N.Y. Comp. Codes R. & Regs. Tit. 11 § 223.6 - Prohibited acts or practices regardless of location

(a) No insurer or insurance producer shall:

(1) submit, process or assist 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 an insurance policy, including using or assisting in using a service member's MyPay account or other similar internet or electronic medium for such purposes. This paragraph does not prohibit assisting a service member by providing insurer or premium information necessary to complete any allotment form;

(2) knowingly receive 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 section, a formal banking relationship is established when the depository institution provides the service member a deposit agreement and periodic statements and permits the service member to make deposits and withdrawals unrelated to the payment or processing of insurance premiums;

(3) employ any device or method or enter into any 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 where the service member has no formal banking relationship;

(4) enter into any 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) use DoD personnel, directly or indirectly, as a representative or agent in any official or unofficial capacity, with or without compensation, with respect to the solicitation or sale of an insurance policy to a service member who is junior in rank or grade, or to a family member of such personnel;

(6) offer or give anything of value, directly or indirectly, to DoD personnel to procure his or her assistance in encouraging, assisting or facilitating the solicitation or sale of an insurance policy to another service member;

(7) knowingly offer or give anything of value to a service member with a pay grade of E-4 or below for his or her attendance to any event where an application for an insurance policy is solicited; or

(8) advise a service member with a pay grade of E-4 or below to change his or her income tax withholding or state of legal residence for the sole purpose of increasing disposable income to purchase an insurance policy.

(b) No insurer or insurance producer, regarding source, sponsorship, approval or affiliation, shall:

(1) make any representation, or use 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 insurance policy offered is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government, the United States Armed Forces, or any state or Federal agency or government entity. Examples of prohibited insurance producer titles include: "Battalion Insurance Counselor," "Unit Insurance Advisor," "Servicemen's Group Life Insurance Conversion Consultant" and "Veteran's Benefits Counselor." Nothing in this paragraph shall be construed to prohibit a person from using 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. Such designations include: Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), Master of Science in Financial Services (MSFS), and Masters of Science Financial Planning (MS); or

(2) solicit the purchase of an insurance policy from a service member 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 policy is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government, or the United States Armed Forces.

(c) No insurer or insurance producer, regarding premiums, costs or investment returns, shall:

(1) use or describe the credited interest rate on an insurance policy in a manner that implies that the credited interest rate is a net return on premium paid; or

(2) excluding individually issued annuities, misrepresent the mortality costs of an insurance policy, including stating or implying that the policy "costs nothing" or is "free."

(d) No insurer or insurance producer, regarding SGLI or VGLI, shall:

(1) make any representation regarding the availability, suitability, amount, cost, exclusions or limitations to coverage provided to a service member or dependents by SGLI or VGLI, which is false, misleading or deceptive;

(2) make any representation or comparison to a service member regarding conversion requirements, including the costs of coverage, or exclusions or limitations to coverage of SGLI or VGLI to private insurers that is false, misleading or deceptive; or

(3) suggest, recommend or encourage a service member to cancel or terminate his or her SGLI policy or issuing an insurance policy that replaces an existing SGLI policy unless the replacement shall take effect upon or after the service member's separation from the United States Armed Forces.

(e) No insurer and or insurance producer, regarding disclosure to a service member, shall:

(1) deploy, use or contract for any lead generating materials designed exclusively for use with service members that do not clearly disclose that the recipient will be contacted by an insurance producer, if that is the case, for the purpose of soliciting the purchase of an insurance policy;

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

(3) fail to clearly disclose the nature or type of insurance policy being sold;

(4) fail to make, at the time of sale or offer to an individual known to be a service member, the written disclosures required by section 10 of the Military Personnel Financial Services Protection Act, Pub. L. No. 109-290, p. 16; or

(5) excluding individually issued annuities, when the sale is knowingly conducted in person, face-to-face with a service member, failing to provide the applicant, at the time the application is taken:

(i) an explanation of any free look period with instructions on how to cancel if a policy is issued; and

(ii) either a copy of the application or a written disclosure. The copy of the application or the written disclosure shall clearly and concisely set out the type of insurance, the death benefit applied for and its expected first year cost. An illustration that meets the requirements of Part 53 (Regulation 74) of this Title shall be deemed sufficient to meet this requirement for a written disclosure.

(f) No insurer or insurance producer, with respect to the sale of an insurance policy to a service member, shall:

(1) excluding individually issued annuities, recommend the purchase of any insurance policy that includes a side fund to a service member in pay grades E-4 and below unless the insurer or insurance producer has reasonable grounds for believing that the insurance policy, standing alone, is suitable;

(2) offer for sale or selling an insurance policy that includes a side fund to a service member in pay grades E-4 and below who is currently enrolled in SGLI, is presumed unsuitable unless, after the completion of a needs assessment, the insurer or insurance producer demonstrates that the applicant's SGLI death benefit, together with any other military survivor benefits, savings and investments, survivor income, and other insurance are insufficient to meet the applicant's insurable needs. For purposes of this paragraph:

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

(ii) 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;

(3) excluding individually issued annuities, offer for sale or sell any insurance policy that includes a side fund:

(i) unless interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;

(ii) unless 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 shall 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 shall be provided for at least each policy year from one to ten and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and

(iii) which by default diverts or transfers funds accumulated in the side fund to pay, reduce or offset any premiums due.

(4) excluding individually issued annuities, offer for sale or sell any insurance policy which after considering all policy or contract benefits, including, endowment, return of premium or persistency, does not comply with section 4221 or any other section of the Insurance Law, or any regulation thereunder.

Notes

N.Y. Comp. Codes R. & Regs. Tit. 11 § 223.6