Life Insurance, Annuity Contracts, and Health Insurance Advertising

Purpose

We've all seen and heard commercials with a fast-talking spokesperson, and at the end of the commercial there is someone speaking even faster rattling off the rules and exclusions of the deal being advertised. The insurance industry has explicit rules about what is allowed in advertising provide prospective purchasers with clear and unambiguous statements when companies advertise life insurance, annuity contracts, and health insurance. This is accomplished by guidelines and standards of conduct in advertising to ensure that product descriptions are presented in a manner that prevents unfair, deceptive, and misleading advertising.

First of all, what qualifies as an advertisement in the insurance industry? Advertisement includes communication:

• in a newspaper, magazine, or other publication;
• in the form of a pamphlet, letter, or poster; or
• over any radio or TV station.

Advertisement does not include:

• material used solely for the training and education of employees or agents;
• internal communications within an insurer's organization;
• individual communications of a personal nature with current policyholders regarding existing coverage; or
• correspondence between a prospective group or blanket policyholder and an insurer in the course of negotiating a group of blanket contract.

Method of disclosure of required information

All disclosures required in the advertisement must be conspicuous and in close conjunction with the statements to which the disclosures are applicable. Disclosures may not be minimized, obscured, ambiguous or mixed with the context of the advertisement so as to be confusing or misleading to consumers.

Form and content of advertisements

The form and content of insurance and annuity advertisements must be complete enough so as not to mislead or deceive the public. The Director will determine whether the advertisement has the capacity to mislead or deceive a person of average education or intelligence, within the segment of the public to which it is directed.

An advertisement must clearly identify that it is advertising insurance or annuity products, and so the name of any policy must be followed by or include the words "Insurance Policy," "Annuity," or similar words clearly identifying, the fact that an insurance policy or annuity is being offered. Phrases such as the following may be used to identify the type of insurance being advertised: whole life insurance policy, level term life insurance, deferred annuity, long-term care insurance policy, major medical insurance policy, or disability insurance policy.

Advertisements of benefits or proceeds payable or premiums payable

No advertisement may omit information if the omission would reasonably result in purchasers being mislead as to the nature or extent of any policy benefits, coverages or premiums.

Disclosing policy provisions relating to renewability, cancellability, and termination

We originally saw this when talking about the Advertising Code at the end of chapter 2. An advertisement that is an invitation to contract must disclose the provisions relating to

• renewability
• termination and
• modification of benefits, losses covered, or premiums.