

In 2010 the revisor of statutes, acting under AS 01.05.031, renumbered former AS 21.36.150 as AS 21.36.900. As of Register 196 (January 2011), the regulations attorney made a conforming technical revision under AS 44.62.125(b)(6), to the authority citation that follows 3 AAC 26.440, so that the citation to former AS 21.36.150 now refers to the renumbered statute, AS 21.36.900.

Authority:AS 21.06.090

AS 21.36.020

AS 21.36.030

AS 21.36.040

AS 21.36.050

AS 21.36.900

The following state regulations pages link to this page.