Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION A   Guideline to Section 2002.20

 

Disclosure is one of the principal objectives of this Part and this Section states specifically that the Part shall assure "truthful and adequate disclosure of all material and relevant information."  This Part specifically prohibits some previous advertising techniques.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION B   Guideline to Section 2002.30(a)

 

a)         If an advertisement is circulated in Illinois from a medium published in a locality bordering Illinois, which has substantial circulation in Illinois, the advertisement must either comply with this Part, disclaim the availability of the product advertised for Illinois residents or the company must decline issue of the policy explaining to the applicant that the advertisement does not meet Illinois advertising standards.

 

b)         If an advertisement appears in a regional publication which has a substantial amount of its circulation in Illinois, the ad will be considered "intended" for use in Illinois and it must either comply with this Part, disclaim the availability of the product advertised for Illinois residents or the company must decline issue of the policy explaining to the applicant that the advertisement does not meet Illinois advertising standards.

 

c)         This Part applies to group and blanket as well as individual accident and sickness insurance.  Certain distinctions, however, are applicable to these categories.  Among them is the level of conversance with insurance, a factor which is covered by Section 2002.60(a) of this Part.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION C   Guideline to Section 2002.30(b)

 

a)         This Section holds a company responsible for the actions of an agent or employee unless the company can demonstrate that it had no prior knowledge of the actions and unless the company can demonstrate to the satisfaction of the Director of Insurance that it has an adequate system of control as described in Section 2002.30(b) of this Part.

 

b)         It is recognized that there are three kinds of advertisements:  

 

1)         offer to contract,

 

2)         offer to inquire, and

 

3)         institutional advertisements.

 

These distinctions are made since, historically, different provisions in a policy were required or not required to be disclosed depending on the kind of advertisement; the company's attention is directed to Sections 2002.40, 2002.70(b)(1), and Section 2002.80 in determining those provisions that must be disclosed.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION D   Guideline to Section 2002.40(a)

 

a)         The scope of the term "advertisement" extends to the use of all media for communication to the general public (Section 2002.40(a)) and to the use of all media for communication by agents, brokers and solicitors.

 

b)         The definition of "advertisement" includes advertising material included with a policy when the policy is delivered and material used in the solicitation of renewals and reinstatements.

 

c)         The definition of "advertisement" does not include:

 

1)         material to be used solely for the training and education of an insurer's employees, agents or brokers unless such training or educational materials are for the presentation to the public of accident and health policies;

 

2)         material in house organs of insurers;

 

3)         communications within an insurer's own organization not intended for dissemination to the public;

 

4)         individual communications of a personal nature with current policyholders other than material urging such policyholders to increase or expand coverages;

 

5)         court approved material ordered by a court to be disseminated to policyholders;

 

6)         a general announcement from a group or blanket policyholder to eligible individuals on an employment or membership list that a contract or program has been written or arranged, provided the announcement clearly indicates that it is preliminary to the issuance of a booklet or certificate; or

 

7)         correspondence between an insurer and prospective group or blanket policyholder which follows the initial presentation of a group or blanket policy to the prospective policyholder, as long as such correspondence relates to the same program as initially presented.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION E   Guideline to Section 2002.40(h)

 

In Section 2002.40(h), the language "except disability, waiver of premium and double indemnity benefits included in life insurance and annuity contracts" means except disability, waiver of premium and double indemnity benefits included in life insurance, endowment or annuity contracts or contracts supplemental thereto which contain only such provisions which:

 

a)         provide additional benefits in case of death or dismemberment or loss of sight by accident, or as

 

b)         operate to safeguard such contracts against lapse or to give a special surrender value or special benefit or an annuity in the event that the insured or annuitant shall become totally and permanently disabled as defined by the contract or supplemental contract.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION F   Guideline to Section 2002.50

 

a)         This Section permits the use of either of the following alternative methods of disclosure:

 

1)         The first alternative provides for the disclosure of exceptions, limitations, reductions and other restrictions conspicuously and in close conjunction with the statements to which such information relates.  This may be accomplished by disclosure in the description of the related benefits or in a paragraph set out in close conjunction with the description of policy benefits.

 

2)         The second alternative provides for the disclosure of exceptions, limitations, reductions and other restrictions not in conjunction with the provisions describing policy benefits but under appropriate captions of such prominence that the information shall not be minimized, rendered obscure or otherwise made to appear unimportant.  The phrase "under appropriate captions" means that the title must be accurately descriptive of the captioned material. Appropriate captions include the following:  "Exceptions," "Exclusions," "Conditions Not Covered" and "Exceptions and Reduction."  The use of captions such as, or similar to, the following are not acceptable because they do not provide adequate notice of the significance of the material:  "Extent of Coverage," "Only these Exclusions" or "Minimum Limitations."

 

b)         In considering whether an advertisement complies with the disclosure requirements of this Section, the Section must be applied in conjunction with the form and content standards in Section 2002.60.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION G   Guideline to Section 2002.60(a)

 

a)         This Section must be applied in conjunction with Sections 2002.20 and 2002.50 of this Part.  This Section refers specifically to "format and content" of the advertisement and the "overall" impression created by the advertisement. This involves factors such as, but not limited to, the size, color and prominence of type used to describe benefits.  The word "format" means the arrangement of the text and captions.

 

b)         The Part requires distinctly different advertisements for publication in newspapers or magazines of general circulation as compared to scholarly, technical or business journals or newspapers.  Where an advertisement consists of more than one piece of material, each piece of material must, independent of all other pieces of material, conform to the disclosure requirements applicable to the appropriate form of advertisement as defined in Section 2002.40 of this Part.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION H   Guideline to Section 2002.60(b)

 

This Section prohibits the use of incomplete statements and words or phrases which have the tendency or capacity to mislead or deceive because of the reader's unfamiliarity with insurance terminology.  Therefore, words, phrases and illustrations used in an advertisement must be clear and unambiguous. If the advertisement uses insurance terminology, sufficient description of a word, phrase or illustration shall be provided by definition or description in the context of the advertisement.  As implied in Section 2002.60(a), distinctly different levels of comprehension may be anticipated of the subscribers of various publications.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION I   Guideline to Section 2002.70(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 Section:

 

a)         An advertisement which describes any benefits that vary by age must disclose that fact in a manner as described in this Part.  (See also ILLUSTRATION O.)

 

b)         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 in a manner as described in this Part.  (See also ILLUSTRATION O.)

 

c)         "Individualized" 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.

 

d)         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.

 

e)         Advertisements for group or franchise 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.

 

f)         It is unacceptable to use terms such as "enroll" or "join" to imply group or blanket insurance coverage when such is not the fact.

 

g)         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.

 

h)         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 for such immediate coverage or guaranteed issuance coverage after the application is received by the insurer.

 

i)          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.

 

j)          Applications, request forms for additional information, and similar related materials are unacceptable if they resemble paper currency, bonds, stock certificates, etc.

 

k)         An advertisement may employ devices which are designed to create reasonable concern in the minds of those to whom they are directed. Unacceptable examples of devices which may create undue concern are:

 

1)         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 is acceptable provided the source is noted and it is not overemphasized.);

 

2)         the use of phrases such as "the finest kind of treatment," implying that such treatment would be unavailable without insurance;

 

3)         the reproduction of newspaper articles, etc., containing irrelevant facts and figures;

 

4)         the use of illustrations which unduly emphasize automobile accidents, disabled persons or persons confined in beds who are in obvious distress or receiving hospital or medical bills or persons being evicted from their homes due to their hospital bills;

 

5)         the use of phrases such as "financial disaster," "financial distress," "financial shock," or other phrases implying that financial ruin is likely without the insurance advertised where used in an advertisement which comes within Section 2002.70(a)(7) relating to policies covering specified illnesses or specified accidents only and other accident and health insurance designed primarily for supplementing an insured's basic insurance program.

 

l)          An advertisement which uses the word "plan" without identifying it as an "insurance plan" is not permissible.

 

m)        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.

 

n)         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.

 

o)         An advertisement of a hospital or other similar facility confinement benefit that makes reference to the benefit being paid directly to the policyholder 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 policyholder. An advertisement of medical and surgical expense benefits shall comply with this Part 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 it is payable to the insured or someone designated by the insured.

 

p)         An advertisement which refers to "hospitalization 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 are prominently set forth.

 

q)         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 sicknesses, 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 are prominently set forth.

 

r)          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.

 

s)         An advertisement which is an invitation to contract and 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.

 

t)          An advertisement which is an invitation to contract and which fails to disclose any waiting or elimination periods for specific benefits is unacceptable.

 

u)         An advertisement for a limited 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 is unacceptable if:

 

1)         the advertisement refers to a total benefit maximum limit payable under the policy in a prominent manner;

 

2)         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;

 

3)         the advertisement prominently displays a benefit which would not, as a general rule, be payable under an average claim.

 

v)         Advertisements which utilize total amounts payable under hospital room and board, 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.  (See also ILLUSTRATION M.)

 

w)        Examples of claims that 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.

 

x)         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.

 

y)         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.

 

z)         An advertisement for loss-of-time coverage which is an invitation to contract 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.

 

aa)       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 and under the care of a physician."

 

Statements such as "Lifetime Sickness Benefits" or "Five-Year Sickness Benefits" are incomplete if such benefits are subject to confinement requirements.

 

bb)       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 Part also prohibits the use of words such as "only" and "just" in conjunction with statements of premium amounts when used to imply a bargain.

 

cc)       Advertisements which state or imply that premiums will not be changed in the future are not acceptable unless the advertised policies so provide.

 

dd)      An advertisement which does not require the premium to accompany the application must not overemphasize that fact and must make the facts concerning effective date of coverage clear.

 

ee)       An advertisement which exaggerates the effect of statutorily mandated benefits or required policy provisions or which exaggerates the provisions or 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.

 

ff)        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 unacceptable.  Also, the addition of a novel method of premium payment to an otherwise common plan of insurance does not render it "new."

 

gg)       An advertisement which is an invitation to contract which fails to disclose the amount of any deductible and/or the percentage of any co-insurance factor is unacceptable.

 

hh)       An advertisement which fails to state clearly the type of insurance coverage being offered is not acceptable.

 

ii)         Language which states or implies that each member under a "family" contract is covered as to the maximum benefits advertised, when such is not the fact, is unacceptable.

 

jj)         The importance of diseases rarely or seldom found in the class of persons to whom the policy is offered shall not be exaggerated in an advertisement.

 

kk)       An advertisement, regardless of the media used, which is designed to produce leads in any manner or subsequent advertisement prior to contact must include information disclosing that an agent may contact the applicant if such is the fact.

 

ll)         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..." which otherwise exaggerate the gaps in Medicare coverage, are unacceptable.  Phrases or devices which unduly excite fear or concern, 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.

 

mm)     An advertisement implying that the coverage is supplemental to Medicare may show the extent it supplements Medicare, but must not refer to the Medicare Program and the proposed coverage to imply that with the coverage and Medicare, the patient will have no uncovered expenses unless that is in fact true.

 

(Source:  Amended at 28 Ill. Reg. 4595, effective March 1, 2004)

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION J   Guideline to Section 2002.70(a)(2)

 

a)         This Section recognizes that certain words and phrases in advertising may have a tendency to mislead the public as to the extent of benefits under an advertised policy.  Consequently, such terms (and those specified in this Part do not represent a comprehensive list but only examples) must be used with caution to avoid any tendency to exaggerate benefits and must not be used unless the statement is literally true in every instance.  The use of the following phrases based on such terms or having the same effect must be similarly restricted:  "pays hospital, surgical, etc., bills," "pays dollars to offset the cost of medical care," "safeguards your standard of living," "pays full coverage," "pays complete coverage," "pays for financial needs," "provides for replacement of your lost paycheck," "replaces income" or "emergency paycheck."  Other phrases may or may not be acceptable depending upon the nature of the coverage being advertised.  For example, the phrase "this policy will help to replace your income" is acceptable in advertising for loss of time coverage, but is unacceptable in advertising for hospital confinement (including "hospital indemnity") coverage.

 

b)         This Section also prohibits words or phrases which exaggerate the effect of a benefit payment on the insured's general well-being, such as "worry-free savings plan," "guaranteed savings," "financial peace of mind" and "you will never have to worry about hospital bills again."

 

c)         Advertisements for policies designed to supplement Medicare benefits are unacceptable if they fail to disclose that no hospital confinement benefits will be payable for that portion of a Medicare benefit period for which Medicare pays all hospital confinement expenses, currently 60 days, other than the initial deductible if the policy so provides.  The length of said period must be stated in days.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION K   Guideline to Section 2002.70(a)(3)

 

Explanations must not minimize nor describe restrictive provisions in a positive manner.  Negative features must be accurately set forth.  Any limitation on benefits precluding pre-existing conditions also must be restated under a caption concerning exclusions or limitations, notwithstanding that the pre-existing condition exclusion has been disclosed elsewhere in the advertisement. (See ILLUSTRATIONS R, S and T for additional comments on pre-existing conditions.)

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION L   Guideline to Section 2002.70(a)(4)

 

a)         The words, phrases, illustrations and concepts listed are illustrations of the words, phrases, illustrations and concepts prohibited by the Part which create the impression of a profit or gain to be realized by the insured when hospitalized.

 

b)         Any illustration which depicts paper currency or checks showing an amount payable is deceptive and misleading and is not permissible.

 

c)         A hospital indemnity advertisement shall not include language such as "pay for a trip to Florida," "buy a new television" or otherwise imply that the insured will make a profit on hospitalization.

 

d)         An advertisement which uses words such as "extra," "special" or "added" to describe any benefit in the policy is unacceptable.

 

e)         Although the Part prohibits the use of the phrase "tax free," it does not prohibit the use of complete and accurate terminology explaining the Internal Revenue Service Rules applicable to the taxation of accident and sickness benefits.  The IRS Rules provide that the premiums paid for the benefits received from hospital indemnity policies are subject to the same rules as loss of time premiums and benefits and are not afforded the same favorable tax treatment as premiums for expense incurred hospital, medical and surgical benefit coverages. (Rev. Rul. 68-451 and Rev. Rul. 69-154.) Prominence either by caption, lead-in, boldface or large type shall not be given in any manner to any statements relating to the tax status of such benefits.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION M   Guideline to Section 2002.70(a)(5)

 

This paragraph requires that benefits payable on a daily basis be stated as such and not on the basis of weekly or monthly equivalents.  It also requires disclosure of the time period of coverage provided by the policy.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION N   Guideline to Section 2002.70(a)(8)

 

a)         This Section should be applied in conjunction with Section 2002.120.

 

b)         Phrases such as "we cut costs to the bone" or "we deal direct with you so our costs are lower" shall not be used.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION O   Guideline to Section 2002.70(b)(1)

 

a)         If an exception, reduction or limitation is important enough to use in a policy, it is of sufficient importance that its existence in the policy should be referred to in the advertisement regardless of whether it may also be the subject matter of a provision of the Uniform Individual Accident and Sickness Policy Provision Law.

 

b)         Some advertisements disclose exceptions, reductions and limitations as required, but the advertisement is so lengthy as to obscure the disclosure. Where the length of an advertisement has this effect, special emphasis must be given by changing the format to show the restrictions in a manner which does not minimize, render obscure or otherwise make them appear unimportant.

 

c)         This Section provides that those invitations to contract advertisements for a policy with any reduction of benefits at a particular age will disclose with the display of usual benefits that the reduction is applicable.

 

d)         This interpretation is primarily aimed toward those policies which reduce benefits at a particular attained age.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION P   Guideline to Section 2002.70(b)(2)

 

a)         This Section imposes the same disclosure standards as the preceding paragraph with respect to policy provisions providing for waiting, elimination, probationary or similar time periods 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. The comments under Section 2002.70(b)(1) are equally applicable to this Section.  Where a policy has waiting, elimination, probationary or other such time periods, such provisions must be stated in negative terms.

 

b)         This Section provides that those advertisements which are invitations to contract for a policy with any waiting periods for coverage, at any time, will disclose such fact in a manner as prescribed by Section 2002.50 of this Part.

 

c)         An advertisement for a policy designed to supplement Medicare benefits is unacceptable if it fails to disclose prominently that no hospital confinement benefits will be payable for that portion of a Medicare benefit period, currently 60 days, for which Medicare pays all Medicare eligible hospital confinement expenses other than the initial deductible, if the policy so provides.  The length of said period must be stated in days.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION Q   Guideline to Section 2002.70(b)(3)

 

a)         This Section is similar to Section 2002.70(a)(3) and requires a fair and accurate description of exceptions, limitations and reductions in a manner which does not minimize, render obscure or otherwise make them appear unimportant.

 

b)         Advertisements must state exceptions, limitations and reductions in the negative and must not understate any exception, limitation or reduction or qualify any exception, limitation or reduction to emphasize coverage described elsewhere:  e.g., "Does not pay for ______; HOWEVER, MEDICARE PAYS THIS" is not acceptable, nor is "Does not pay for the first four days in HOSPITAL FOR SICKNESS, BUT PAYS FOR ACCIDENT FROM FIRST DAY." (Capitalization indicates the manner in which statements are sometimes emphasized.)

 

c)         This Section prohibits the use of any term, such as "just," "only," "merely," "necessary" or "minimum" to describe any exclusion, limitation, reduction or exception.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION R   Guideline to Section 2002.70(c)(1)

 

a)         This Section imposes the same disclosure standards with respect to pre-existing conditions' provisions as noted in ILLUSTRATION 0.  The comments under that Illustration are equally applicable to this Section of the Part since the pre-existing conditions' provision is an exception under the Part.

 

b)         This Part implements the objective of Section 2002.70(a)(3) by requiring in negative terms a description of the effect of a pre-existing condition exclusion because such an exclusion is a restriction on coverage.  The Subdivision also prohibits the use of the phrase "pre-existing condition" without an appropriate definition or description of the term and prohibits stating a reduction in the statutory time limit (such as a reduction from two years to one year) as an affirmative benefit.  The words "appropriate definition or description" mean that the term "pre-existing condition" must be defined as it is used by the company's claims department.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION S   Guideline to Section 2002.70(c)(2)

 

a)         The phrase "no health questions" or words of similar import shall not be used if the policy excludes pre-existing conditions.

 

b)         Use of a phrase such as "guaranteed issue" or "automatic issue," if the policy excludes pre-existing conditions for a certain period, must be accompanied by a statement disclosing that fact in a manner which does not minimize, render obscure or otherwise make it appear unimportant, and is otherwise consistent with Section 2002.50.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION T   Guideline to Section 2002.70(c)(3)

 

The Department requires approval of the application forms even when the application is not attached to the policy when issued.  This Part does not change such a requirement.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION U   Guideline to Section 2002.80

 

a)         This Section imposes the same disclosure standards with respect to policy provisions relating to renewability, cancelability and termination, modification of benefits, losses or premiums because of age or otherwise as stated in ILLUSTRATION O.  The comments in that Illustration are equally applicable to this Section.

 

b)         Advertisements of cancelable policies must state that the contract is cancelable or renewable at the option of the company as the case may be.  For example, the following represent illustrations:  A policy which is cancelable shall be advertised in a manner similar to "This policy can be cancelled by the company at any time"; a policy which is renewable at the option of the insurance company shall be advertised in a manner similar to "This policy is renewable at the option of the company" or "The company has the right to refuse renewal of this policy" or "Renewable at the option of the insurer."  Advertisements of such policies must indicate that the insurer has the right to increase premium rates.

 

c)         With respect to non-cancelable policies and guaranteed-renewable policies, the Part requires that a summary of the policy provisions with respect to renewability must be set forth and defined where appropriate.  The disclosure of provisions relating to renewability requires the use of language such as "non-cancelable," "non-cancelable and guaranteed renewable," or "guaranteed renewable."

 

d)         The Part also requires a statement of the qualifying conditions which constitute limitations of the permanent nature of the coverage.  These customarily fall into three categories:  age limits, reservation of right to increase premiums and the establishment of aggregate limits.  For example, "non-cancelable and guaranteed renewable" does not fulfill the requirement of the Part if the policy contains a terminal age of 65.  In such a case, a proper statement would be "non-cancelable and guaranteed renewable to age 65."  If a guaranteed renewable policy reserves the right to increase premiums, the statement must be expanded into language similar to "guaranteed renewable to age 65, but the company reserves the right to increase premium rates on a class basis."  A policy may have one or more of the three basic limitations and an advertisement must describe each of those which the policy contains. Most new individual policy issues are guaranteed renewable; therefor, the fact that a policy is guaranteed renewable shall not be exaggerated.

 

e)         This Part also requires the disclosure of any modification of benefits or losses covered because of age or for other reasons.  Provisions for reduction of benefits at stated ages must be set forth.  For example, a policy may contain a provision which reduces benefits 50% after age 60 although it is renewable to age 65.  Such a reduction would have to be set forth.  Also, a provision for the elimination of certain hazards at any specific ages or after the policy has been in force for a specified time would have to be set forth.

 

f)         An advertisement for a policy which provides for step-rated premium rates based upon the policy year of the insured's attained age must disclose such rate increases and the times or ages at which such premiums increase.

 

g)         This Section requires that the qualifying conditions of renewability must be disclosed in a manner which does not minimize or render obscure the qualifying conditions of renewal.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION V   Guideline to Section 2002.90(a)

 

a)         This Section requires that all such statements must be genuine and not fictitious.  Under this Section, the manufacturing, substantive editing or "doctoring-up" of a testimonial is clearly prohibited as being false and misleading to the insurance buying public.  However, language which would be unacceptable under this Part must be edited out of a testimonial.

 

b)         A testimonial must also represent the current opinion of the author. While an insurer is not required in each instance to check with the author each time the testimonial is used to ascertain that the views expressed have not altered, a testimonial should be checked before use in those instances when a change in views might be probable or reasonable to assume.  When a testimonial is used more than one year after it was originally given, a confirmation must be obtained.

 

c)         Testimonials or Endorsements by Third Parties.  A "testimonial" is defined as a statement from a typical policyowner, group policyholder or beneficiary as to either benefits received in a claim payment or comments relating to the policyowner, group policyholder or beneficiary expressions of appreciation relating to those usual policyowner, group policyholder or beneficiary-company relationships.

 

d)         An endorsement differs from a testimonial only through the fact that an endorsement includes any comments from any person except those of a typical policyowner, group policyholder or beneficiary who is commenting only on those usual policyowner, group policyholder or beneficiary-company relationships. A typical policyowner, group policyholder or beneficiary is not any person well known to the general public or who is classifiable as a celebrity.

 

e)         There are two types of testimonials:  Solicited and Unsolicited.

 

1)         Solicited Testimonials are those in which the company has in any way contacted the policyowner, group policyholder or beneficiary requesting information about claims handling, policyowners service, etc.  A solicited testimonial used in an advertisement must be clearly labeled with a statement such as, "These comments from policyowners, group policyholders or beneficiaries were received as a result of our questioning policyowners, group policyholders, or beneficiaries as to their thoughts about our service," or other language which indicates that the testimonial was solicited.

 

2)         Unsolicited Testimonials are those sent to a company without the company contacting the policyowner, group policyholder or beneficiary.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION W   Guideline to Section 2002.90(b)

 

a)         This Section requires the disclosure of any financial interest of a person making a testimonial, endorsement or appraisal.  Any payment, direct or indirect, whether specifically for the testimonial or endorsement or for any other services or relationship, is required to be disclosed.  Reimbursement for substantial travel and entertainment expenses is also required to be disclosed; however, union scale wages required by union rules are not required to be disclosed.  Travel away from the home of the person giving the testimonial or endorsement to a distant location involving transportation expenses, lodging expenses or expenses for meals constitutes payment and must be reflected as a paid endorsement.  The requirement of disclosure may be fulfilled by use of the phrase "Paid Endorsement" or words of similar import in a type style and size that is identical to the endorser's name.  In the case of television or radio advertising, the paid nature of the advertisement must be given prominence.

 

b)         The word "person," as used in this subsection, includes a human person, body of persons or any legal entity recognized by law as the subject of rights and duties.

 

c)         A person making an endorsement cannot comment upon his evaluation either of the merits of an administrative process of a company or of the value of the insurance product unless he has adequate experience within the area he is evaluating.  In the absence of such experience, either the level of expertise of the person or the relevant facts forming the basis for such an endorsement must be disclosed.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION X   Guideline to Section 2002.90(c)

 

This Section requires both that approval or endorsement of a policy by an individual, group of individuals, society, association or other organization be factual and that any proprietary relationship between the sponsoring or endorsing organization and the insurer be disclosed.  For example, if the dividend under an association group case is payable to the association, disclosure of that fact is required.  Also, if the insurer or an officer of the insurer formed or controls the association, that fact must be disclosed.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION Y   Guideline to Section 2002.90(d)

 

a)         This Section provides the Department of Insurance the means to verify the authenticity of testimonials used in advertising efforts.

 

b)         The use of testimonials which do not correctly reflect the present practices of the insurer or which are not applicable to the policy or benefit being advertised is not permissible.

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION Z   Guideline to Section 2002.100(a)<br>Section 2002.ILLUSTRATION AA   Guideline to Section 2002.100(b)<br>Section 2002.ILLUSTRATION BB   Guideline to Section 2002.100(c)<br>Section 2002.ILLUSTRATION CC   Guideline to Section 2002.110(a) and (b)<br>Section 2002.ILLUSTRATION DD   Guideline to Section 2002.120<br>Section 2002.ILLUSTRATION EE   Guideline to Section 2002.130(a) <br>Section 2002.ILLUSTRATION FF   Guideline to Section 2002.130(b)<br>Section 2002.ILLUSTRATION GG   Guideline to Section 2002.140(a) and (b)<br>Section 2002.ILLUSTRATION HH   Guideline to Section 2002.150<br>Section 2002.ILLUSTRATION II   Guideline to Section 2002.160<br>Section 2002.ILLUSTRATION JJ   Guideline to Section 2002.160(a) and (b)<br>Section 2002.ILLUSTRATION KK   Guideline to Section 2002.160(a)(4)<br>Section 2002.ILLUSTRATION LL   Guideline to Section 2002.160(b)<br>Section 2002.ILLUSTRATION MM   Guideline to Section 2002.160(c)<br> Section 2002.ILLUSTRATION NN   Guideline to Section 2002.170(c)<br>

 

a)         This Section prohibits the use of statistics in a manner which is misleading and deceptive.  It requires the disclosure of all relevant facts and prohibits the use of irrelevant facts.  An advertisement shall specifically identify the policy to which statistics relate and, where statistics are given which are applicable to a different policy, it must be stated clearly that the data does not relate to the policy being advertised.

 

b)         Statistics which describe the insurer, such as assets, corporate structure, financial standing, age, product lines or relative position in the insurance business, may be irrelevant and, if used at all, must be used with extreme caution because of their potential for misleading the public.  As a specific example, an advertisement for a health insurance policy which refers to the amount of life insurance which the company has in force or the amounts paid out in life insurance benefits is not permissible unless the advertisement clearly indicates the amount paid out for each line of insurance.

 

c)         An advertisement which states the dollar amount of claims paid must also indicate the period over which such claims have been paid.  The total dollar amount of claims paid must not be overemphasized.

 

d)         If the term "loss ratio" is used, it shall be properly explained in the context of the advertisement, and it shall be calculated on the basis of premiums earned to losses incurred and shall not be on a yearly run-off basis.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION AA   Guideline to Section 2002.100(b)

 

This Section prohibits deceptive or misleading statements in an advertisement regarding an insurer's claim settlement practices.  It also prohibits the use of an unusual amount paid for a unique claim or an unusual claim whether actual or hypothetical.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION BB   Guideline to Section 2002.100(c)

 

This Section requires any advertisement which uses statistics to cite the source.  The Part does not require that statistics for a state be used since such statistics as hospital charges and average stays may vary from state to state.  When nationwide statistics are used, such fact should be noted as such unless the statistics on the particular point are substantially the same in a state to which the advertisement is directed.  Statistics may be used only if they are credible.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION CC   Guideline to Section 2002.110(a) and (b)

 

This Section imposes the same disclosure standards as stated in ILLUSTRATION O.  The comments in that Illustration are equally applicable to this Section.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION DD   Guideline to Section 2002.120

 

a)         This Section prohibits unfair or incomplete comparisons of products, insurers or business methods.  It specifically prohibits comparisons of non-comparable policies and provides that advertisements shall not unfairly minimize nor disparage competing types of insurance coverages or competing methods of marketing insurance, including any federal or state program.

 

b)         An advertisement should not contain statements such as "no red tape" or "here is all you do to receive benefits."

 

c)         Advertisements which state or imply that competing insurance coverages customarily contain certain exceptions, reductions or limitations not contained in the advertised policies are unacceptable unless such exceptions, reductions or limitations are contained in a substantial majority of such competing coverages.

 

d)         Advertisements which state or imply that an insurer's premiums are lower or that its loss ratios are higher because its organizational structure differs from that of competing insurers are unacceptable.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION EE   Guideline to Section 2002.130(a)

 

This Section prohibits advertisements which imply that an insurer is licensed beyond the limits of those jurisdictions where it is actually licensed. An advertisement which contains testimonials from persons who reside in a state in which the insurer is not licensed or which refers to claims of persons residing in states in which the insurer is not licensed implies licensing in those states and, therefore, is in violation of this Part unless the advertisement states that the insurer is not licensed in those states.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION FF   Guideline to Section 2002.130(b)

 

a)         This Section prohibits advertisements implying that approval, endorsement or accreditation of policy forms or advertising has been granted by any division or agency of the state or federal governments.  "Approval" of either policy forms or advertising shall not be used by an insurer to imply or state that a governmental agency has endorsed or recommended the insurer, its policies, advertising or its financial condition.

 

b)         This prohibits prominent statements such as "licensed by the State of Illinois" or any other statements which imply endorsements by a governmental agency.  The insurer is not prohibited to disclose the fact that a company is licensed in the State of Illinois in the body or majority of the advertisement.

 

c)         Although the Section permits a reference to an insurer being licensed in a state where the advertisement appears, it does not allow exaggeration of the fact of such licensing nor does it permit the suggestion that competing insurers may not be so licensed because, in most states, an insurer must be licensed in the state to which it directs its advertising.

 

d)         Terms such as "official," or words of similar import, used to describe any policy or application form are not permissible because of the potential for deceiving or misleading the public.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION GG   Guideline to Section 2002.140(a) and (b)

 

a)         This Section prohibits the use of an advertisement which has the capacity or tendency to mislead or deceive as to the true identity of the insurer. The Section recognizes the existence of holding companies.  The requirement that the advertisement refer to the policy form number is applicable to advertisements of individual and franchise policies only.  However, the requirement of the policy form number is not applicable to those advertisements for individual and franchise policies not required to disclose information under Sections 2002.70(b)(1) and (8).  Subsection (a) and subsection (b) prohibit misleading practices of insurers in connection with the sale of insurance to supplement federal Medicare benefits and confusion by insurers with advertising material used by hospital service corporations or pre-paid health plans.

 

b)         This Section prohibits advertisements, envelopes or stationery which employ words, letters, initials, symbols or other devices which are so similar to those used by governmental agencies or other insurers, including hospital service corporations and pre-paid health plans, that the public may be confused into believing:

 

1)         that the advertised coverages are somehow provided by or are endorsed by such governmental agencies or such other insurers;

 

2)         that the advertised coverages are the same as those provided by such governmental agencies or such other insurers;

 

3)         that the advertiser is the same as, is connected with or is endorsed by such governmental agencies or such other insurers.

 

c)         It is unacceptable for an advertisement to use the name of a state or a political subdivision thereof in a policy name or description.  For example, "XYZ insurance company's (name of state) hospital confinement policy" is unacceptable.

 

d)         This Section prohibits an insurer from using envelopes or stationery which have printed thereon any name, service mark, slogan or symbol or using any other device in such a manner that it implies that the insurer or the policy advertised is connected with a governmental agency such as the Social Security Administration or the Veterans Administration.

 

e)         Policies advertised to supplement Medicare benefits are unacceptable if they incorporate the word "MEDICARE" in the title of the plan or policy being advertised unless, wherever it appears, said word is qualified by language differentiating it from Medicare.  Such phrases as "Medicare Insurance Supplement" or "insurance to supplement Medicare" are acceptable.  Such an advertisement, however, shall not use the phrase "_________ Medicare Department of the XYZ Insurance Company," or language of similar import.

 

f)         Advertisements for policies designed to supplement Medicare benefits are unacceptable if they fail to clearly show that the company or the plan being advertised is not endorsed by the U.S. Government or the federal Medicare program.

 

g)         This Section prohibits an advertisement which implies that the reader may lose a right, privilege or benefit under federal, state or local law if he fails to respond to the advertisement.

 

h)         If the use of letters, initials or symbols of the corporate name or trademark would have the capacity or tendency to mislead or deceive the public as to the true identity of the insurer, this Section prohibits the use of such letters, initials, or symbols without disclosing in close conjunction the true and correct complete name of the insurer which will issue the policy.

 

i)          This Part prohibits the use of the name of an agency or "_______ Underwriters" or "_______ Plan" in type, size and location so as to have the capacity and tendency to mislead or deceive as to the true identity of the insurer and also prohibits an insurer from using an address so as to mislead or deceive as to its true identity, location or licensing status.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION HH   Guideline to Section 2002.150

 

a)         This Section prohibits the use of representations to any segment of the population that a particular policy or coverage is available only to that or similar segments of the population as preferred risks when actually such policy or coverage is available to members of the public at large at the same rates.  This Part prohibits an advertisement labeled "Now for Readers of X Magazine."

 

b)         This Section prohibits the solicitation of a particular class, such as governmental employees, by use of advertisements which state or imply that their occupational status entitles them to reduced rates on a group or other basis when, in fact, the policy being advertised is sold only on an individual basis at regular rates.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION II   Guideline to Section 2002.160(a)(1)

 

This Section prohibits advertising representing that a product is offered on an introductory, initial, special offer basis or otherwise which

 

a)         will not be available later; or

 

b)         is available only to certain individuals

 

unless such is the fact.  This Part prohibits the repetitive use of such advertisements.  Where an insurer uses enrollment periods in the advertising of its policies, the Part prohibits describing an enrollment period as a special opportunity or offer for the applicant.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION JJ   Guideline to Section 2002.160(a)(2)

 

a)         This Section restricts the repetitive use of enrollment periods.  This Part does not limit just the use of enrollment periods.  It requires that a particular insurance product offered in an enrollment period through any advertising media, including the prepared presentations of agents, cannot be offered again in the entire state until six months from the close of the enrollment periods have expired.  Thus, an insurer must choose whether to use enrollment periods or open enrollment for a product.

 

b)         This Section does not prohibit multiple advertising during an enrollment period through any and all media published or transmitted within this state as long as the enrollment periods for such advertisements have the same expiration date.

 

c)         The six month limitation applies to the offering of the product in any advertising media and the entire State of Illinois is considered one geographic area.  For example, if an enrollment period was used in the solicitation of a product in the Chicago area, it could not be offered in any section of Illinois until six months expire from the closing date of the enrollment period.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION KK   Guideline to Section 2002.160(a)(4)

 

a)         This Section defines the meaning of "a particular insurance product" in Section 2002.160(a)(2) and prohibits advertising of products having minor variations, such as different elimination periods or different amounts of daily hospital indemnity benefits, in a succession of enrollment periods.

 

b)         To determine if one product is substantially different than another, the products must be compared as to primary benefits offered.  For example, if one hospital indemnity policy has a $30/day benefit and a return of premium benefit, it is substantially similar to one having a $100/day benefit with no return of premium benefit.  A hospital expense policy as compared with a hospital indemnity plan is substantially different.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION LL   Guideline to Section 2002.160(b)

 

This Section prohibits advertising which overemphasizes an initial reduced premium.  The Part requires the renewal premium to appear as frequently as, as prominently as, and in juxtaposition with the initial reduced premium wherever and as often as it appears.  The term "juxtaposition" means side by side or immediately above or below.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION MM   Guideline to Section 2002.160(c)

 

a)         This subsection prohibits the use in advertisements of so-called awards as an inducement to the purchase of insurance.

 

b)         This subsection prohibits those marketing techniques which imply that the person is being offered an opportunity to purchase a policy due to a minor qualification which has little to do with the underwriting requirements for the benefits provided by the policy.

 

Section 2002.APPENDIX A   Guidelines

 

Section 2002.ILLUSTRATION NN   Guideline to Section 2002.170

 

This Section is closely related to the requirements of Section 2002.100 concerning the use of statistics.  The Part prohibits insurers which have been organized for only a brief period of time advertising that they are "old" and also prohibits the use of illustrations of a "home office" building in a manner which is misleading with respect to the actual size and magnitude of the insurer.  Also, the occupations of the persons comprising the insurer's board of directors or the public's familiarity with their names or reputations is irrelevant and must not be emphasized.  The preponderance of a particular occupation or profession among the board of directors of an insurer does not justify the advertisement of a plan of insurance offered to the general public as insurance designed or recommended by members of that occupation or profession.  For example, it is unacceptable for an insurance company to advertise a policy offered to the general public as "the physicians' policy" or "the doctors' plan" simply because there is a preponderance of physicians or doctors on the board of directors of the insurer.  The Part prohibits the use of a recommendation of a commercial rating system unless the purpose, meaning and limitations of the recommendation are clearly indicated.