Utah Admin. Code R590-242-5 - False, Misleading, Deceptive , or Unfair Practices Regardless of Location

(1) The acts or practices by an insurer or insurance producer in this Subsection (1) are corrupt practices, improper influences, or inducements that are false, misleading, deceptive, or unfair.

(a)

(i) Submitting, processing, or assisting in the submission or processing of an 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 with a service member's MyPay account or other similar internet or electronic medium for such purposes.

(ii) Subsection (1)(a)(i) does not prohibit assisting a service member by providing insurer or premium information necessary to complete an allotment form.

(b)

(i) 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.

(ii) A formal banking relationship is established when a depository institution:

(A) provides the service member with a deposit agreement and periodic statements, and makes the disclosures required by the Truth in Savings Act, 12 U.S.C. Section 4301 et seq. and the rules promulgated thereunder; and

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

(c) Entering into an agreement where 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 when the service member has no formal banking relationship.

(d) Entering into an agreement with a depository institution to receive funds from a service member where the depository institution, with or without compensation, agrees to accept direct deposits from a service member with whom it has no formal banking relationship.

(e) Using DOD personnel, directly or indirectly, as a representative or agent in any official or unofficial capacity, with or without compensation, regarding the solicitation or sale of life insurance to any service member who is junior in rank or grade, or to any family member of such personnel.

(f) Offering or giving anything of value, directly or indirectly, to DOD personnel to procure their assistance in encouraging, assisting, or facilitating the solicitation, negotiation, or sale of life insurance to another service member.

(g) Knowingly offering or giving anything of value to a service member with a pay grade of E-4 or below for the service member's attendance to any event where an application for life insurance is solicited.

(h) Advising a service member with 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.

(2) The acts or practices by an insurer or insurance producer in this Subsection (2) regarding source, sponsorship, approval, or affiliation are confusing and are false, misleading, deceptive, or unfair.

(a) 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) Prohibited insurance producer titles include the following:

(A) Battalion Insurance Counselor;

(B) Unit Insurance Advisor;

(C) Servicemen's Group Life Insurance Conversion Consultant;

(D) Veteran's Benefits Counselor; or

(E) a similar title.

(ii) This rule does not 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 including:

(A) Chartered Life Underwriter, CLU;

(B) Chartered Financial Consultant, ChFC;

(C) Certified Financial Planner, CFP;

(D) Master of Science in Financial Services, MSFS; or

(E) Masters of Science Financial Planning, MS.

(b) 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 may 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, or the United States Armed Forces.

(3) The acts or practices by an insurer or insurance producer in this Subsection (3) are confusing regarding premiums, costs, or investment returns and are false, misleading, deceptive, or unfair.

(a) 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.

(b) Except for individually issued annuities, misrepresenting the mortality costs of a life insurance product, including stating or implying that the product "costs nothing" or is "free".

(4) The acts or practices by an insurer or insurance producer in this Subsection (4) regarding SGLI or VGLI are false, misleading, deceptive, or unfair.

(a) Making any representation regarding the availability, suitability, amount, cost, exclusions, or limitations of coverage provided to a service member or a service member's dependents by SGLI or VGLI.

(b) Making any representation regarding conversion requirements, including the costs of coverage, exclusions or limitations to coverage of SGLI or VGLI to private insurers.

(c) Suggesting, recommending, or encouraging a service member to cancel or terminate a SGLI policy or issuing a life insurance policy that replaces an existing SGLI policy unless the replacement takes effect upon or after the service member's separation from the United States Armed Forces.

(5) The acts or practices by an insurer or insurance producer in this Subsection (5) regarding disclosure are false, misleading, deceptive, or unfair.

(a) 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 service member will be contacted by an insurance producer, if that is the case, to solicit the purchase of life insurance.

(b) Failing to disclose that a solicitation for the sale of life insurance will be made when making a specific appointment for an in-person, face-to-face meeting with a prospective purchaser.

(c) Except for an individually issued annuity, failing to clearly and conspicuously disclose the fact that the product being sold is life insurance.

(d) Knowingly failing to make, at the time of sale or offer to an individual known to be a service member, the written disclosures under Section 10 of the Military Personnel Financial Services Protection Act, Pub. L. No. 109-290.

(e)

(i) Except for an individually issued annuity, when a sale is conducted during an in-person, face-to-face meeting with a known service member, failing to provide the applicant, when the application is taken:

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

(B) a copy of the application or a written disclosure.

(ii) The copy of the application or the written disclosure shall clearly and concisely set out the type of life insurance, the death benefit applied for, and its expected first year cost.

(iii) A basic illustration that meets the requirements of Rule R590-177 meets this requirement for a written disclosure.

(6) The acts or practices by an insurer or insurance producer in this Subsection (6) regarding the sale of certain life insurance products are false, misleading, deceptive, or unfair.

(a) Except for an individually issued annuity, recommending the purchase of a life insurance product that includes a side fund to a service member in a pay grade E-4 and below unless the insurer has reasonable grounds for believing that the life insurance death benefit, standing alone, is suitable.

(b) Offering for sale or selling a life insurance product that includes a side fund to a service member in a pay grade E-4 and below who is currently enrolled in SGLI, is presumed unsuitable unless, after the completion of a needs assessment, the insurer demonstrates that the applicant's SGLI death benefit, together with any other military survivor benefits, savings, investments, survivor income, and other life insurance are insufficient to meet the applicant's insurable needs for life insurance.

(c) Except for an individually issued annuity, offering for sale or selling a life 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 is provided with a schedule of effective rates of return based upon cash flows of the combined product, wherein the effective rate of return considers 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, and is 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) that, by default, diverts or transfers funds accumulated in the side fund to pay, reduce, or offset any premiums due.

(d) Except for an individually issued annuity, offering for sale or selling a life insurance policy that, after considering all policy benefits including an endowment, a return of premium, or persistency, does not comply with Section 31A-22-408.

(e) Selling to a known service member a life insurance policy 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.

Notes

Utah Admin. Code R590-242-5

Amended by Utah State Bulletin Number 2023-23, effective 11/21/2023