Mich. Admin. Code R. 500.655 - Deceptive words, phrases, or illustrations prohibited

Rule 5.

(1) An advertisement shall not omit information or use words, phrases, statements, references, or illustrations if the omission of the information or use of the words, phrases, statements, references, or illustrations has the capacity, tendency, or effect of misleading or deceiving purchasers or prospective purchasers as to the nature or extent of a policy benefit payable, loss covered, or premium payable. The fact that the policy offered is made available to a prospective insured for inspection before consummation of the sale or that an offer is made to refund the premium if the purchaser is not satisfied does not remedy misleading statements.

(2) An advertisement shall not contain or use words or phrases such as "all," "full," "comprehensive," "complete," "unlimited," "up to," "as high as," "this policy will help fill some of the gaps that medicare and your present insurance leave out," or "the policy will help to replace your income" or any similar words and phrases in a manner which exaggerates any benefits beyond the terms of the policy.

(3) An advertisement for a medicare supplement policy shall not contain or use words or phrases such as "this policy pays all that medicare doesn't" or any similar words and phrases in a manner which exaggerates any benefit beyond the terms of the policy.

(4) An advertisement shall not contain a description of a policy limitation, exception, or reduction that is 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 2 years." Words and phrases used in an advertisement to describe these policy limitations, exceptions, and reductions shall fairly and accurately describe the negative features of the limitations, exceptions, and reductions of the policy offered.

(5) An advertisement of a benefit for which payment is conditional upon confinement in a hospital or similar facility shall not use language which has the tendency or capacity to lead a potential insured to believe that the policy's purpose is to enable him or her to make a net profit from being hospitalized or confined. The advertisement shall not use words or phrases such as "tax free," "extra cash," "extra income," or "extra pay" or similar words or phrases.

(6) An advertisement of a hospital or other similar facility confinement benefit shall not advertise that the amount of the benefit is payable on a monthly or weekly basis when, in fact, the amount of the benefit payable is based upon a daily pro rata basis relating to the number of days of confinement, unless the daily amount is emphasized and precedes the weekly or monthly benefit amounts. When the policy contains a limit on the number of days of coverage provided, the limit shall appear in the advertisement.

(7) An advertisement for a policy providing benefits for specified illnesses only, such as cancer, or for specified accidents only, such as automobile accidents, shall clearly, and in type which is not less than 2 points larger than the type in the body of the advertisement, 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 is a cancer only policy," or "this is an automobile accident only policy."

(8) An advertisement shall not contain a claim stating or implying that acquisition and servicing costs for the plan advertised are lower than equivalent costs for other generally used means of marketing similar insurance, unless that is the fact. An example of a misleading phrase is: "We deal directly with you so our costs are lower," when the acquisition and servicing costs for the advertised plan are actually not lower than equivalent costs for other similar plans.

(9) An advertisement which also is an invitation to join an association, trust, or discretionary group shall solicit insurance coverage on a separate and distinct application. Each of these applications shall require separate signatures, but need not be in a separate document or contained in a separate mailing. The insurance program shall be presented so as not to mislead or deceive the prospective members that they are purchasing insurance as well as applying for membership, if that is the case.

(10) Notwithstanding the provisions of subrule (8) of this rule, an advertisement of accident and sickness insurance sold by direct response shall not state or imply that because no insurance agent will call and no commissions will be paid to agents, it is a low-cost plan or use other similar words or phrases.

Notes

Mich. Admin. Code R. 500.655

1979 AC; 1991 AACS