I 

108TH CONGRESS 

2D SESSION H. R. 5011 

To prevent the sale of abusive insurance and investment products to military 

personnel. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 7, 2004 

Mr. BURNS (for himself, Mr. SIMPSON, Mr. EDWARDS, Mr. NORWOOD, and 

Mr. WILSON of South Carolina) introduced the following bill; which was 

referred to the Committee on Financial Services 

A BILL 

To prevent the sale of abusive insurance and investment 

products to military personnel. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Military Personnel Fi5 nancial Services Protection Act’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 

8 (1) Our military personnel perform great sac9 rifices in protecting our Nation in the War on Ter10 ror and promoting democracy abroad. 
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1 (2) Our brave men and women in uniform de2 serve to be offered first-rate financial products in 

3 order to provide for their families and save and in4 vest for retirement. 

5 (3) Our military personnel are being offered 

6 high-cost securities and life insurance products by fi7 nancial services companies engaging in abusive and 

8 misleading sales practices. 

9 (4) One securities product being offered to our 

10 service members, the contractual plan mutual fund, 

11 has not been marketed to civilians since the 1980s 

12 due to its exorbitant fees. A 50% sales commission 

13 is assessed against the first year of contributions, 

14 even though the average commission on a mutual 

15 fund is less than six percent. 

16 (5) If a mutual fund is too expensive for the ci17 vilian market, then it is also too expensive for our 

18 men and women in uniform. 

19 (6) Certain life insurance products being of20 fered to our service members are being improperly 

21 marketed as investment products. These products 

22 provide very low death benefits for very high pre23 miums that are front-loaded in the first few years, 

24 making them completely inappropriate for most mili25 tary personnel. 
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1 (7) Regulation of these securities and life insur2 ance products and their sale on military bases has 

3 been clearly inadequate and will require further Con4 gressional legislation to address. 

5 SEC. 3. PROHIBITION ON FUTURE SALES OF PERIODIC PAY6 MENT PLANS. 

7 Section 27 of the Investment Company Act of 1940 

8 (15 U.S.C. 80a–27) is amended by adding at the end the 

9 following new subsection: 

10 ‘‘(j) TERMINATION OF SALES.— 

11 ‘‘(1) TERMINATION.—On and after 30 days 

12 after the date of enactment of the Military Per13 sonnel Financial Services Protection Act, it shall be 

14 unlawful— 

15 ‘‘(A) for any registered investment com16 pany to issue any periodic payment plan certifi17 cate; or 

18 ‘‘(B) for such company, or any depositor of 

19 or underwriter for any such certificate, or any 

20 other person, to sell such a certificate. 

21 ‘‘(2) NO INVALIDATION OF EXISTING CERTIFI22 CATES.—Paragraph (1) shall not be construed to 

23 alter, invalidate, or otherwise affect any rights or ob24 ligations, including rights of redemption, under any 
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1 periodic payment plan certificate issued and sold be2 fore such date of enactment.’’. 

3 SEC. 4. STATE INSURANCE COMMISSIONER JURISDICTION 

4 ON MILITARY INSTALLATIONS. 

5 (a) IN GENERAL.—Notwithstanding any provision of 

6 State law, any authority of a State insurance department 

7 with respect to insurers or insurance agents shall apply 

8 with respect to activities of insurers and agents, notwith9 standing that such activities take place on a military in10 stallation of the United States or on any Federal land or 

11 facility, except to the extent that such authority directly 

12 conflicts with any applicable authorized Federal regulation 

13 or directive. 

14 (b) EFFECTIVE DATE.—This section shall take effect 

15 on the date of the enactment of this Act. 

16 SEC. 5. REQUIRED DEVELOPMENT OF MILITARY PROTEC17 TION STANDARDS. 

18 (a) REQUIRED DISCLOSURE.—Until a State has met 

19 its obligation under subsection (b)— 

20 (1) life insurance may not be sold on a military 

21 installation in the State to any member of the armed 

22 forces without prior disclosure to such member that 

23 subsidized life insurance may be available to the 

24 member from the Federal Government; and 
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1 (2) the State may not license or renew the li2 cense of any entity that has violated the prohibition 

3 in paragraph (1). 

4 (b) STATE STANDARDS.—The Congress intends that 

5 each State, within 12 months after the date of the enact6 ment of this Act, implement standards to protect members 

7 of the armed forces, while on a military installation of the 

8 United States or on any Federal land or facility, from dis9 honest and predatory insurance sales practices. 

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