Life Insurance - Insurance Regulation
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Chapter 2
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**Licensing Process and Types**
**Licensing Process and Types**
Three basic types of insurance producer licenses issued by the Pennsylvania Insurance Department; individual producer licenses, non-resident producer licenses, and business entity licenses.
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Requirements and Exemptions to Licensing
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* Anyone who sells, solicits, or negotiates insurance contracts must be licensed as an insurance producer.
* Those whose duties are primarily clerical do not receive commissions from the licensing requirements.
* Anyone who sells, solicits, or negotiates insurance contracts must be licensed as an insurance producer.
* Those whose duties are primarily clerical do not receive commissions from the licensing requirements.
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Exemptions to Licensing (Those who do not need the license, specific groups)
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* Employees of insurers who only inspect, rates, or classify risk and/or supervise the training of insurance producers.
* An officer, director, or employee of an insurer if they do not receive a commission on policies that cover risk in Pennsylvania and their only
* function is related to administrative, underwriting, and technical assistance to insurance producers.
* A person who is licensed in another state and sells insurance policies that covers risk which reside both where the license resides in Pennsylvania
* A salaried full-time employee who advises employers on their employee insurance policy but does not sell or solicit insurance and does not receive a commission.
* Employees of insurers who only inspect, rates, or classify risk and/or supervise the training of insurance producers.
* An officer, director, or employee of an insurer if they do not receive a commission on policies that cover risk in Pennsylvania and their only
* function is related to administrative, underwriting, and technical assistance to insurance producers.
* A person who is licensed in another state and sells insurance policies that covers risk which reside both where the license resides in Pennsylvania
* A salaried full-time employee who advises employers on their employee insurance policy but does not sell or solicit insurance and does not receive a commission.
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Requirements and Exemptions to Licensing (Those who do not need the license \[more vague\])
* Any individual who does one or more of the following but is not paid a commission for doing so:
1. Supplies written information for group insurance plans
2. Performs administrative services related to insurance plans including enrollment and issuing certificates.
3. Provides risk management services to businesses and
4. Enrolls renters of motor vehicles in insurance policies that cover the vehicle and is incidental to rental.
1. Supplies written information for group insurance plans
2. Performs administrative services related to insurance plans including enrollment and issuing certificates.
3. Provides risk management services to businesses and
4. Enrolls renters of motor vehicles in insurance policies that cover the vehicle and is incidental to rental.
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Licensing Procedure
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* In order to get a license as an Pennsylvania resident producer, one must complete the prereqs and submit an application.
* If the applicant is an individual, they must be at least 18 years old and not have committed an act in violation of the rules which govern insurance producers.
* In order to get a license as an Pennsylvania resident producer, one must complete the prereqs and submit an application.
* If the applicant is an individual, they must be at least 18 years old and not have committed an act in violation of the rules which govern insurance producers.
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Education Requirements for Licensure
In order to qualify for licensure, an individual must take 24 hours of pre-licensing education per line of authority. Including three hours of ethics training and passing a pre-licensing examination
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Individuals not required to take 24 hours of education or pass a pre licensing examination (1)
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1. A business entity, like an insurance agency.
2. A person who possesses the professional designation of Chartered Life Underwriter
3. A person who possesses the professional designation of Certified Insurance COunselor
4. A person who possesses any other professional designation for the requirements are waived by the commissioner.
5. A person who is licensed in another state as an insurance producer for the lines of authority for which the person desires to be licensed in this state as a non-resident producer.
1. A business entity, like an insurance agency.
2. A person who possesses the professional designation of Chartered Life Underwriter
3. A person who possesses the professional designation of Certified Insurance COunselor
4. A person who possesses any other professional designation for the requirements are waived by the commissioner.
5. A person who is licensed in another state as an insurance producer for the lines of authority for which the person desires to be licensed in this state as a non-resident producer.
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Individuals not required to take 24 hours of education or pass a pre licensing examination (2)
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1. A person who has a line of authority limited to limited line credit insurance
2. A person who has a line of authority limited to a limited line of insurance
3. An individual whose line of authority will be restricted to domestic mutual fire insurance and will be with an insurer writing only coverage other than insurance upon automobile
4. The individual whose line of authority will be restricted to fraternal organizations and
5. An individual who was licensed in their prior home state, moves to Pennsylvania, and applies within 90 days to become licensed in the same lines of authority as they were licensed in their former home state.
1. A person who has a line of authority limited to limited line credit insurance
2. A person who has a line of authority limited to a limited line of insurance
3. An individual whose line of authority will be restricted to domestic mutual fire insurance and will be with an insurer writing only coverage other than insurance upon automobile
4. The individual whose line of authority will be restricted to fraternal organizations and
5. An individual who was licensed in their prior home state, moves to Pennsylvania, and applies within 90 days to become licensed in the same lines of authority as they were licensed in their former home state.
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Departmental Rights and Notification of Changes
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* The department reserves the right to reject applicants whom the department determines lack general fitness, competence, or reliability such as they are not worthy of licensure.
* This is a catch for individuals who have committed breaches which, while not punishable under the law, are serious enough that the department feels they will behave poorly and/or dangerously as an insurance producer.
* The department reserves the right to reject applicants whom the department determines lack general fitness, competence, or reliability such as they are not worthy of licensure.
* This is a catch for individuals who have committed breaches which, while not punishable under the law, are serious enough that the department feels they will behave poorly and/or dangerously as an insurance producer.
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Licensing of Business
* Business entities may be licensed as insurance producers and insurance agencies fall into this category of licensure. IN order to do so, the business must comply with a number of requirements
1. Must have one or more employees who are licensed as individual insurance producers.
2. At least one licensee who is designated as a manager with supervisory duties.
1. Must have one or more employees who are licensed as individual insurance producers.
2. At least one licensee who is designated as a manager with supervisory duties.
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Reciprocal Licensing: Resident Producer
* one who has established residency or has established a business location in this state and will apply for a resident insurance license.
* Resident Licenses are commonly called Home State licenses
* Only one person can have one home-state insurance license, but can hold many non-resident licenses as desired.
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* Resident Licenses are commonly called Home State licenses
* Only one person can have one home-state insurance license, but can hold many non-resident licenses as desired.
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Temporary Licensing
* If a producer becomes unable to fulfill their duties as an insurance producer, the department may choose to grant a temporary insurance license to an individual who will oversee the producer’s activities and responsibilities. This can be applied because the producer has either
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1. Died
2. Became physically or mentally disabled
3. Entered active duty in the military
4. Or experienced something extenuating.
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1. Died
2. Became physically or mentally disabled
3. Entered active duty in the military
4. Or experienced something extenuating.
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Temporary Licensing pt.2
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* The temporary license will be given to someone who can fulfill the duties of the licensee.
* The temporary license will last 180 days, and it is not transferable or renewable, and will be revoked if the business is sold or transferred.
* The temporary license will be given to someone who can fulfill the duties of the licensee.
* The temporary license will last 180 days, and it is not transferable or renewable, and will be revoked if the business is sold or transferred.
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Exclusive General Agent
* A licensee who has been granted sole authority to act directly or indirectly as an insurance producer for a domestic insurer with respect to a specific portion of the insurer’s business or within a specific territory.
1. Has the authority to bind coverage on behalf of the insurer.
2. Either separately or together affiliates or sub producers directly or indirectly and underwrites in any one year amount of gross direct written premium equal to or more than 25% of the surplus as regards to policyholders.
1. Has the authority to bind coverage on behalf of the insurer.
2. Either separately or together affiliates or sub producers directly or indirectly and underwrites in any one year amount of gross direct written premium equal to or more than 25% of the surplus as regards to policyholders.
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Managers
Managers are a person who negotiates and binds ceding reinsurance contracts on behalf of a domestic insurer or manages all or part of the insurance business of an insurer and does not act as an agent for such an insurer.
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**Maintenance and Duration**
**Maintenance and Duration**
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* Both resident and non-resident licensees must keep the Department informed of all address changes, including both home and business addresses.
* If a licensee changes either of these addresses, they must notify the state of the change and provide the current address within 30 days of making the change.
* Both resident and non-resident licensees must keep the Department informed of all address changes, including both home and business addresses.
* If a licensee changes either of these addresses, they must notify the state of the change and provide the current address within 30 days of making the change.
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Act
The Insurance department act of 1921
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Applicant
An individual applying for an insurance license
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Approved Course
Approved Course: An educational program presented by means of classroom, Internet-based or corresponded study, and certified by the Commissioner as meeting the education requirements of this state
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Commissioner
The Insurance Commissioner of the Commonwealth
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Credit Hour
50 minutes of classroom instruction or its equivalent
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Department
The Pennsylvania Insurance Department;
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Home State
The state in which a producer obtained their original license
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Instructor
An individual responsible for teaching an approved course
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Insurance producer
A person licensed to sell, solicit or negotiate insurance in accordance with the laws and rules
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License
A document issued by the Department authorizing the named recipient to conduct business as an insurance producer in this Commonwealth
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License Period
The period of time from the issue date to the expiration stated on the license.
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Non Resident Insurance Producer
A person whose home state license was issued in a state other than Pennsylvania;
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Partnership Policies
Long-term care insurance policies that satisfy the requirements in the Federal Deficit Reduction Act of 2005
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Person
There are two definitions of person:
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* AN Individual or corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyds insurer, fraternal benefit society, beneficial association and any other legal entity engaged in the business of insurance, including insurance producers and adjusters; and
* Health care plans, including Health Maintenance Organizations Health care plans, fraternal benefit societies and beneficial societies are considered to be in the business of insurance
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* AN Individual or corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyds insurer, fraternal benefit society, beneficial association and any other legal entity engaged in the business of insurance, including insurance producers and adjusters; and
* Health care plans, including Health Maintenance Organizations Health care plans, fraternal benefit societies and beneficial societies are considered to be in the business of insurance
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Pre Examination Education
Education required under law regarding license requirements
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Program Administrator
The person or entity responsible for the administration contract;
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Resident Insurance producer
A licensed insurance producer whose home state is the Commonwealth of Pennsylvania;
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Sponder
A person offering or providing an approved course;
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Student
An individual subject to examination education requirements, or a licensed producer subject to continuing education requirements regarding renewals; and successfully completes: To complete an approved course for which a valid course completion certificate is issued.
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Renewal of License and Continuing Education
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* All licenses are required to renew insurance licenses upon expiration. Insurance producer licenses are valid for two years and expire on the last day of the producer’s birth month. Two years or possibly more after passing the examination. This means that the first licensing period could be more than two calendar years, but never less than two years.
* After the licensing period, the license lapses and expires unless the licensee renews the license with the department. If it’s expired for more than a year, then it would be revoked, and must take another licensing exam.
* To renew a no longer existing license, they must take 24 hours of continuing education.
* All licenses are required to renew insurance licenses upon expiration. Insurance producer licenses are valid for two years and expire on the last day of the producer’s birth month. Two years or possibly more after passing the examination. This means that the first licensing period could be more than two calendar years, but never less than two years.
* After the licensing period, the license lapses and expires unless the licensee renews the license with the department. If it’s expired for more than a year, then it would be revoked, and must take another licensing exam.
* To renew a no longer existing license, they must take 24 hours of continuing education.
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Lapsed Licenses
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* If an individual allows their license to lapse, they have 60 days to pay their lapsed renewal fee and provide proof of their new insurance education. If they submit these documents to the department within the aforesaid time limit, they would make their license retroactive to its expiration date.
* If a licensee is unable to comply with the requirements due to military service, then they may apply to the department with a waiver signifying why they will not be able to comply with the continued education requirements.
* If an individual allows their license to lapse, they have 60 days to pay their lapsed renewal fee and provide proof of their new insurance education. If they submit these documents to the department within the aforesaid time limit, they would make their license retroactive to its expiration date.
* If a licensee is unable to comply with the requirements due to military service, then they may apply to the department with a waiver signifying why they will not be able to comply with the continued education requirements.
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Exemptions from continuing education
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1. Licensee who is a business entity
2. Licensee that has a limited line of authority
3. Licensee who has a line of authority limited to restricted fraternal organization
4. A licensee who has a line of authority limited to limited line credit insurance if the insurer provides a course of instruction to each individual whose duties include selling, soliciting, or negotiating the insurance; and
5. A non-resident licensee who has satisfied the continuing education requirements of the licensee’s homestat if that state reciprocates and recognizes this state’s continuing education requirements for the resident licensees.
1. Licensee who is a business entity
2. Licensee that has a limited line of authority
3. Licensee who has a line of authority limited to restricted fraternal organization
4. A licensee who has a line of authority limited to limited line credit insurance if the insurer provides a course of instruction to each individual whose duties include selling, soliciting, or negotiating the insurance; and
5. A non-resident licensee who has satisfied the continuing education requirements of the licensee’s homestat if that state reciprocates and recognizes this state’s continuing education requirements for the resident licensees.
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Duties to Report Administrative or Criminal Actions
Duties to Report Administrative or Criminal Actions
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* A licensee that is subject to administrative action by any governmental agency must report to the department the initial administrative action of the licensing body and any other additional information to the state within 30 days.
* This report must include a copy of the order and any other relevant legal documents.
* A licensee that is subject to administrative action by any governmental agency must report to the department the initial administrative action of the licensing body and any other additional information to the state within 30 days.
* This report must include a copy of the order and any other relevant legal documents.
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Duties to Report Administrative or Criminal Actions (Criminal Conduct)
Duties to Report Administrative or Criminal Actions (Criminal Conduct)
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* If the Licensee is charged with criminal conduct then they must notify the department within 30 days of the charges being made. The licensee is required to report any changes within 30 days, results of pretrial hearing, and the sentence passed, The license must apply to the department, within 30 days of it becoming available a copy of the criminal complaint,/indictment, a copy of any orders resulting from a pretrial hearing and a report of the final disposition of the charges.
* A licensee is required to report administrative actions and criminal charges regardless of whether the licensee is found innocent or guilty and regardless of whether the licensee pleaded guilty, not guilty, or no contest.
* If the Licensee is charged with criminal conduct then they must notify the department within 30 days of the charges being made. The licensee is required to report any changes within 30 days, results of pretrial hearing, and the sentence passed, The license must apply to the department, within 30 days of it becoming available a copy of the criminal complaint,/indictment, a copy of any orders resulting from a pretrial hearing and a report of the final disposition of the charges.
* A licensee is required to report administrative actions and criminal charges regardless of whether the licensee is found innocent or guilty and regardless of whether the licensee pleaded guilty, not guilty, or no contest.
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Assumed Names
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* Licenses are only issued in the name of the applicant or business entity. If a licensee desires to do business under any name other than that which appears on the producer license, the licensee is required to notify the insurance Commissioner in writing prior to the use of the fictitious name.
* Licenses are only issued in the name of the applicant or business entity. If a licensee desires to do business under any name other than that which appears on the producer license, the licensee is required to notify the insurance Commissioner in writing prior to the use of the fictitious name.
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Disciplinary Actions and Prohibited Acts
* Department has multiple methods by which it enforces decisions of the department and punishes licensees who violate the rules governing Pennsylvania Insurance producers.
1. Fine licensees convicted of a code violation or other insurances laws
2. Suspend or revoke insurance licenses for violations
3. Refer the licensee for criminal prosecution if a crime was involved.
1. Fine licensees convicted of a code violation or other insurances laws
2. Suspend or revoke insurance licenses for violations
3. Refer the licensee for criminal prosecution if a crime was involved.
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Enforcement by the Department
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* If the department has evidence of a violation, it will notify the person of the alleged violation.
* The notice will specify the nature of the violation and fix a time where the hearing will be held.
* The licensee will be given a 10 day notice, then will conduct the hearing on the violation in accordance with the laws and rules to practice and procedures.
* If the department has evidence of a violation, it will notify the person of the alleged violation.
* The notice will specify the nature of the violation and fix a time where the hearing will be held.
* The licensee will be given a 10 day notice, then will conduct the hearing on the violation in accordance with the laws and rules to practice and procedures.
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Enforcement by the Department (Penalties)
* After hearing or upon failure of the person to appear at the hearing, if a violation is found, the commissioner may in addition to any penalty impose a combination of the following that is considered appropriate.
1. Denial, suspension, refusal to renew or revocation of the license
2. A civil penalty of up to 5,000 for each action in violation of law
3. A cease and desist order;
4. Any other conditions as the Commissioner deems appropriate.
1. Denial, suspension, refusal to renew or revocation of the license
2. A civil penalty of up to 5,000 for each action in violation of law
3. A cease and desist order;
4. Any other conditions as the Commissioner deems appropriate.
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Cease and Desist Orders and Administrative Penalty
Cease and Desist Orders and Administrative Penalty
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* If evidence of a cease and desist violation is found, it will notify the person of the alleged violation, then give 10 days advance notice to the time and place of the hearing.
* No person is excused from testifying or from producing papers, documents, books, contracts or agreements at any hearing held by the Commissioner on the grounds that the testimony or evidence may tend to incriminate that person.
* After the hearing if a violation is found, refer to: Enforcement by the Department (Penalties) section of notes.
* If evidence of a cease and desist violation is found, it will notify the person of the alleged violation, then give 10 days advance notice to the time and place of the hearing.
* No person is excused from testifying or from producing papers, documents, books, contracts or agreements at any hearing held by the Commissioner on the grounds that the testimony or evidence may tend to incriminate that person.
* After the hearing if a violation is found, refer to: Enforcement by the Department (Penalties) section of notes.
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Administrative Penalties for Cease and Desist Orders
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* Once hearing that the violation or multiple violations have occurred, the commissioner may issue an order requiring the person to cease and desist from engaging the acts that violated that law.
* Once hearing that the violation or multiple violations have occurred, the commissioner may issue an order requiring the person to cease and desist from engaging the acts that violated that law.
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Civil Penalties
Civil Penalties
* For each violation for unfair methods of competition, acts or practice defined as a violation, if the person knew or reasonably should have known the act of a violation, the following penalties may be assessed.
1. A penalty up to 5,000 per violation, cannot exceed 50,000
2. For acts in which the person did not know or reasonably should have known it was a violation, a penalty of up to 1,000, not to exceed 10,000 in the aggregate for any six-month period.
3. For each violation of an order issued by the Commissioner, and while the other order is in effect, a penalty of up to 10,000.
1. A penalty up to 5,000 per violation, cannot exceed 50,000
2. For acts in which the person did not know or reasonably should have known it was a violation, a penalty of up to 1,000, not to exceed 10,000 in the aggregate for any six-month period.
3. For each violation of an order issued by the Commissioner, and while the other order is in effect, a penalty of up to 10,000.
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Unlicensed Activity
Anyone who performs the duties of an insurance producer in the Commonwealth without being licensed according to law, is equal to committing a third degree felony.
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Consent Agreement
It is an agreement between a prosecuting authority and the accused where the accused does consent to the penalty, should they be found guilty. This is an option so that the evidence used in the proceedings cannot be used in evidence in future criminal or civil proceedings.
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Prohibited Acts (Part 1)
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1. Providing incorrect, misleading, incomplete or false information to the Department in a license application;
2. Violating the insurance laws or regulations of this Commonwealth or a subpoena or order of the commissioner or of another state's insurance commissioner;
3. Obtaining or attempt to obtain a license through misrepresentation or fraud;
4. Improperly withholding, misappropriating or converting money or property received in the course of doing business;
5. Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;
6. Admitting to or been found to have committed any unfair insurance practice or fraud;
1. Providing incorrect, misleading, incomplete or false information to the Department in a license application;
2. Violating the insurance laws or regulations of this Commonwealth or a subpoena or order of the commissioner or of another state's insurance commissioner;
3. Obtaining or attempt to obtain a license through misrepresentation or fraud;
4. Improperly withholding, misappropriating or converting money or property received in the course of doing business;
5. Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;
6. Admitting to or been found to have committed any unfair insurance practice or fraud;
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Prohibited Acts (Part 2)
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1. Using fraudulent, coercive or dishonest practices or demonstrating incompetence; untrustworthiness or financial irresponsibility in the conduct of doing business in this Commonwealth or elsewhere;
2. Having an insurance producer license or other financial services license, or its equivalent, denied, suspended or revoked by a governmental entity;
3. Forging another person's name on an application for insurance or on any document related to an insurance or financial service transaction;
4. Cheating on an examination for an insurance producer license;
5. Knowingly accepting insurance business which was sold, solicited or negotiated by a person who is not licensed as an insurance producer;
6. Failing to comply with an administrative or court order imposing a child support obligation;
1. Using fraudulent, coercive or dishonest practices or demonstrating incompetence; untrustworthiness or financial irresponsibility in the conduct of doing business in this Commonwealth or elsewhere;
2. Having an insurance producer license or other financial services license, or its equivalent, denied, suspended or revoked by a governmental entity;
3. Forging another person's name on an application for insurance or on any document related to an insurance or financial service transaction;
4. Cheating on an examination for an insurance producer license;
5. Knowingly accepting insurance business which was sold, solicited or negotiated by a person who is not licensed as an insurance producer;
6. Failing to comply with an administrative or court order imposing a child support obligation;
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Prohibited Act (Part 3)
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1. Failing to pay State income tax or comply with any administrative or court order directing the payment of State income tax;
2. Committing a felony or its equivalent, a misdemeanor that involves the misuse or theft of money or property belonging to another person, or fraud, forgery, or any dishonest acts or an act involving a breach of fiduciary duty;
3. Transferring insurance coverage to an insurer other than the insurer expressly chosen by the insured without the consent of the insured;
4. Failing to notify the department of a change of address within 30 days;
5. Demonstrating a lack of general fitness, competence or reliability sufficient to satisfy the department that the licensee is not worthy of licensure; and
6. Improperly withholding, misappropriating or converting money or property received in the course of doing business.
1. Failing to pay State income tax or comply with any administrative or court order directing the payment of State income tax;
2. Committing a felony or its equivalent, a misdemeanor that involves the misuse or theft of money or property belonging to another person, or fraud, forgery, or any dishonest acts or an act involving a breach of fiduciary duty;
3. Transferring insurance coverage to an insurer other than the insurer expressly chosen by the insured without the consent of the insured;
4. Failing to notify the department of a change of address within 30 days;
5. Demonstrating a lack of general fitness, competence or reliability sufficient to satisfy the department that the licensee is not worthy of licensure; and
6. Improperly withholding, misappropriating or converting money or property received in the course of doing business.
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Failure to Respond or Remit Payment
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* Licensees must respond to written inquiries from the department within 30 days of receipt.
* Licensees must remit valid payment for all fees due and owing to the department.
* If a licensee fails to comply with the above requirements, they must correct the violation within 15 days of receiving notice from the department. \[1\]
* If failed, the department may assess an administrative fine of no more than 100$ per violation.
* Licensees must respond to written inquiries from the department within 30 days of receipt.
* Licensees must remit valid payment for all fees due and owing to the department.
* If a licensee fails to comply with the above requirements, they must correct the violation within 15 days of receiving notice from the department. \[1\]
* If failed, the department may assess an administrative fine of no more than 100$ per violation.
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**Unfair Trade Practices**
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* The 24 Hour Pennsylvania Life Insurance Pre License Course covers Insurance Regulation 06, which focuses on Unfair Insurance Practices (40 P.S. 1171.1; 1171.5).
* The course explains that all states have implemented measures to regulate and prevent unfair trade practices by insurers and producers in the insurance industry.
* The course outlines specific acts that are considered unfair methods of competition and unfair or deceptive acts and practices in the insurance business.
* The 24 Hour Pennsylvania Life Insurance Pre License Course covers Insurance Regulation 06, which focuses on Unfair Insurance Practices (40 P.S. 1171.1; 1171.5).
* The course explains that all states have implemented measures to regulate and prevent unfair trade practices by insurers and producers in the insurance industry.
* The course outlines specific acts that are considered unfair methods of competition and unfair or deceptive acts and practices in the insurance business.
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Declaration of Purpose
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* The "Unfair Insurance Practices Act" regulates trade practices in the insurance business.
* The act defines and determines unfair methods of competition and unfair or deceptive acts or practices.
* It prohibits trade practices that are considered unfair or deceptive in the insurance industry.
* The "Unfair Insurance Practices Act" regulates trade practices in the insurance business.
* The act defines and determines unfair methods of competition and unfair or deceptive acts or practices.
* It prohibits trade practices that are considered unfair or deceptive in the insurance industry.
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Definitions
Definitions
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* Abuse in the context of the 24 Hour Pennsylvania Life Insurance Pre License Course refers to attempting to cause damage to property with the intention of intimidating or controlling the behavior of a covered individual.
* Affiliated insurer is an insurer that is connected to another insurer as defined by "The Insurance Company Law of 1921."
* Commissioner refers to the insurance commissioner of the Commonwealth of Pennsylvania. \[1\]
* Abuse in the context of the 24 Hour Pennsylvania Life Insurance Pre License Course refers to attempting to cause damage to property with the intention of intimidating or controlling the behavior of a covered individual.
* Affiliated insurer is an insurer that is connected to another insurer as defined by "The Insurance Company Law of 1921."
* Commissioner refers to the insurance commissioner of the Commonwealth of Pennsylvania. \[1\]
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Deceptive Acts or Practices
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* Unfair methods of competition and unfair or deceptive acts or practices in the business of insurance refer to various acts and practices that misrepresent the benefits, conditions, and terms of insurance policies, as well as the financial condition of insurers.
* These acts also include using misleading names or titles for insurance policies, making misrepresentations to induce policy lapses or surrenders, and misrepresenting insurance policies as shares of stock.
* Additionally, any advertisements, announcements, or statements that contain untrue, deceptive, or misleading representations or statements are considered unfair or deceptive acts or practices in the insurance industry.
* Unfair methods of competition and unfair or deceptive acts or practices in the business of insurance refer to various acts and practices that misrepresent the benefits, conditions, and terms of insurance policies, as well as the financial condition of insurers.
* These acts also include using misleading names or titles for insurance policies, making misrepresentations to induce policy lapses or surrenders, and misrepresenting insurance policies as shares of stock.
* Additionally, any advertisements, announcements, or statements that contain untrue, deceptive, or misleading representations or statements are considered unfair or deceptive acts or practices in the insurance industry.
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Deceptive Acts or Practices (Pt.2)
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* Defamation is illegal and prohibited in the Commonwealth.
* Making false or maliciously critical statements that are intended to damage the financial condition of a person is prohibited.
* Entering into agreements or committing acts of boycott, coercion, or intimidation that result in unreasonable restraint or monopoly in the insurance business is also prohibited.
* Knowingly filing false financial statements or making false entries in books, reports, or statements related to the business of a person is prohibited.
* Issuing or delivering agency company stock, benefit certificates, or contracts promising returns and profits as an inducement to insurance is prohibited.
* Defamation is illegal and prohibited in the Commonwealth.
* Making false or maliciously critical statements that are intended to damage the financial condition of a person is prohibited.
* Entering into agreements or committing acts of boycott, coercion, or intimidation that result in unreasonable restraint or monopoly in the insurance business is also prohibited.
* Knowingly filing false financial statements or making false entries in books, reports, or statements related to the business of a person is prohibited.
* Issuing or delivering agency company stock, benefit certificates, or contracts promising returns and profits as an inducement to insurance is prohibited.
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Unfair Discrimination
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* Pennsylvania prohibits unfair discrimination in the rates charged for life insurance contracts, including discriminatory practices based on sex, marital status, race, religion, nationality, ethnic group, age, family size, occupation, place of residence, or underwriting standards.
* Insurers are allowed to charge different rates based on actuarially sound data, such as statistical differences in life expectancy or risk factors.
* The state requires that any premium rate discrimination must be supported by appropriate data and comply with the regulations set by the insurance commissioner. This ensures fairness and prevents arbitrary discrimination.
* Pennsylvania prohibits unfair discrimination in the rates charged for life insurance contracts, including discriminatory practices based on sex, marital status, race, religion, nationality, ethnic group, age, family size, occupation, place of residence, or underwriting standards.
* Insurers are allowed to charge different rates based on actuarially sound data, such as statistical differences in life expectancy or risk factors.
* The state requires that any premium rate discrimination must be supported by appropriate data and comply with the regulations set by the insurance commissioner. This ensures fairness and prevents arbitrary discrimination.
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Provisions Under Law
Provisions Under Law
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* Insurers and producers must abide by the provisions set forth in the insurance policy and cannot make any promises or agreements that go beyond what is stated in the contract.
* Producers cannot offer rebates or special favors to consumers that are not provided for in the insurance contract.
* Insurers have the right to cancel policies for non-payment of premium, fraud or material misrepresentation, and nonrenewal based on business decisions or product withdrawal from the market.
* Insurers and producers must abide by the provisions set forth in the insurance policy and cannot make any promises or agreements that go beyond what is stated in the contract.
* Producers cannot offer rebates or special favors to consumers that are not provided for in the insurance contract.
* Insurers have the right to cancel policies for non-payment of premium, fraud or material misrepresentation, and nonrenewal based on business decisions or product withdrawal from the market.
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Unfair Settlement or Comproclaimmise Practices
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* Misrepresenting facts or policy provisions related to coverage.
* Failing to promptly acknowledge and respond to written or oral communications regarding claims.
* Failing to establish reasonable standards for investigating claims promptly.
* Misrepresenting facts or policy provisions related to coverage.
* Failing to promptly acknowledge and respond to written or oral communications regarding claims.
* Failing to establish reasonable standards for investigating claims promptly.
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Unfair Settlement or Compromise Practice Part 2
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* Failing to promptly provide a reasonable explanation of the basis for denying a claim or offering a compromise settlement is considered an unfair insurance practice.
* Insurers must base claim denials or compromise settlements on the facts or applicable law stated in the insurance policy.
* It is prohibited to make false or fraudulent statements or misrepresentations in order to obtain a fee, commission, or other benefit from insurers, agents, brokers, or individuals.
* Failing to promptly provide a reasonable explanation of the basis for denying a claim or offering a compromise settlement is considered an unfair insurance practice.
* Insurers must base claim denials or compromise settlements on the facts or applicable law stated in the insurance policy.
* It is prohibited to make false or fraudulent statements or misrepresentations in order to obtain a fee, commission, or other benefit from insurers, agents, brokers, or individuals.
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Nondiscrimination
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* Bonuses can be paid to policyholders or premiums can be reduced from surplus accumulated from nonparticipating insurance, as long as it is fair, equitable, and in the best interests of both the policyholders and the company.
* Allowances can be made for policyholders who have continuously made premium payments directly to an insurer's office, representing the savings in collection expenses.
* The rate of premium for a group insurance policy can be readjusted based on the loss or expense experience, but only for the specific policy year.
* Bonuses can be paid to policyholders or premiums can be reduced from surplus accumulated from nonparticipating insurance, as long as it is fair, equitable, and in the best interests of both the policyholders and the company.
* Allowances can be made for policyholders who have continuously made premium payments directly to an insurer's office, representing the savings in collection expenses.
* The rate of premium for a group insurance policy can be readjusted based on the loss or expense experience, but only for the specific policy year.
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Rebating Prohibited Except in Certain Circumstances
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* Rebates in the insurance industry are generally prohibited in Pennsylvania, as insurance producers are not allowed to offer any form of rebate or kickback to consumers, including commissions, profits, or other benefits.
* There is a minor exception that allows producers to offer or give non-cash items of up to $100 in value annually, as long as these items are not specified in the insurance contract.
* Producers are not allowed to make the receipt of anything of value contingent on the purchase of insurance, and violating this law is considered a third-degree misdemeanor crime. Deceptive acts or practices are also not permitted under the Unfair Insurance Practices Act. However, services related to loss control, such as inspections and suggestions for risk mitigation, are allowed as long as they are offered for free or at a discounted price.
* Rebates in the insurance industry are generally prohibited in Pennsylvania, as insurance producers are not allowed to offer any form of rebate or kickback to consumers, including commissions, profits, or other benefits.
* There is a minor exception that allows producers to offer or give non-cash items of up to $100 in value annually, as long as these items are not specified in the insurance contract.
* Producers are not allowed to make the receipt of anything of value contingent on the purchase of insurance, and violating this law is considered a third-degree misdemeanor crime. Deceptive acts or practices are also not permitted under the Unfair Insurance Practices Act. However, services related to loss control, such as inspections and suggestions for risk mitigation, are allowed as long as they are offered for free or at a discounted price.
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Prohibition
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* Prohibition: Insurance producers are prohibited from offering rebates or special advantages that are not specified in the insurance policy.
* Penalty: Violation of this law is considered a misdemeanor of the third degree, punishable by up to one year in prison and a fine of up to $2,500.
* Context: This regulation is a part of the Pennsylvania Insurance Regulation 06, which addresses unfair insurance practices and aims to protect consumers in the insurance industry.
* Prohibition: Insurance producers are prohibited from offering rebates or special advantages that are not specified in the insurance policy.
* Penalty: Violation of this law is considered a misdemeanor of the third degree, punishable by up to one year in prison and a fine of up to $2,500.
* Context: This regulation is a part of the Pennsylvania Insurance Regulation 06, which addresses unfair insurance practices and aims to protect consumers in the insurance industry.
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Misrepresentation
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* Producers must accurately represent the terms of an insurance policy and the potential of policy dividends.
* Producers are prohibited from issuing or using statements that misrepresent the terms of an insurance contract.
* Violating this law is considered a third-degree misdemeanor, punishable by penalties and charges.
* In the context of the 24 Hour Pennsylvania Life Insurance Pre License Course, this topic focuses on the regulations and consequences surrounding unfair insurance practices, specifically misrepresenting policy terms and using misleading statements.
* Producers must accurately represent the terms of an insurance policy and the potential of policy dividends.
* Producers are prohibited from issuing or using statements that misrepresent the terms of an insurance contract.
* Violating this law is considered a third-degree misdemeanor, punishable by penalties and charges.
* In the context of the 24 Hour Pennsylvania Life Insurance Pre License Course, this topic focuses on the regulations and consequences surrounding unfair insurance practices, specifically misrepresenting policy terms and using misleading statements.
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Twisting
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* refers to the unethical practice of convincing a policyholder to surrender their existing policy and purchase a new one, without full disclosure of the facts surrounding the replacement.
* This practice is often carried out by dishonest producers who aim to earn higher commissions from new business rather than renewal commissions.
* Can lead to issues for the insured, such as undergoing a new underwriting process and potentially ending up with a policy that has disadvantages compared to their previous one, such as waiting periods or higher risk categories.
* refers to the unethical practice of convincing a policyholder to surrender their existing policy and purchase a new one, without full disclosure of the facts surrounding the replacement.
* This practice is often carried out by dishonest producers who aim to earn higher commissions from new business rather than renewal commissions.
* Can lead to issues for the insured, such as undergoing a new underwriting process and potentially ending up with a policy that has disadvantages compared to their previous one, such as waiting periods or higher risk categories.
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Replacement
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* Replacement refers to a transaction where new life insurance or annuity is purchased, knowing that existing life insurance or annuity has been terminated, reduced in value, amended to reduce benefits, or used as collateral for borrowing.
* The term "replacement" does not include group life insurance, group annuities, credit life/accident/health insurance, or pensions.
* This definition is mentioned in the context of the 24 Hour Pennsylvania Life Insurance Pre License Course, specifically in relation to Insurance Regulation: 06. Unfair Insurance Practices
* Replacement refers to a transaction where new life insurance or annuity is purchased, knowing that existing life insurance or annuity has been terminated, reduced in value, amended to reduce benefits, or used as collateral for borrowing.
* The term "replacement" does not include group life insurance, group annuities, credit life/accident/health insurance, or pensions.
* This definition is mentioned in the context of the 24 Hour Pennsylvania Life Insurance Pre License Course, specifically in relation to Insurance Regulation: 06. Unfair Insurance Practices
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Replacement of Life Insurance and Annuities
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* Regulations are in place in Pennsylvania to regulate insurers, agents, and brokers when it comes to the replacement of life insurance and annuities.
* These regulations aim to protect policyholders by setting minimum standards of conduct for agents and ensuring that purchasers receive accurate and relevant information to make informed decisions.
* Noncompliance with these regulations can result in penalties and charges for insurers, agents, and brokers who engage in unfair insurance practices.
* Regulations are in place in Pennsylvania to regulate insurers, agents, and brokers when it comes to the replacement of life insurance and annuities.
* These regulations aim to protect policyholders by setting minimum standards of conduct for agents and ensuring that purchasers receive accurate and relevant information to make informed decisions.
* Noncompliance with these regulations can result in penalties and charges for insurers, agents, and brokers who engage in unfair insurance practices.
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Additional Definitions (Replacement of Life Insurance and Annuities)
Additional Definitions (Replacement of Life Insurance and Annuities)
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* Conservation refers to attempts by insurers or their agents to discourage policyholders from replacing existing life insurance or annuities.
* Registered contracts are variable annuities or variable life insurance policies where the death benefits and cash values vary based on investments held in a separate account or another registered contract.
* Replacement refers to the purchase of new life insurance or annuities when there is existing coverage, known or should be known by the proposing agent or insurer.
* These regulations do not apply to certain transactions exempted from replacement requirements, including group life insurance and annuities, contractual changes or conversions within the same insurer, and transactions involving registered contracts
* Conservation refers to attempts by insurers or their agents to discourage policyholders from replacing existing life insurance or annuities.
* Registered contracts are variable annuities or variable life insurance policies where the death benefits and cash values vary based on investments held in a separate account or another registered contract.
* Replacement refers to the purchase of new life insurance or annuities when there is existing coverage, known or should be known by the proposing agent or insurer.
* These regulations do not apply to certain transactions exempted from replacement requirements, including group life insurance and annuities, contractual changes or conversions within the same insurer, and transactions involving registered contracts
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Duties of Agents and Brokers
Duties of Agents and Brokers
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* In the context of the 24 Hour Pennsylvania Life Insurance Pre License Course, statements signed by the applicant and agent regarding replacement in a transaction must be provided.
* The agent or broker must present the applicant with a "Notice Regarding Replacement of Life Insurance and Annuities" at the time of application, which must be signed by both the agent and the applicant.
* The agent or broker must obtain a list of the existing life insurance or annuities to be replaced, identifying the policies by insurer, insured, and contract number. They must also leave the applicant with copies of written or printed communications and information related to the replacement policies.
* In the context of the 24 Hour Pennsylvania Life Insurance Pre License Course, statements signed by the applicant and agent regarding replacement in a transaction must be provided.
* The agent or broker must present the applicant with a "Notice Regarding Replacement of Life Insurance and Annuities" at the time of application, which must be signed by both the agent and the applicant.
* The agent or broker must obtain a list of the existing life insurance or annuities to be replaced, identifying the policies by insurer, insured, and contract number. They must also leave the applicant with copies of written or printed communications and information related to the replacement policies.
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Duties of Insurers and Insurers Using Agents or Brokers
Duties of Insurers and Insurers Using Agents or Brokers
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* Insurance companies must ensure that their field representatives or personnel responsible for replacement compliance are informed about the requirements of the regulation.
* As part of a completed application for life insurance or annuities, the insurance company must obtain a signed statement from the applicant indicating whether the proposed insurance or annuity will replace an existing policy.
* If replacement is involved, the agent or broker must send written communication to all existing insurers within five working days of receiving the replacement application, providing them with the necessary disclosures or ledger statements regarding the proposed policy. This allows the replaced insurer the opportunity to conserve the business.
* Insurance companies must ensure that their field representatives or personnel responsible for replacement compliance are informed about the requirements of the regulation.
* As part of a completed application for life insurance or annuities, the insurance company must obtain a signed statement from the applicant indicating whether the proposed insurance or annuity will replace an existing policy.
* If replacement is involved, the agent or broker must send written communication to all existing insurers within five working days of receiving the replacement application, providing them with the necessary disclosures or ledger statements regarding the proposed policy. This allows the replaced insurer the opportunity to conserve the business.
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Right to Examine/Unconditional Refund
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* The replacing insurer in Pennsylvania is required to prominently display a 20-day Right to Examine, or Free Look provision on the replacement policy.
* If the policyowner decides to return the policy within the 20-day period, the insurer must provide a full refund of premiums paid.
* The policyowner can return the policy without providing a reason and the Right to Return provision starts from the date of policy delivery.
* The replacing insurer in Pennsylvania is required to prominently display a 20-day Right to Examine, or Free Look provision on the replacement policy.
* If the policyowner decides to return the policy within the 20-day period, the insurer must provide a full refund of premiums paid.
* The policyowner can return the policy without providing a reason and the Right to Return provision starts from the date of policy delivery.
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Direct Response Sales
Direct Response Sales
* If the sale was due to a direct response solicitation and the insurer did not propose the replacement, the insurance company must send a replacement notice to the applicant.
* The insurance company must provide the applicant with an original or copy of any written communication related to the policies associated with the replacement
* The insurance company is required to request a list of existing life insurance or annuity contracts that are to be replaced, including the name of the insurer and contract/policy number.
* The insurance company must provide the applicant with an original or copy of any written communication related to the policies associated with the replacement
* The insurance company is required to request a list of existing life insurance or annuity contracts that are to be replaced, including the name of the insurer and contract/policy number.
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Penalties
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* Failure to comply with insurance regulations in Pennsylvania may subject agents and brokers to penalties, with each failure being considered a separate violation. A final determination is made after a hearing. Non-compliance can result in disqualification from obtaining an insurance license.
* The failure to comply with these regulations does not prevent legal proceedings against insurance companies, associations, exchanges, their members, officers, directors, or attorneys-in-fact. Such acts may also be considered a violation of the Unfair Insurance Practices Act.
* Policyowners in Pennsylvania have the right to replace an existing policy, even if they initially indicated on the application that replacement was not intended. The application statement does not prevent the owner from changing their mind and replacing the contracts. However, if an agent shows a pattern of replacing policies, it is considered evidence that they knew replacement was intended, which is a violation of insurance regulations.
* Failure to comply with insurance regulations in Pennsylvania may subject agents and brokers to penalties, with each failure being considered a separate violation. A final determination is made after a hearing. Non-compliance can result in disqualification from obtaining an insurance license.
* The failure to comply with these regulations does not prevent legal proceedings against insurance companies, associations, exchanges, their members, officers, directors, or attorneys-in-fact. Such acts may also be considered a violation of the Unfair Insurance Practices Act.
* Policyowners in Pennsylvania have the right to replace an existing policy, even if they initially indicated on the application that replacement was not intended. The application statement does not prevent the owner from changing their mind and replacing the contracts. However, if an agent shows a pattern of replacing policies, it is considered evidence that they knew replacement was intended, which is a violation of insurance regulations.
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False and Deceptive Advertising
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* The Commissioner of Insurance determines whether an advertisement is misleading or deceptive based on how an average person would perceive it.
* Advertisements must be clear and non-deceptive, even if the details are provided later in the application process.
* Terms used in advertisements must be easily understood by the general public, and any specific terms regarding benefits must be completely honest, including all exceptions and restrictions.
* The Commissioner of Insurance determines whether an advertisement is misleading or deceptive based on how an average person would perceive it.
* Advertisements must be clear and non-deceptive, even if the details are provided later in the application process.
* Terms used in advertisements must be easily understood by the general public, and any specific terms regarding benefits must be completely honest, including all exceptions and restrictions.
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Testimonials and More
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* Testimonials, endorsements, and statistics in an advertisement must be true and genuine. If an individual is compensated for their testimonial, the advertisement must disclose it as a "paid endorsement".
* An advertisement cannot claim that "no medical exam is required" if any policy terms depend on the health condition/history of the applicant unless all conditions are disclosed.
* Comparisons between two plans in an advertisement must be fair, complete, and not disparaging. Plans must be comparable for a valid comparison.
* Testimonials, endorsements, and statistics in an advertisement must be true and genuine. If an individual is compensated for their testimonial, the advertisement must disclose it as a "paid endorsement".
* An advertisement cannot claim that "no medical exam is required" if any policy terms depend on the health condition/history of the applicant unless all conditions are disclosed.
* Comparisons between two plans in an advertisement must be fair, complete, and not disparaging. Plans must be comparable for a valid comparison.
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Misleading Financial Status Advertisements
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* Advertisements for insurance must not make false or misleading statements about the financial status or relevant facts of the insurance business.
* The advertisement cannot claim endorsement or accreditation by any government agency.
* If a commercial rating system is mentioned, the advertisement must disclose the purpose, limitations, and extent of the recommendation.
* The advertisement must clearly state the name of the insurance company issuing the plan.
* The advertisement can only include the home address of the insurance company or an identified branch or district office.
* Advertisements for insurance must not make false or misleading statements about the financial status or relevant facts of the insurance business.
* The advertisement cannot claim endorsement or accreditation by any government agency.
* If a commercial rating system is mentioned, the advertisement must disclose the purpose, limitations, and extent of the recommendation.
* The advertisement must clearly state the name of the insurance company issuing the plan.
* The advertisement can only include the home address of the insurance company or an identified branch or district office.
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Government Agency Endorsements
Government Agency Endorsements
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* An advertisement cannot use methods that make it appear as if it is sent by an official government agency, as this would be deceptive and illegal.
* Examples of deceptive methods include mailings to truck drivers, employees, and farmers in Pennsylvania, bearing captions like "Department of Information, Pennsylvania Truckers Division" or "Government Employees Division."
* Other examples of deceptive captions include "National Health Plan Agency," "State Health Insurance Service Agency," and "Senior Citizens Division." These examples highlight the importance of the provision in the context of the 24 Hour Pennsylvania Life Insurance Pre License Course on Insurance Regulation.
* An advertisement cannot use methods that make it appear as if it is sent by an official government agency, as this would be deceptive and illegal.
* Examples of deceptive methods include mailings to truck drivers, employees, and farmers in Pennsylvania, bearing captions like "Department of Information, Pennsylvania Truckers Division" or "Government Employees Division."
* Other examples of deceptive captions include "National Health Plan Agency," "State Health Insurance Service Agency," and "Senior Citizens Division." These examples highlight the importance of the provision in the context of the 24 Hour Pennsylvania Life Insurance Pre License Course on Insurance Regulation.
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Filing of Advertisements
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* Mail-order solicitations for accident and health contracts must be filed with the Department as an "Initial Filing of a Mail-order Solicitation" before the first publication of the advertisement.
* The voluntary review does not protect the advertisement from potential action by the Department under existing statutory provisions.
* The Department has the discretion to review all advertisements, whether or not they are required to be filed.
* Mail-order solicitations for accident and health contracts must be filed with the Department as an "Initial Filing of a Mail-order Solicitation" before the first publication of the advertisement.
* The voluntary review does not protect the advertisement from potential action by the Department under existing statutory provisions.
* The Department has the discretion to review all advertisements, whether or not they are required to be filed.
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Filing Procedures
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* Advertisements for the 24 Hour Pennsylvania Life Insurance Pre License Course must be filed or submitted by certified mail.
* The filing must include three copies of the advertisement, a stamped, self-addressed envelope, and a cover letter with specific information.
* The cover letter should designate the type of filing, include reference numbers, state the date of first publication, and provide details for amended or renewed filings, testimonials, and enrollments.
* Advertisements for the 24 Hour Pennsylvania Life Insurance Pre License Course must be filed or submitted by certified mail.
* The filing must include three copies of the advertisement, a stamped, self-addressed envelope, and a cover letter with specific information.
* The cover letter should designate the type of filing, include reference numbers, state the date of first publication, and provide details for amended or renewed filings, testimonials, and enrollments.
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Company’s Responsibility and Control
Company’s Responsibility and Control
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* Companies must have complete control over the content, form, and method of dissemination of advertisements for their contracts.
* Advertisements created by individuals other than the company must be approved in writing by an officer or designated person before being used.
* This requirement is applicable to the 24 Hour Pennsylvania Life Insurance Pre License Course, specifically in the context of Insurance Regulation: 06. Unfair Insurance Practices
* Companies must have complete control over the content, form, and method of dissemination of advertisements for their contracts.
* Advertisements created by individuals other than the company must be approved in writing by an officer or designated person before being used.
* This requirement is applicable to the 24 Hour Pennsylvania Life Insurance Pre License Course, specifically in the context of Insurance Regulation: 06. Unfair Insurance Practices
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Advertising File
Advertising File
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* A company must maintain a complete file of all its printed, published, or prepared advertisements for individual contracts and typical advertisements for blanket, franchise, and group contracts.
* Advertisements in the file should include information about distribution, contract form numbers, and must be available for inspection by the Department.
* Advertisements and related materials should be kept in the file for either 4 years or until the next regular examination report, whichever is longer, as per Pennsylvania Life Insurance Pre License Course: Insurance Regulation: 06. Unfair Insurance Practices
* A company must maintain a complete file of all its printed, published, or prepared advertisements for individual contracts and typical advertisements for blanket, franchise, and group contracts.
* Advertisements in the file should include information about distribution, contract form numbers, and must be available for inspection by the Department.
* Advertisements and related materials should be kept in the file for either 4 years or until the next regular examination report, whichever is longer, as per Pennsylvania Life Insurance Pre License Course: Insurance Regulation: 06. Unfair Insurance Practices
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Certificate of Compliance
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* Companies filing an annual statement must include a "Certificate of Compliance" executed by an authorized officer, stating that their advertisements complied with insurance laws and regulations in Pennsylvania.
* This requirement is part of Insurance Regulation 06, which addresses Unfair Insurance Practices under the Pennsylvania Life Insurance Pre-License Course.
* The purpose of the certificate is to ensure that companies are aware of and adhere to the provisions of insurance laws and regulations in Pennsylvania regarding advertising practices.
* Companies filing an annual statement must include a "Certificate of Compliance" executed by an authorized officer, stating that their advertisements complied with insurance laws and regulations in Pennsylvania.
* This requirement is part of Insurance Regulation 06, which addresses Unfair Insurance Practices under the Pennsylvania Life Insurance Pre-License Course.
* The purpose of the certificate is to ensure that companies are aware of and adhere to the provisions of insurance laws and regulations in Pennsylvania regarding advertising practices.
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Compliance Standards and Sanctions
Compliance Standards and Sanctions
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* The Commissioner has the authority to establish compliance standards for enforcing laws related to insurance advertisement.
* Failing to file or maintain advertising materials as required by the Department can result in penalties and sanctions.
* This topic is relevant to the 24 Hour Pennsylvania Life Insurance Pre License Course, specifically in the context of Insurance Regulation: 06. Unfair Insurance Practices.
* The Commissioner has the authority to establish compliance standards for enforcing laws related to insurance advertisement.
* Failing to file or maintain advertising materials as required by the Department can result in penalties and sanctions.
* This topic is relevant to the 24 Hour Pennsylvania Life Insurance Pre License Course, specifically in the context of Insurance Regulation: 06. Unfair Insurance Practices.
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**General Compliance Standards**
**General Compliance Standards**
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* Companies can submit a "Voluntary Submission of an Advertisement" if they believe that compliance standards are burdensome in a specific instance. They must provide reasons why the regulation should not be applicable in that circumstance, and the Department will review the submission.
* The compliance standards apply to advertisements related to insurance. There are General Compliance Standards that apply to all advertisements, and Specific Compliance Standards that apply to specific types of insurance, as outlined in the legislation.
* Companies can submit a "Voluntary Submission of an Advertisement" if they believe that compliance standards are burdensome in a specific instance. They must provide reasons why the regulation should not be applicable in that circumstance, and the Department will review the submission.
* The compliance standards apply to advertisements related to insurance. There are General Compliance Standards that apply to all advertisements, and Specific Compliance Standards that apply to specific types of insurance, as outlined in the legislation.
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**General Compliance Standards (explained)**
**General Compliance Standards (explained)**
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* The purpose of these compliance standards is to enforce existing statutory provisions regarding the use of deceptive, misleading, or false statements, practices, or procedures in insurance advertising. The Department seeks to prevent advertisements that could defeat or circumvent the intent of The Unfair Insurance Practices Act or related regulations.
* The purpose of these compliance standards is to enforce existing statutory provisions regarding the use of deceptive, misleading, or false statements, practices, or procedures in insurance advertising. The Department seeks to prevent advertisements that could defeat or circumvent the intent of The Unfair Insurance Practices Act or related regulations.
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General Compliance Standards: Form and Content of Advertisements (Complete and Clear)
The advertisement of an insurance contract must provide all the necessary information and be easily understandable to avoid any deception or misleading tendencies. It should not leave out important details or use confusing language.
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Determination of Misleading Capacity
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The Commissioner of Insurance determines whether an advertisement has the capacity or tendency to mislead or deceive. This determination is based on the overall impression the advertisement creates on an average person within the targeted segment of the public.
The Commissioner of Insurance determines whether an advertisement has the capacity or tendency to mislead or deceive. This determination is based on the overall impression the advertisement creates on an average person within the targeted segment of the public.
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Truthful and Non-Misleading
Advertisements must be truthful in both facts and implications. They should not make false claims or create a false impression about the insurance contract being advertised. All information presented should be accurate and not misleading.
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Misleading or Deceptive Statements
Misleading or Deceptive Statements
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* The advertisement used in the 24 Hour Pennsylvania Life Insurance Pre License Course should not contain any phrases, statements, references, or illustrations that can mislead or deceive potential buyers about the contract benefits, covered losses, or payable premiums.
* These standards of avoiding misleading information apply even if the contract is available for inspection before the sale or if a refund offer is made if the purchaser is dissatisfied.
* The 24 Hour Pennsylvania Life Insurance Pre License Course should adhere to the regulations outlined in 40 P.S. 1171.1 and 1171.5, which govern unfair insurance practices.
* The advertisement used in the 24 Hour Pennsylvania Life Insurance Pre License Course should not contain any phrases, statements, references, or illustrations that can mislead or deceive potential buyers about the contract benefits, covered losses, or payable premiums.
* These standards of avoiding misleading information apply even if the contract is available for inspection before the sale or if a refund offer is made if the purchaser is dissatisfied.
* The 24 Hour Pennsylvania Life Insurance Pre License Course should adhere to the regulations outlined in 40 P.S. 1171.1 and 1171.5, which govern unfair insurance practices.
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Unclear Statements
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* Statements that aren’t reasonably comprehended by the general public cannot be used in Advertisements.
* This restriction was set by the Commonwealth.
* Statements that aren’t reasonably comprehended by the general public cannot be used in Advertisements.
* This restriction was set by the Commonwealth.
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Renewability or Cancellability
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* The Advertisement cannot represent or imply that a contract will be indefinite.
* An Advertisement will have to refer to its renewability, cancellability and must outwardly present the qualifications to cancel or renew the contract.
* The Advertisement cannot represent or imply that a contract will be indefinite.
* An Advertisement will have to refer to its renewability, cancellability and must outwardly present the qualifications to cancel or renew the contract.
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Status of Company
Status of Company
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* An advertisement originating within Pennsylvania should not imply licensing beyond the state unless the company is licensed outside of the state.
* The advertisement must clearly indicate whether the company is licensed in specific states or not, using statements like "This Company is licensed only in..." or "This Company is not licensed in..."
* Advertisements originating outside Pennsylvania must comply with the state's regulations and prominently display the disclaimer "This offer is not available to residents of Pennsylvania." They must also avoid making false or misleading statements about the company's assets, financial standing, or government approval.
* An advertisement originating within Pennsylvania should not imply licensing beyond the state unless the company is licensed outside of the state.
* The advertisement must clearly indicate whether the company is licensed in specific states or not, using statements like "This Company is licensed only in..." or "This Company is not licensed in..."
* Advertisements originating outside Pennsylvania must comply with the state's regulations and prominently display the disclaimer "This offer is not available to residents of Pennsylvania." They must also avoid making false or misleading statements about the company's assets, financial standing, or government approval.
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Introductory, Initial, or Special Offers
Introductory, Initial, or Special Offers
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* Advertisements cannot falsely represent that a contract(s) will have an introductory, initial, or special offer.
* An Advertisement cannot advertise that a contract has a substantial advantage that is not available at a later date.
* The Advertisement cannot falsely represent that only a specific number of policies will be sold, or that there is a fixed discontinuance of the sale that is advertised.
* Advertisements cannot falsely represent that a contract(s) will have an introductory, initial, or special offer.
* An Advertisement cannot advertise that a contract has a substantial advantage that is not available at a later date.
* The Advertisement cannot falsely represent that only a specific number of policies will be sold, or that there is a fixed discontinuance of the sale that is advertised.
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Enrollment Periods
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* Advertisements that use an enrollment period must clearly display the end date of that period.
* Phrases like "special enrollment" or "enrollment deadline" cannot be used if they falsely imply that an application must be made by a specific deadline to obtain the advertised insurance product.
* An enrollment period for an individual insurance product cannot be offered within Pennsylvania unless there has been a minimum of 90 days between the close of the previous enrollment period and the opening of the new one. The advertisement must indicate the deadline for mailing the application, which should be between 10 and 40 days from the first advertisement.
* Advertisements that use an enrollment period must clearly display the end date of that period.
* Phrases like "special enrollment" or "enrollment deadline" cannot be used if they falsely imply that an application must be made by a specific deadline to obtain the advertised insurance product.
* An enrollment period for an individual insurance product cannot be offered within Pennsylvania unless there has been a minimum of 90 days between the close of the previous enrollment period and the opening of the new one. The advertisement must indicate the deadline for mailing the application, which should be between 10 and 40 days from the first advertisement.
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Testimonials or Endorsements By Third Parties
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* Testimonials used in advertisements for the 24 Hour Pennsylvania Life Insurance Pre License Course must be genuine, represent the current opinion of the author, and be applicable to the course being advertised.
* If a person making a testimonial or endorsement has a financial interest in the company or a related entity, this must be prominently disclosed in the advertisement.
* If a person is compensated for making a testimonial or endorsement, this fact must be disclosed in the advertisement with the language "Paid Endorsement."
* Testimonials used in advertisements for the 24 Hour Pennsylvania Life Insurance Pre License Course must be genuine, represent the current opinion of the author, and be applicable to the course being advertised.
* If a person making a testimonial or endorsement has a financial interest in the company or a related entity, this must be prominently disclosed in the advertisement.
* If a person is compensated for making a testimonial or endorsement, this fact must be disclosed in the advertisement with the language "Paid Endorsement."
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Use of Statistics
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* Falsely representing the dollar amount of claims paid, the number of people insured, or any similar statistical information relating to an insurer or policy cannot be used unless it reflects accurate and relevant facts.
* The advertisement cannot imply that statistics are derived from the contract advertised unless it is the truth, and when applicable to other contracts or plans, it must specifically state which contracts.
* Falsely representing the dollar amount of claims paid, the number of people insured, or any similar statistical information relating to an insurer or policy cannot be used unless it reflects accurate and relevant facts.
* The advertisement cannot imply that statistics are derived from the contract advertised unless it is the truth, and when applicable to other contracts or plans, it must specifically state which contracts.
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Disclosure of Amount of Benefits
If an advertisement mentions a choice of the amount of benefits, it must disclose that the actual amount of benefits provided depends on the specific plan selected.
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Premium Variations
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The advertisement must also inform potential customers that the premium for the insurance policy will vary depending on the amount of benefits chosen.
The advertisement must also inform potential customers that the premium for the insurance policy will vary depending on the amount of benefits chosen.
Note 
Flashcards (24)