Section 760IAC1-13-5. Prohibited statements and sales practices

   No life insurance company and no agent, solicitor, broker, or representative of such company shall, within this state:

(1) Make any statement or reference relating to the growth of the life insurance industry or to the tax status of life insurance companies in connection with any solicitation of an application for life insurance in a context which would reasonably be understood to interest a prospect in the purchase of shares of stock in an insurance company rather than in the purchase of a life insurance policy;

(2) Make any statement which reasonably gives rise to the inference that the insured or prospective insured will enjoy a status common to a stockholder or will acquire a stock ownership interest in the insurance company by virtue of purchasing the life insurance policy;

(3) Make any reference to or statement concerning a company's "Investment Department," "Insured Investment Department," or similar terminology in such a manner as to imply that the policy was sold or issued or is serviced by the investment department of the life insurance company;

(4) Make any statement or reference which would reasonably tend 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, in the payment of dividends, special advantages, benefits, or favored treatment unless such is specifically provided in the insurance contract; this clause has no relation or applicability to policies under which insured persons of one class of risk may receive dividends at a higher rate than persons of another class of risk;

(5) State or imply that only a limited number of persons, or limited class of persons, will be eligible to buy a particular kind of policy, unless such limitation is related to recognized underwriting practices and can be verified by the underwriting practices of the company;

(6) State or imply that policyholders who act as "centers of influence" for an insurance company will share, because of so acting, in the company's surplus earnings in some manner not available to other policyholders who are otherwise in the same class;

(7) State or imply that the principal amounts payable under coupons which may be attached to a life insurance policy represent interest, earnings, return on investment, or anything other than policy benefits, the cost of which is included in the total premium shown in the policy;

(8) Describe or refer to premium payments in language which states the payment is a "deposit," unless:

(a) the payment establishes a debtor-creditor relationship between the life insurance company and the policyholders and a showing is made as to when and how the deposit may be withdrawn; or

(b) the term is used in conjunction with the word "premium" or similar language in such a manner as to clearly indicate the true character of the payment;

(9) Provide any illustration or projection of future dividends on any policy unless:

(a) the illustration or projection is based on the experience currently used by the company for dividends or upon a scale adopted by the company, and

(b) the illustration or projection clearly indicates that the dividends shown are not guaranteed;

(10) Use the words "dividends," "cash dividends," "surplus," or similar phrases in such a manner as to state or imply that the payment of dividends is guaranteed or certain to occur;

(11) State or imply that a purchaser of a policy will share in a stated percentage or portion of the earnings of the company, unless such is specifically provided in the Insurance Contract;

(12) Make any statement or imply that projected dividends under a participating policy will be or can be sufficient at any time to assure the receipt of benefits, such as a paid-up policy without the further payment of premiums, unless the statement is accompanied by an adequate explanation as to:

(a) what benefits or coverage would be provided or discontinued at such time;

(b) the conditions under which this would occur;

(13) Describe a life insurance policy or premium payments therefor in terms of "units of participation" unless accompanied by other language fairly indicating their reference to a life insurance policy or to premium payments, as the case may be;

(14) Include in sales kits and prepared sales presentations proposed answers to a prospect's questions as to whether life insurance is being sold which are designed to avoid a clear and unequivocal statement that life insurance is the subject matter of the solicitation;

(15) State that the insured is guaranteed certain benefits if the policy is allowed to lapse without making an adequate explanation of the nonforfeiture benefits;

(16) Display to a prospective policyholder any printed material which includes illustrations, using dollar amounts, in connection with the proposed sale of a life insurance policy or endowment benefits unless the printed material clearly identifies the subject to which the dollar amounts pertain and the subject has an economic relationship to the guaranteed values and dividends of the policy;

(17) Make any statement that a company makes a profit as a result of policy lapses or surrenders;

(18) Make comparisons to the past experience of other life insurance companies as a means of projecting possible experience of the soliciting company when the comparisons are designed to enhance the characteristics of the policy being sold by confining the comparisons to companies having favorable experience with that type of policy without a fair disclosure of companies which have had unfavorable experience and omitting references to other companies which have had unfavorable experience with such type policies, when it is within the knowledge of the company or agent that other companies have had such unfavorable experience;

(19) Fail or omit to indicate in a writing left with the applicant at the time an application for any life insurance policy containing "coupon" or "guaranteed annual endowment" benefits is obtained that there will be separately stated premium charge for these benefits; provided, however, that this clause (19) shall not apply where the amount of any pure endowment or periodic benefit or benefits payable during any policy year is greater than the total annual premium for such year.

(Department of Insurance; Reg 13,Rule 4; filed Jun 7, 1966, 9:00 am: Rules and Regs. 1967, p. 116; readopted filed Sep 14, 2001, 12:22 p.m.: 25 IR 531; readopted filed Nov 27, 2007, 4:01 p.m.: 20071226-IR-760070717RFA; readopted filed Nov 26, 2013, 3:43 p.m.: 20131225-IR-760130479RFA)