836-020-0225 Advertisements of Benefits Payable, Losses Covered, or Premiums Payable (1) Deceptive Words, Phrases, or Illustrations Prohibited: (a) No advertisement shall omit particular information or use particular words, phrases, statements, references, or illustrations if the omission of such information or use of such words, phrases, statements, references, or illustrations has the capacity, tendency, or effect of misleading or deceiving prospective purchasers as to the nature or extent of any policy benefit payable, loss covered, or premium payable. The fact that the offered policy is made available to a prospective insured for inspection prior to consummation of sale, or that an offer is made to refund the premium if the purchaser is not satisfied, does not remedy misleading statements; (b) No advertisement shall use words or phrases such as “all,” “full,” “complete,” “comprehensive,” “unlimited,” “up to,” “as high as,” “this policy will help pay your hospital and surgical bills,” “this policy will help fill some of the gaps that Medicare and your present insurance leave out,” “this policy will help to replace your income” (when used in reference to loss-of-time benefits), or similar words or phrases, in a manner which exaggerates any benefit beyond the terms of the policy; (c) No advertisement shall contain descriptions of a policy limitation, exception, or reduction worded in a positive manner to imply that it is a benefit. Examples of this are describing a waiting period as a “benefit builder,” or stating that “even pre-existing conditions are covered after two years.” Words and phrases used in an advertisement to describe policy limitations, exceptions, or reductions shall fairly and accurately describe the negative features of the limitation, exception, or reduction; (d) No advertisement of a benefit for which payment is conditional upon confinement in a hospital or similar facility shall use words or phrases such as “tax free,” “extra cash,” “extra income,” “extra pay,” or substantially similar words or phrases in a manner which has the capacity, tendency, or effect of misleading prospective purchasers into believing that the policy advertised will in some way enable them to make a profit from being hospitalized. This rule does not prohibit the use of complete and accurate terminology explaining the federal Internal Revenue Service rules applicable to the taxation of various types of health insurance benefits. It is noted that such rules provide that premiums paid for and benefits received from hospital indemnity policies are subject to the same rule as loss-of-time premiums and benefits, and are not afforded the same favorable tax treatment as expense-incurred hospital, medical, and surgical benefit coverages; (e) No advertisement of a hospital or similar facility confinement benefit shall advertise that the amount of the benefit is payable on a monthly or weekly basis when, in fact, the amount of the benefit payable is on a daily pro rata basis relating to the number of days of confinement. When the policy contains a limit on the number of days of coverage provided, the limit must appear in the advertisement; (f) No advertisement of a policy covering only one or more specified diseases shall imply coverage beyond the terms of the policy. Several synonymous terms shall not be used to refer to any one disease so as to imply broader coverage than is the fact; (g) An advertisement for a policy providing benefits for specified illnesses only, such as cancer, or for specified accidents only, such as automobile accidents, shall clearly and conspicuously in prominent type state the limited nature of the policy; (h) An advertisement of an insurance policy sold by direct mail shall not imply that, because “no insurance agent will call and no commission will be paid to agents,” it is a “low cost plan,” or use similar phrases. A statement that “no agent will call” is not of itself misleading. (2) Limitations, Exceptions, and Reductions: (a) When an advertisement refers to a dollar amount of a benefit, a period of time for which a benefit is payable, the cost of the policy or of a specific policy benefit, or the loss for which such benefit is payable, it shall also disclose the limitations, exceptions, and reductions affecting the basic provisions of the policy without which disclosure the advertisement would have the capacity or tendency to mislead or deceive; (b) When a policy contains a waiting elimination, probationary or similar time period between the effective date of the policy and the effective date of coverage under the policy, or a time period between the date a loss occurs and the date benefits begin to accrue for such loss, an advertisement to which the preceding paragraph is applicable shall disclose the existence of such periods; (c) An advertisement shall not use the words “only,” “just,” “merely,” “minimum,” or similar words or phrases to describe the applicability of any exceptions and reductions. An example is: “This policy is subject to the following minimum exceptions and reductions:.” (3) Pre-Existing Conditions: (a) An advertisement to which section (2) of this rule is applicable shall disclose in negative terms the extent to which any loss is not covered if the cause of the loss is traceable to a condition existing prior to the effective date of the policy. No use of the term “pre-existing condition” shall be made without an appropriate definition or description; (b) When a policy does not cover losses resulting from pre-existing conditions, no advertisement of the policy shall state or imply that the applicant’s physical condition or medical history will not affect the issuance of the policy or payment of claim thereunder. This paragraph prohibits the use of the phrase “no medical examination required” and phrases of similar import, but does not prohibit explaining “automatic issue”; (c) When an advertisement contains an application form to be completed by the applicant and returned by mail for a direct response insurance coverage, the application form shall contain a question or statement, immediately preceding the blank space for the applicant’s signature, which reflects the pre-existing condition provisions of the policy. The question or statement shall be substantially as follows: (A) (Question) “Do you understand that this policy will not pay benefits during the first ______ year(s) after the issue date for a disease or physical condition which you now have or have had in the past?” (B) (Statement) “I understand that this policy will not pay benefits for any loss incurred during the first year(s) after the issue date on account of a disease or physical condition which I now have or have had in the past.” Statutory/Other Authority: ORS 731, 743 & 746 Statutes/Other Implemented: ORS 742.009 & 746.075 History: IC 53, f. 3-5-73, ef. 3-15-73