11 NCAC 12 .0427             LIFE INSURANCE ADVERTISING: DISCLOSURE REQUIREMENTS

(a)  The information required to be disclosed by 11 NCAC 12 .0424 to .0433 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.

(b)  No advertisement shall omit material information or use words or phrases in other than their customary insurance meaning or use words, phrases, statements, references or illustrations if such omission or such use has the capacity, tendency, or effect of misleading or deceiving 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.

(c)  In the event an advertisement uses "Non‑Medical", "No Medical Examination Required" or similar terms where issue is not guaranteed, such terms shall be accompanied by a further disclosure of equal prominence and in juxtaposition thereto to the effect that issuance of the policy may depend upon the answers to the health questions.

(d)  An advertisement shall not use as the name or title of a life insurance policy any phrase that does not include the words "life insurance" unless accompanied by other language clearly indicating it is life insurance.

(e)  An advertisement shall prominently describe the type of policy advertised.

(f)  An advertisement of a policy marketed by the direct response techniques shall not state or imply that because there is no agent or commission involved there will be cost saving to prospective purchasers unless such is the fact.

(g)  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 fact shall be prominently disclosed.

(h)  An advertisement for a policy with non‑level premiums shall prominently describe the premium changes.

(i)  Nonguaranteed Policy Elements:

(1)           An advertisement shall not utilize or describe nonguaranteed policy elements in a manner that is misleading or has the capacity or the tendency to mislead.

(2)           An advertisement shall not state or imply that the payment or amount of nonguaranteed policy elements is guaranteed.  If nonguaranteed policy elements are illustrated, they must be based on the insurer's current scale and the illustration must contain a statement to the effect that they are not to be construed as guarantees or estimates of amounts to be paid in the future.

(3)           An advertisement that includes any illustrations or statements containing or based upon nonguaranteed elements shall set forth with equal prominence comparable illustrations or statements containing or based upon the guaranteed element.

(4)           If an advertisement refers to any nonguaranteed policy element, it shall indicate that the insurer reserves the right to change any such element at any time and for any reason.  However, if an insurer has agreed to limit this right in any way, such as, for example, if it has agreed to change these elements only at certain intervals or only if there is a change in the insurer's current or anticipated experience, the advertisement may indicate any such limitation of the insurer's right.

(5)           An advertisement shall not refer to dividends as "tax free"use words of similar import, unless the tax treatment of dividends is fully explained and the nature of the dividend as a return of premium is indicated clearly.

(j)  An advertisement shall not state 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.

(k)  Testimonials or Endorsements by Third Parties:

(1)           Testimonials used in advertisements must be genuine; represent the current opinion of the author; be applicable to the policy advertised, if any; and be accurately reproduced.  In using a testimonial, the insurer makes as its own all of the statements contained therein, and such statements are subject to all provisions of 11 NCAC 12 .0424 to .0433.

(2)           If the individual making a testimonial or an endorsement has a financial interest in the insurer or a related entity as a stockholder, director, officer, employee or otherwise, or receives any benefit directly or indirectly other than required union scale wages, such fact shall be disclosed in the advertisement.

(3)           An advertisement shall not state or imply that an insurer or a policy has been approved or endorsed by a group of individuals, society, association or other organization unless such is the fact and unless any proprietary relationship between an organization and the insurer is disclosed.  If the entity making the endorsement or testimonial is owned, controlled or managed by the insurer, or receives any payment or other consideration from the insurer for making such endorsement or testimonial, such fact shall be disclosed in the advertisement.

(l)  An advertisement shall not contain statistical information relating to any insurer or policy unless it accurately reflects recent and relevant facts.  The source of any such statistics used in an advertisement shall be identified therein.

(m)  Introductory, Initial or Special Offers and Enrollment Periods:

(1)           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 of its policies.

(2)           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.

(3)           An advertisement shall not offer a policy that utilizes a reduced initial premium rate in a manner that overemphasizes the availability and the amount of the reduced initial premium.  When an insurer charges an initial premium that differs in amount from the amount of the renewal premium payable on the same mode, all references to the reduced initial premium shall be followed by an asterisk or other appropriate symbol that refers the reader to that specific portion of the advertisement that contains the full rate schedule for the policy being advertised.

(4)           An enrollment period during which a particular insurance policy may be purchased on an individual basis shall not be offered within this state unless there has been a lapse of not less than three months between the close of the immediately preceding enrollment period for the same policy and the opening of the new enrollment period with the number of enrollment periods being limited to no more than two in any one calendar year for a particular insurance product.  The advertisement shall specify the date by which the applicant must mail the application, which shall not be later than 10 days and not more than 40 days on which such enrollment period is advertised for the first time.  This shall apply to all advertising media‑‑i.e., mail, newspapers, radio, television, magazines and periodicals‑‑by any one insurer.  The phrase "any one insurer" includes all the affiliated companies of a group of insurance companies under common management or control.  This does not apply to the use of a termination of 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 sent to the applicant in response to his request.  It is also inapplicable to solicitations of employees or members of a particular group or association which otherwise would be eligible under specific provisions of the insurance code 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 shall be applied separately to each such sponsoring organization.

(n)  An advertisement of a particular policy shall not state or imply that prospective insureds shall be or become members of a special class, group or quasi‑group and as such enjoy special rates, dividends or underwriting privileges unless such is the fact.

(o)  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, their policies, services or methods of marketing.

(p)  An advertisement shall not make use of any method of marketing that fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance agency.

 

History Note:        Authority G.S. 58‑2‑40; 58‑58‑40; 58‑63‑15;

Eff. February 1, 1976;

Readopted Eff. September 26, 1978;

Amended Eff. February 1, 1992; April 1, 1989.