Ariz. Admin. Code § 20-6-202

Current through Register Vol. 30, No. 49, December 6, 2024

Section R20-6-202 - Advertising, Solicitation, and Transaction of Life Insurance

A. The definitions in R20-6-201(A) and the following definition apply in this Section:

"Life insurance" means a life insurance contract, including all benefits payable under the policy.

B. Applicability

1. This Section applies to:

a. All persons subject to regulation under A.R.S. Title 20; and

b. Advertising, promotion, solicitation, negotiation, and sale of life insurance policies, regardless of the form of dissemination.

2. This Section does not apply to group insurance, franchise insurance, or to annuities without life contingencies.

C. General provisions. A life insurance advertisement shall not mislead the public by:

1. Omitting information that fairly describes the subject matter as a life insurance policy and the benefits available under the policy;

2. Placing undue emphasis on facts that, even if true, are not relevant to the sale of life insurance; or

3. Placing undue emphasis on features of incidental or secondary importance to the life insurance aspects of the policy.

D. The Department deems the following acts misleading and deceptive:

1. Using any statement, including phrases such as "investment," "investment plan," "founders plan," "charter plan," "expansion plan," "profit," "profits," or "profit sharing," in a context or under circumstances or conditions that may mislead a purchaser or prospective purchaser to believe that the insurer is selling something other than a life insurance policy or will provide some benefit not included in the policy, or not available to other persons of the same class and equal expectation of life;

2. Using any phrase as the name or title of a life insurance policy if the phrase does not include the words "life insurance," unless other language in the same document expressly provides that the contract is a life insurance policy;

3. Making any statement relating to the growth or earnings of the life insurance industry or to the tax status of life insurance companies in a context that would reasonably be understood as attempting to interest a prospective applicant in the purchase of shares of stock in the insurance company rather than in the purchase of a life insurance policy;

4. Making any statement that reasonably tends to imply that the insured will enjoy a status common to a stockholder or will acquire a stock ownership interest in the insurance company by purchasing the policy, unless the statement is made with reference to policies of domestic life insurers engaged in a program allowed under A.R.S. § 20-453;

5. Providing a policyholder with a premium receipt book, policy jacket, return envelope, or other printed or electronic material referring to the insurer's "investment department," "insured investment department," or similar terminology in a manner implying that the policy is sold, issued, or serviced by the insurer's investment department;

6. Making any statement that reasonably tends to imply that, by purchasing a policy, the purchaser or prospective purchaser will become a member of a limited group of persons who may receive the payment of dividends, special advantages, benefits, or favored treatment unless the insurance contract specifically provides for the described payment of dividend, special advantages, benefits, or favored treatment;

7. Stating or implying that only a limited number of persons or limited class of persons may buy a particular kind of policy, unless the limitation is related to recognized underwriting practices or specifically stated in the policy or rider;

8. Describing premium payments in language that states the payment is a "deposit," unless:

a. The payment establishes a debtor-creditor relationship between the insurance company and the policyholder; or

b. The term is used with the word "premium" in a manner as to clearly indicate the true character of the payment;

9. Providing any illustration or projection of future dividends that:

a. Is not based on the company's actual scale for payment of current dividends, and

b. Does not clearly indicate that the dividends are not guarantees;

10. Using the words "dividends," "cash dividends," "surplus," or similar phrases in a manner that states or implies that the payment of dividends is guaranteed or certain to occur;

11. Stating, without qualification, that a purchaser of a policy will share in a stated percentage or portion of the insurer's earnings;

12. Making any statement that projected dividends under a participating policy will be or can be sufficient at any future time to assure the receipt of benefits such as a paid-up policy without further payment of premiums unless the statement also explains:

a. The benefits or coverage that would be provided at the future time, and

b. The conditions under which the receipt of benefits without further payment of premiums would occur;

13. Describing a life insurance policy or premium payments in terms of "units of participation," unless accompanied by other language clearly indicating that the references are to a life insurance policy or to premium payments, as applicable.

14. Advising producers to avoid disclosing that life insurance is the subject of the solicitation or sale;

15. Stating that an insured is guaranteed certain benefits if the policy is allowed to lapse, without explaining the non-forfeiture benefits;

16. Using a dollar amount in printed material to be shown to a prospective policyholder, unless the amount is accompanied by language that:

a. States the nature of the dollar amount,

b. Prohibits including the use of dollar amounts not related to guaranteed values and properly projected dividend figures, and

c. Prohibits the use of figures showing growth of stock values, or other values not a part of the life insurance contract.

17. Stating that a policy provides features not found in any other insurance policy, unless the insurer can demonstrate that other policies do not have the same feature;

18. Making any statement or implication about an insurance policy that cannot be verified by reference to the policy contract, a sample of the policy being described, or the company's officially published rate book and dividend illustrations;

19. Stating that life insurance is "loss proof" or "depression proof," except that an insurer may make statements that life insurance benefits, other than dividends, are guaranteed by the company regardless of economic conditions;

20. Making any statement that a company makes a profit as a result of policy lapses or surrenders;

21. Making comparisons to the past experience of other life insurance companies as a means of projecting possible experience for the company issuing the advertising; and

22. Conduct or statements designed to mislead a prospective applicant or purchaser.

Ariz. Admin. Code § R20-6-202

Former General Rule Number 68-14. R20-6-202 recodified from R4-14-202 (Supp. 95-1). Amended by final rulemaking at 13 A.A.R 2061, effective August 4, 2007 (Supp. 07-2).