California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2536.2 - Advertisements of Benefits Payable, Losses Covered or Premiums Payable

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Deceptive
				  Words, Phrases or Illustrations Prohibited.
(1) No advertisement shall omit information
				  or use 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
				  purchasers or prospective purchasers as to the nature or extent of any policy
				  benefit payable, loss covered or premium payable. 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.
GUIDELINE 2536.2(a)(1)
This section prohibits words, phrases or illustrations
					 which create deception to the reader by omission or commission. The following
					 examples are illustrations of the prohibitions created by the
					 Subsection:
1. An advertisement which
				  describes any benefits that vary by age must disclose that fact.
2. An advertisement which uses a phrase such
				  as "no age limit," if benefits or premiums vary by age or if age is an
				  underwriting factor, must disclose that fact.
3. Advertisements, applications, requests for
				  additional information and similar materials are unacceptable if they state or
				  imply that the recipient has been individually selected to be offered insurance
				  or has had his eligibility for such insurance individually determined in
				  advance, when the advertisement is directed to all persons in a group or to all
				  persons whose names appear on a mailing list.
4. Advertisements which indicate that a
				  particular coverage or policy is exclusively for "preferred risks" or a
				  particular segment of the population or that a particular segment of the
				  population are acceptable risks, when such distinctions are not maintained in
				  the issuance of policies, are not acceptable.
5. Advertisements for group or franchise
				  group plans which provide a common benefit or a common combination of benefits
				  shall not imply that the insurance coverage is tailored or designed
				  specifically for that group, unless such is the fact.
6. It is unacceptable to use terms such as
				  "enroll" or "join" to imply group or blanket insurance coverage when such is
				  not the fact.
7. Any advertisement
				  which contains statements such as "anyone can apply" or "anyone can join,"
				  other than with respect to a guaranteed issue policy for which administrative
				  procedures exist to assure that the policy is issued within a reasonable period
				  of time after the application is received by the insurer, is
				  unacceptable.
8. An advertisement
				  which states or implies immediate coverage or guaranteed issuance of a policy
				  is unacceptable unless suitable administrative procedures exist so that the
				  policy is issued within a reasonable period of time after the application is
				  received by the insurer.
9. Any
				  advertisement which uses any phrase or term such as "here is all you do to
				  apply," "simply" or "merely" to refer to the act of applying for a policy which
				  is not a guaranteed issue policy is unacceptable unless it refers to the fact
				  that the application is subject to acceptance or approval by the
				  insurer.
10. Applications, request
				  forms for additional information and similar related materials are unacceptable
				  if they resemble paper currency, bonds, stock certificates, etc.
11. No advertisement shall employ devices
				  which are designed to create undue fear or anxiety in the minds of those to
				  whom they are directed. Unacceptable examples of such devices are:
a) The use of phrases such as "cancer kills
				  somebody every two minutes" and "total number of accidents" without reference
				  to the total population from which such statistics are drawn. (As an example of
				  a permissible device, data prepared by the American Cancer Society are
				  acceptable provided their source is noted and they are not
				  over-emphasized);
b) The use of
				  phrases such as "the finest kind of treatment," implying that such treatment
				  would be unavailable without insurance;
c) The reproduction of newspaper articles,
				  etc., containing irrelevant facts and figures;
d) The use of illustrations which unduly
				  emphasize automobile accidents, cripples or persons confined to beds who are in
				  obvious distress or receiving hospital or medical bills or persons being
				  evicted from their homes due to their hospital bills;
e) The use of phrases such as "financial
				  disaster," "financial distress," "financial shock," or other phrases implying
				  that financial ruin is likely without insurance where used in an advertisement
				  which comes within Section
				  2536.2(a)(7)
				  relating to policies covering specified illnesses or specified accidents
				  only.
12. An
				  advertisement which uses the word "plan" without identifying it as an
				  "insurance plan" is not permissible.
13. An advertisement which implies in any
				  manner that the prospective insured may realize a profit from obtaining
				  hospital, medical or surgical insurance coverage is not acceptable.
14. An advertisement shall not state or imply
				  by word, phrase or illustration that the benefits being offered will supplement
				  any other insurance policy, insurance-type concept, or governmental plan if
				  such is not the fact.
15. An
				  advertisement of a hospital or other similar facility confinement benefit that
				  makes reference to the benefit being paid directly to the policyholders is
				  misleading unless, in making such a reference, the advertisement includes a
				  statement that the benefits may be paid directly to the hospital or other
				  health care facility if an assignment of benefits is made by the policyholders.
				  An advertisement of medical and surgical expense benefits shall comply with
				  this rule in regard to the disclosure of assignments of benefits to providers
				  of services. Phrases such as "you collect," "you get paid," "pays you," or
				  other words or phrases of similar import are acceptable so long as the
				  advertisement indicates that benefits are payable to the insured or someone
				  designated by the insured.
16. An
				  advertisement which refers to "hospitalizations for injury or sickness"
				  omitting the word "covered" when the policy excludes certain sicknesses or
				  injuries is unacceptable. Continued reference to "covered injury or sickness"
				  is not necessary where this fact has been prominently disclosed in the
				  advertisement and where the description of sicknesses or injuries not covered
				  is prominently set forth.
17. An
				  advertisement which refers to "whenever you are hospitalized" or "while you are
				  confined in the hospital" omitting the phrase "for covered injury or sickness,"
				  if the policy excludes certain injuries or sickness, is unacceptable. Continued
				  reference to "covered injury or sickness" is not necessary where this fact has
				  been prominently disclosed in the advertisement and where the description of
				  sickness or injuries not covered is prominently set forth.
18. Advertisements which state that benefits
				  are provided when "you" go to the hospital" are unacceptable unless the
				  advertisement clearly sets forth the extent of the coverage.
19. An advertisement which fails to disclose
				  that the definition of "hospital" does not include a nursing home, convalescent
				  home or extended care facility, as the case may be, is unacceptable.
20. An advertisement which fails to disclose
				  any waiting or elimination periods for specific benefits is
				  unacceptable.
21. An advertisement
				  for a limited policy, or a hospital indemnity policy, or a plan of insurance
				  which covers only certain causes of loss (such as dread disease) or which
				  covers only a certain type of loss (such as hospital confinement) is
				  unacceptable if:
a) the advertisement refers
				  to a total benefit maximum limit payable under the policy in any headline,
				  lead-in or caption without also in the same headline, lead-in or caption
				  specifying the applicable daily limits and other internal limits;
b) the advertisement states any total benefit
				  limit without stating the periodic benefit payment, if any, and the length of
				  time the periodic benefit would be payable to reach the total benefit
				  limit;
c) the advertisement
				  prominently displays a total benefit limit which would not, as a general rule,
				  be payable under an average claim.
22. Advertisements which emphasize total
				  amounts payable under hospital, medical or surgical coverage or other benefits
				  in a policy, such as benefits for private duty nursing, are unacceptable unless
				  the actual amounts payable per day for such indemnity or benefits are
				  stated.
23. Examples of what
				  benefits may be paid under a policy shall not disclose only maximum benefits
				  unless such maximum benefits are paid for loss from common and probable
				  illnesses or accidents rather than exceptional or rare illnesses or accidents
				  or periods of confinement for such exceptional or rare accidents or
				  illnesses.
24. When a range of
				  benefit levels is set forth in an advertisement, it must be made clear that the
				  insured will receive only the benefit level written or printed in the policy
				  selected and issued. Language which implies that the insured may select the
				  benefit level at the time of filing claims is unacceptable.
25. Language which implies that the amount of
				  benefits payable under a loss-of-time policy may be increased at the time of
				  claim or disability according to the needs of the insured is
				  unacceptable.
26. An advertisement
				  for loss-of-time coverage which is an invitation to contract and which sets
				  forth a range of amounts of benefit levels is unacceptable unless it also
				  states that eligibility for the benefits is based upon condition of health,
				  income, other economic conditions, or other underwriting standards of the
				  insurer if such is the fact.
27.
				  The term "confining sickness" is an abbreviated expression and must be
				  explained in an advertisement containing the term. Such an explanation might be
				  as follows: "Benefits are payable for total disability due to confining
				  sickness only so long as the insured is necessarily confined indoors." Captions
				  such as "Lifetime Sickness Benefits" or "Five-Year Sickness Benefits" are
				  incomplete if such benefits are subject to confinement requirements. When
				  sickness benefits are subject to confinement requirements, captions such as
				  "Lifetime House Confining Sickness Benefits" or "Five Year House Confining
				  Sickness Benefits" would be permissible.
28. Advertisements for policies whose
				  premiums are modest because of their limited coverage or limited amount of
				  benefits shall not describe premiums as "low," "low cost," "budget" or use
				  qualifying words of similar import. This rule also prohibits the use of words
				  such as "only" and "just" in conjunction with statements of premium amounts
				  when used to imply a bargain.
29.
				  Advertisements which state or imply that premiums will not be changed in the
				  future are not acceptable unless the advertised policies so provide.
30. An advertisement which does not require
				  the premium to accompany the application must not over-emphasize the fact and
				  must make the effective date of the coverage clear.
31. An advertisement which exaggerates the
				  effect of statutorily mandated benefits or required policy provisions or which
				  implies that such provisions are unique to the advertised policy is
				  unacceptable. For example, the phrase, "Money Back Guarantee" is an exaggerated
				  description of the ten-day right to examine the policy and is not
				  acceptable.
32. An advertisement
				  which implies that a common type of policy or a combination of common benefits
				  is "new," "unique," "a bonus," "a breakthrough," or is otherwise unusual is
				  acceptable. Also, the addition of a novel method of premium payment to an
				  otherwise common plan of insurance does not render it "new."
33. An advertisement which is an invitation
				  to contract and which fails to disclose the amount of any deductible and/or the
				  percentage of any co-insurance factor is unacceptable.
34. An advertisement which fails to state
				  clearly the type of insurance coverage being offered is not
				  acceptable.
35. Language which
				  states or implies that each member under a "family" contract is covered as to
				  the maximum benefits advertised, where such is not the fact, is
				  unacceptable.
36. The importance of
				  diseases rarely or seldom found in the class of person to whom the policy is
				  offered shall not be exaggerated in an advertisement.
37. A television, radio, mail or newspaper
				  advertisement which is designed to produce leads either by use of a coupon or a
				  request to write to the company or a subsequent advertisement prior to contact
				  must include information disclosing that an agent may contact the applicant if
				  such is the fact.
38.
				  Advertisements for policies designed to supplement Medicare or which are
				  otherwise designed for issue to the elderly shall not employ devices which are
				  designed to create undue anxiety in the minds of such persons. Such phrases as
				  "here is where most people over 65 learn about the gaps in Medicare" or
				  "Medicare is great, but .." or which otherwise exaggerate the gaps in Medicare
				  coverage are unacceptable. Phrases or devices which unduly excite fear and
				  dependence upon relatives or charity are unacceptable. Phrases or devices which
				  imply that long sicknesses or hospital stays are common among the elderly are
				  unacceptable.
39. An advertisement
				  implying that the coverage is supplemental to Medicare, if it does not explain
				  the manner in which it is supplemental to Medicare coverage, is not
				  acceptable.
40. An advertisement
				  for a policy designed to supplement benefits under Medicare is unacceptable if
				  the advertisement:
a) fails to disclose in
				  clear language which of the Medicare benefits the policy is designed to
				  supplement and which of the Medicare benefits the policy is not designed to
				  supplement or if it otherwise implies that Medicare provides only those
				  benefits which the policy is designed to supplement;
b) describes the in-patient hospital coverage
				  of Medicare as "hospital Medicare" or "Medicare Part A" when the policy does
				  not supplement the non-hospital or the psychiatric hospital benefits of
				  Medicare Part A (phrases to the effect of "the in-hospital portion of Medicare
				  Part A" are acceptable);
c) fails
				  to clearly describe the operation of the Part or Parts of Medicare which the
				  policy is designated to supplement;
d) describes those Medicare benefits not
				  supplemented by the policy in such a way as to minimize their importance
				  relative to the Medicare benefits which are supplemented;
e) prominently displays a total benefit limit
				  which would not, as a general rule, be payable for an average claim;
f) fails to clearly describe the operation of
				  the Medicare Part A "lifetime reserve" (currently 60 days) and initial "benefit
				  period" (currently 90 days) or fails to state that Medicare Part A provides
				  benefits for psychiatric hospital confinement, where the policy supplements
				  Medicare Part A.
41.
				  Advertisements which employ fictitious narratives are unacceptable; however,
				  hypothetical claims may be used to illustrate the operation of the policies
				  advertised.