Mich. Admin. Code R. 500.1377 - Disclosure requirements

Current through Vol. 22-05, April 1, 2022

Rule 7.

(1) The information required to be disclosed by these rules shall 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.
(2) An advertisement shall not omit material information or use words, phrases, statements, references, or illustrations if such omission or such use is misleading or deceptive to purchasers or 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 the policy offered is made available to a prospective insured for inspection prior to consummation of the sale, or an offer is made to refund the premium if the purchaser is not satisfied, does not remedy misleading statements.
(3) If an advertisement uses terms or phrases such as "Non-Medical" or "No Physical Examination Required" or uses similar terms or phrases and if issue is not guaranteed, such terms or phrases shall be accompanied by a further disclosure of equal prominence and nearby to the effect that issuance of the policy will depend upon answers to health questions contained in the application, if such is the fact.
(4) An advertisement shall not use as the name or title of a life insurance policy any phrase which does not include the words "life insurance," unless accompanied by other language clearly indicating it is life insurance.
(5) An advertisement shall prominently describe the type of policy advertised.
(6) An advertisement of an insurance policy marketed by direct response technique shall not state or imply that because there is no agent or commission involved there will be cost savings to prospective purchasers, unless such is the fact.
(7) 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 coverage changes shall be prominently disclosed.
(8) An advertisement for a policy with non-level premiums shall prominently describe the premium changes.
(9) All of the following provisions apply with respect to dividends:
(a) An advertisement shall not utilize or describe dividends in a manner which is misleading.
(b) An advertisement shall not state or imply that the payment or amount of dividends is guaranteed. If dividends are illustrated, they shall be based on the insurer's current dividend scale, and the illustration shall contain a statement to the effect that they are not be construed as guarantees or estimates of dividends to be paid in the future.
(c) An advertisement shall not state or imply that illustrated dividends under a participating policy or pure endowments, or both, will be or can be sufficient at any future time to assure, without the further payment of premiums, the receipt of benefits, such as a paid-up policy, unless the advertisement clearly and precisely explains what benefits or coverage would be provided at such time and under what conditions this would occur.
(d) If level benefit insurance is contingent upon dividends providing term insurance or paid-up insurance, or both, any advertisement or illustration shall disclose that insufficient or not dividends will either cause a reduction or elimination of supplemental coverage or that additional premium will be required to keep the original death benefit amount in force.
(10) An advertisement shall not state or imply 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.
(11) An advertisement shall not contain statistical information relating to any insurer or policy unless it accurately reflects recent and relevant facts and is sufficiently complete and clear so as not to be misleading.The source of any such statistics used in an advertisement shall be identified therein.
(12) All of the following provisions apply with respect to introductory, initial, or special offers and enrollment periods:
(a) An advertisement of an individual policy or combination of such policies shall not state or imply that such policy or combination of such 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 such is the fact. An advertisement shall 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 shall 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, unless such is the fact.
(c) An enrollment period during which a particular insurance policy may be purchased on an individual basis shall not be advertised within this state unless there has been a lapse of not less than 3 months between the close of the immediately preceding enrollment period for the same policy and the opening of the new enrollment period, but not more than twice in any calendar year. The advertisement shall specify the date by which the applicant shall mail the application, which shall be not less 10 days and not more than 40 days from the date on which such enrollment period is advertised for the first time. This rule applies to all advertising by any 1 insurer, which 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 set to the applicant in response to the applicant's request. It is also inapplicable to solicitation by the group policyholder of employees or members of a particular group or association which otherwise would be eligible under specific provisions of Act No. 218 of the Public Acts of 1956, as amended, being S500.100 et seq. of the Michigan Compiled Laws, for group 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.
(13) An advertisement of a particular policy shall not state or imply that prospective insureds shall be or become members of a special class or group and as such enjoy special rates, dividends, or underwriting privileges, unless such is the fact.
(14) An advertisement shall not make unfair or incomplete comparisons of policies, benefits, dividends, or rates of other insurers. An advertisement shall not falsely or unfairly describe other insurers or their policies, services, or methods of marketing.
(15) For individual deferred annuity products or deposit funds, excluding variable annuities and investment annuities, all of the following provisions shall apply:
(a) Any illustrations or statements containing or based upon interest rates higher than the guaranteed accumulation interest rates shall set forth with equal prominence comparable illustrations or statements containing or based upon the guaranteed accumulation interest rates. Such higher interest rates shall not be greater than those currently being credited by the company unless such higher rates have been publicly declared by the company with an effective date for new issues not more than 3 months subsequent to the date of declaration. Any illustrations shall be based on gross premiums.
(b) If an advertisement illustrates or states premiums, net interest rates, or accumulative values, the actual relationship between the net and gross premium shall be disclosed in close proximity thereto and with equal prominence, describing the first year and renewal charges, including, but not limited to, expenses and annual contract, collection, and mortality charges.
(c) If any contract does not provide a cash value or return of premium benefit due to surrender or death prior to the commencement of payment of any annuity benefit, any illustration or statements concerning such contracts shall prominently state that these benefits are not provided.Return of premium or cash value shall not be referred to as a death benefit.


Mich. Admin. Code R. 500.1377
1984 AACS; 1997 AACS

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