Chapter Ins 2

Ins 2.15(6)(i)3. 3. The total guaranteed cash surrender value at the end of the year or, if no guaranteed cash surrender values are provided, the total guaranteed paid-up annuity at the end of the year;

Ins 2.15(6)(i)4. 4. If other than guaranteed cash values are shown, the total illustrative cash value or paid-up annuity at the end of the year may not be greater in amount than that based on:

Ins 2.15(6)(i)4.a. a. The current dividend scale and the interest rate currently used to accumulate dividends under such arrangements or the current excess interest rate credited by the insurer, and

Ins 2.15(6)(i)4.b. b. Current annuity purchase rates.

Ins 2.15(6)(im) (im) If the annuity payments have not yet commenced, the yield on gross considerations at the end of 10 years and at the scheduled commencement of annuity payments. For contracts without surrender values, only the yield at the scheduled commencement of annuity payments need be shown. The yield shall be figured on the basis of the contract value used to determine the annuity payments. These yield figures shall be shown on a guaranteed basis and, if current annuity payments or cash surrender values are shown, on an illustrative basis also.

Ins 2.15(6)(in) (in) A statement of the interest rates used in calculating the guaranteed and illustrative contract or fund values.

Ins 2.15(6)(j) (j) For a Contract Summary which includes values based on the current dividend scale or the current dividend accumulation or excess interest rate, a statement that such values are illustrations and are not guaranteed;

Ins 2.15(6)(k) (k) The date on which the Contract Summary is prepared.

Ins 2.15(7) (7) Preparation of preliminary contract summary and contract summary. The following must be considered in preparing the Preliminary Contract Summary and the Contract Summary:

Ins 2.15(7)(a) (a) The Preliminary Contract Summary and the Contract Summary must be separate documents;

Ins 2.15(7)(b) (b) All information required to be disclosed must be set out in such a manner as not to minimize or render any portion thereof obscure;

Ins 2.15(7)(c) (c) Any amounts which remain level for 2 years or more contract years may be represented by a single number if it is clearly indicated what amounts are applicable for each contract year;

Ins 2.15(7)(d) (d) Amounts in sub. (6) (d), (f), (g) and (i) shall, in the case of flexible premium annuity arrangements, be determined either according to an anticipated pattern of consideration payments or on the assumption that considerations payable will be a specified level amount, such as $100 or $1,000 per year;

Ins 2.15(7)(e) (e) If not specified in the contract, annuity payments shall be assumed to commence at age 65 or 10 years from issue, whichever is later;

Ins 2.15(7)(f) (f) A dividend scale or excess interest rate which has been publicly declared by the insurer with an effective date not more than two months subsequent to the date of declaration shall be considered a current dividend scale or a current excess interest rate.

Ins 2.15(8) (8) Disclosure requirements.

Ins 2.15(8)(a) (a) The insurer and its intermediaries shall provide, to all prospective purchasers of any contract or arrangement subject to this section, a buyer’s guide and a properly completed Preliminary Contract Summary or Contract Summary prior to accepting the applicant’s initial consideration for the annuity contract, or, in the case of a rider or provision, prior to acceptance of the applicant’s initial consideration for the associated insurance policy or annuity contract. Insurers which do not market contracts through an intermediary may provide the Contract Summary, and a buyer’s guide at the point of contract delivery provided they:

Ins 2.15(8)(a)1. 1. Guarantee to the contractholder the right to return the contract for a full refund of premium any time during a 30 day period commencing on the date such contractholder receives the Contract Summary and a buyer’s guide;

Ins 2.15(8)(a)2. 2. Alert the prospective contractholder, in advertisements or direct mail solicitations, of his or her right to obtain a buyer’s guide and a Preliminary Contract Summary prior to the sale.

Ins 2.15(8)(b) (b) The insurer and its intermediaries shall provide a Contract Summary upon delivery of the contract, if it has not been delivered beforehand;

Ins 2.15(8)(c) (c) The insurer and its intermediaries shall provide a buyer’s guide and a Contract Summary to individual prospective purchasers upon reasonable request;

Ins 2.15(8)(d) (d) Any statement provided subsequent to sale to a contractholder which purports to show the then current value of an arrangement subject to this section shall show the then current guaranteed cash surrender value or, if no guaranteed cash surrender value is provided the then current guaranteed paid-up annuity.

Ins 2.15(9) (9) General requirements.

Ins 2.15(9)(a) (a) Each insurer shall maintain at its home office or principal office a complete file containing one copy of each document authorized by the insurer for use pursuant to this section. The file shall contain one copy of each authorized form for a period of at least 3 years following the date of its last authorized use. The requirements of this paragraph are in addition to the requirements set forth in s. Ins 2.16 (30);

Ins 2.15(9)(b) (b) An intermediary shall inform the prospective purchaser, prior to commencing a sales presentation, that the intermediary is acting as an insurance intermediary and shall inform the prospective purchaser of the full name of the insurer which the intermediary is representing to the buyer. In sales situations in which an intermediary is not involved, the insurer shall identify its full name;

Ins 2.15(9)(c) (c) Terms such as financial planner, investment advisor, financial consultant, or financial counseling shall not be used in such a way as to imply that the insurance intermediary is generally engaged in an advisory business in which compensation is unrelated to sales, unless such is actually the case;

Ins 2.15(9)(d) (d) Any reference to dividends or to excess interest credits must include a statement that such dividends or credits are not guaranteed;

Ins 2.15(9)(f) (f) Recommendations made by any person subject to this section concerning the purchase or replacement of any arrangement subject to this section are subject to the requirements of s. Ins 2.16 (6);

Ins 2.15(9)(g) (g) No presentation of benefits may display guaranteed and non-guaranteed benefits as a single sum unless guaranteed benefits are shown separately in close proximity thereto and with equal prominence. The requirements of this paragraph are in addition to the requirements set forth in s. Ins 2.16 (21);

Ins 2.15(9)(h) (h) Sales promotion literature and contract forms shall not state or imply that annuity arrangements are the same as savings accounts or deposits in banking or savings institutions. The use of policies or certificates which resemble savings bank passbooks is prohibited. If savings accounts or deposits in banking and savings institutions are utilized in connection with such annuity arrangements, this shall not prohibit the use of an accurate description of the annuity arrangement.

Ins 2.15 History History: Cr. Register, October, 1980, No. 298, eff. 1-1-81; am. (1) and (2) (b) and appendix I, Register, June, 1982, No. 318, eff. 7-1-82; r. (11) under s. 13.93 (2m) (b) 16., Stats., Register, December, 1984, No. 348; r. and recr. (4) and appendix 1, am. (5) (intro.), (a), (i) and (j), (6) (intro.), (a), (j) and (k), (7) (intro.), (a), (8) (a), (b) and (c), cr. (6) (im) and (in), r. (9) (e) and (12), Register, July, 1987, No. 379, eff. 8-1-87; reprinted to correct error in appendix I, Register, October, 1987, No. 382; am. (2) (a), (3) (b) 5. and 6., (9) (a) and (g), r. and recr. (9) (f), r. (10), Register, July, 1989, No. 403, eff. 8-1-89; CR 14-075: am. (3) (b) 1., 2., (4) (c), (8) Register August 2015 No. 716, eff. 9-1-15; correction in (3) (b) 2. b., (8) (a) 1., 2. under s. 35.17, Stats. Register August 2015 No. 716.

Ins 2.16 Ins 2.16 Advertisements of and deceptive practices in life insurance and annuities.

Ins 2.16(1) (1) Purpose. This section safeguards the interests of prospective purchasers of life insurance and annuities by providing the prospective purchasers with clear and unambiguous statements, explanations, advertisements and written proposals concerning the life insurance policies and annuity contracts offered to them. The commissioner may best achieve this purpose by establishing certain minimum standards of and guidelines for conduct in the advertising and sale of life insurance and annuities. These minimum standards and guidelines prevent unfair competition among insurers and are conducive to the accurate presentation and description to the insurance buying public of policies or contracts of life insurance and annuities. This section interprets and implements, including but not limited to, the following Wisconsin statutes: ss. 601.01 (2) and (3) and 628.34, Stats. The requirements of this section are in addition to and not a substitute for the requirements set forth in ss. Ins 2.14, 2.15, and 2.17.

Ins 2.16(2) (2) Scope.

Ins 2.16(2)(a) (a) Unless otherwise provided under a particular provision of this section, the section applies to any person who makes, directly or indirectly on behalf of an insurer, fraternal benefit society, or intermediary, an advertisement, representation, or solicitation in this state of any insurance specified in s. Ins 6.75 (1) (a).

Ins 2.16(2)(b) (b) This section does not apply to:

Ins 2.16(2)(b)1. 1. Credit life insurance.

Ins 2.16(2)(b)2. 2. Group life insurance purchased, established, or maintained by an employer including a corporation, partnership, or sole proprietorship, or by an employee organization, or both, except for group life insurance purchased, established or maintained by these persons in connection with a multiple employer welfare arrangement as defined under 29 USC 1002 (40).

Ins 2.16(2)(b)3. 3. Life insurance policies issued in connection with pension and welfare plans as defined by and which are subject to the federal employee retirement income security act of 1974 (ERISA), 29 USC 1001 to 1461.

Ins 2.16(2)(b)4. 4. Variable life insurance policies under which the death benefits and cash values vary in accordance with unit values of investments held in a separate account.

Ins 2.16(2)(b)5. 5. Variable annuities.

Ins 2.16(2)(b)6. 6. Group annuity and pure endowment contracts purchased under a retirement plan or plans of deferred compensation established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or both.

Ins 2.16(2)(b)7. 7. Immediate annuity contracts, which are arrangements under which payments begin within 13 months of the issue date.

Ins 2.16(2)(b)8. 8. Annuity contracts issued in connection with employee benefit plans as defined by 29 USC 1002 (3) of the federal employee retirement income security act of 1974 (ERISA), except annuity contracts issued in connection with plans providing for the purchase of annuity contracts solely by reason of salary reduction agreements under 26 USC 403 (b) of the internal revenue code.

Ins 2.16(2)(b)9. 9. A policyholder’s deposit account established solely to facilitate payment of regular premiums.

Ins 2.16(2)(b)10. 10. Settlement options under life insurance or annuity contracts.

Ins 2.16(3) (3) Definitions. In this section:

Ins 2.16(3)(a) (a)

Ins 2.16(3)(a)1. 1. “Advertisement” means:

Ins 2.16(3)(a)1.a. a. Printed and published material, audio visual material and descriptive literature of an insurer or intermediary used in direct mail, newspapers, magazines, other periodicals, radio and TV scripts, billboards and similar displays, excluding advertisements prepared for the sole purpose of obtaining employees, intermediaries or agencies;

Ins 2.16(3)(a)1.b. b. Descriptive literature and sales aids of all kinds authored, issued, distributed or used by an insurer, intermediary or third party for presentation to members of the public, including but not limited to circulars, leaflets, booklets, depictions, illustrations and form letters. Descriptive literature and sales aids do not include material in house organs of insurers, communications within an insurer’s own organization not intended for dissemination to the public, individual communications of a personal nature, and correspondence between a prospective group or blanket policyholder and an insurer in the course of negotiating a group or blanket policy, and general announcements from group or blanket policyholders to eligible individuals that a contract has been written;

Ins 2.16(3)(a)1.c. c. Prepared sales talks, presentations and material for use by intermediaries and representations made by intermediaries in accordance therewith, excluding materials to be used solely by an insurer for the training and education of its employees or intermediaries; and

Ins 2.16(3)(a)1.d. d. Packaging, including but not limited to envelopes, used in connection with subd. 1. a., b., and c.

Ins 2.16(3)(a)2. 2. Advertisement does not include a policy summary as defined in s. Ins 2.14 (3) (d), the “buyer’s guide to life insurance” as set forth in s. Ins 2.14, an illustration as defined in s. Ins 2.17 (3) (i), a contract summary as defined in s. Ins 2.15 (4) (a), a preliminary contract summary as defined in s. Ins 2.15 (4) (b), and a buyer’s guide as defined in s. Ins 2.15 (4) (c).

Ins 2.16(3)(b) (b) “Analysis” means the separation of a life insurance policy or annuity contract into constituent parts for comparison, special emphasis, or other purposes.

Ins 2.16(3)(c) (c) “Appraisal” means an evaluation or estimate of the quality or other features of a life insurance policy or annuity contract. Appraisal does not include a statement which is also an endorsement or testimonial.

Ins 2.16(3)(d) (d) “Endorsement” means any statement promoting the insurer, its policy, or both, made by an individual, group of individuals, society, association or other organization which makes no reference to the endorser’s experience under the policy.

Ins 2.16(3)(e) (e) “Guaranteed interest rate” means the lowest rate of interest which an insurer may pay under the terms of a policy during the duration of the policy.

Ins 2.16(3)(f) (f) “Illustrated rate” means a rate shown in an advertisement, representation, or solicitation which an insurer may guarantee for a limited period of time, but not guarantee for the duration of the policy.

Ins 2.16(3)(g) (g) “Individual policy issued on a group basis” means an individual policy issued for which:

Ins 2.16(3)(g)1. 1. Coverage is provided to employees or members or classes of employees or members defined in terms of conditions pertaining to employment or membership in an association or other group which is eligible for franchise or group insurance as defined in s. 600.03 (22) and (23), Stats.;

Ins 2.16(3)(g)2. 2. The coverage is not available to the general public and can be obtained and maintained only because of the covered person’s membership in or connection with the group;

Ins 2.16(3)(g)3. 3. The employer, association or other group, or a designated person acting on behalf of one of these persons, pays premiums or subscription charges to the insurer; and

Ins 2.16(3)(g)4. 4. The employer, association or other group sponsors the insurance plan.

Ins 2.16(3)(h) (h) “Institutional advertisement” means an advertisement which is prepared solely to promote the reader’s or listener’s interest in the concept of life insurance or annuities, or of promoting the insurer sponsoring the advertisement, or both.

Ins 2.16(3)(i) (i) “Intermediary” has the meaning provided in s. 628.02 (1), Stats.

Ins 2.16(3)(j) (j) “Policy” means any document, including a policy, plan, contract, agreement, rider or endorsement, used to set forth in writing life insurance or annuity benefits.

Ins 2.16(3)(k) (k) “Representation” means any communication, other than an advertisement or solicitation, relating to an insurance policy, the insurance business, any insurer, or any intermediary.

Ins 2.16(3)(L) (L) “Solicitation” means an attempt to persuade a person to make an application for an insurance policy.

Ins 2.16(3)(m) (m) “Testimonial” means any statement made by a policyholder, certificate holder or other person covered by the insurer which promotes the insurer and its policy or contract by describing the person’s benefits, favorable treatment or other experience under the policy or contract.

Ins 2.16(4) (4) Application of this section.

Ins 2.16(4)(a) (a) The commissioner shall construe this section in a manner which does not unduly restrict, inhibit or retard the promotion, sale and expansion of life insurance policies or annuity contracts. The commissioner shall consider differences in the purposes served by various advertisements and in the insurance product being advertised when interpreting this section. When applying this section to a specific advertisement, the commissioner shall consider the detail, character, purpose, use and entire content of the advertisement.

Ins 2.16(4)(b) (b) The extent to which a person subject to this section shall disclose policy provisions in an advertisement will depend on the content, detail, character, purpose and use of the advertisement and the nature of any qualifications involved. The principal criterion is whether the advertisement has the capacity or tendency to mislead or deceive if such a provision is not disclosed.

Ins 2.16(4)(c) (c) The commissioner shall determine whether an advertisement has the capacity or tendency to mislead or deceive from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed.

Ins 2.16(5) (5) Advertisements, representations, and solicitations in general.

Ins 2.16(5)(a) (a) Advertisements, representations, and solicitations shall be truthful and not misleading in fact or in implication and shall accurately describe the policy, the insurance business, any insurer, or any intermediary to which they apply. No advertisement may contain words or phrases the meaning of which is clear only by implication or by familiarity with insurance terminology.

Ins 2.16(5)(b) (b) Oral representations and solicitations shall conform to the requirements of this section.

Ins 2.16(6) (6) Suitability of policies. No insurer or intermediary may recommend to a prospective buyer the purchase or replacement of any individual life insurance policy or annuity contract without reasonable grounds to believe that the recommendation is not unsuitable to the applicant. The insurer or intermediary shall make all necessary inquiries under the circumstances to determine that the purchase of the insurance is not unsuitable for the prospective buyer. This subsection does not apply to an individual policy issued on a group basis.

Ins 2.16(7) (7) Deceptive words, phrases or illustrations.

Ins 2.16(7)(a) (a) No person subject to this section may use an advertisement that exaggerates a benefit or minimizes cost by overstatement, understatement or incompleteness. No advertisement may omit information or contain words, phrases, statements, references or illustrations if the omission or use has the capacity, tendency, or effect of misleading or deceiving purchasers or prospective purchasers as to the nature or extent of any policy benefit payable, loss covered, premium payable or state or federal tax consequences. An advertisement referring to any policy benefit payable, loss covered, premium payable, or state or federal tax consequences shall be sufficiently complete and clear as to avoid deception or the capacity or tendency to mislead or deceive.

Ins 2.16(7)(b) (b) No advertisement may state or imply that life insurance arrangements are the same as savings accounts or deposits in banking or savings institutions. No person subject to this section may use policies which resemble savings bank passbooks. If savings accounts or deposits in banking and savings institutions are utilized in connection with life insurance arrangements, this paragraph does not prohibit the use of an accurate description of the life insurance arrangement.

Ins 2.16 Note Note: Annuity contracts are subject to the same limitations under s. Ins 2.15 (9) (h).

Ins 2.16(7)(c) (c) No advertisement may contain the terms “investment,” “investment plan,” “founder’s plan,” “charter plan,” “deposit,” “expansion plan,” “profit,” “profits,” “profit sharing,” “interest plan,” “savings,” “savings plan,” or other similar terms in connection with a policy in a context or under circumstances or conditions as to have the capacity or tendency to mislead a purchaser or prospective purchaser of the policy to believe that he or she will receive, or that it is possible that he or she will receive, something other than a policy or some benefit not available to other persons of the same class and equal expectation of life.

Ins 2.16(7)(d) (d) An advertisement may refer to immediate coverage or guaranteed issuance of a policy only if suitable administrative procedures exist so that the policy is issued within a reasonable time after the application is received.

Ins 2.16(7)(e) (e) No advertisement may refer to a policy or coverage as“special” unless a person subject to this section can show that a reasonable basis exists for the use of this term.

Ins 2.16(8) (8) Identity of insurer.

Ins 2.16(8)(a) (a) Each advertisement shall clearly identify the insurer. If an application is a part of the advertisement, the application shall show the name of the insurer.

Ins 2.16(8)(b) (b) No advertisement may contain a trade name, an insurance group designation, the name of the parent company of the insurer, the name of a government agency or program, the name of a department or division of an insurer, the name of an agency, the name of any other organization, a service mark, a slogan, a symbol or any other device which has the capacity or tendency to mislead or deceive as to the identity of the insurer or create the impression that an entity other than the insurer has any responsibility for the financial obligation under any policy.

Ins 2.16(8)(c) (c) No advertisement may contain any combination of words, symbols or materials which, by its content, phraseology, shape, color, nature or other characteristics, is so similar to combinations of words, symbols or materials used by federal, state or local government agencies that it tends to confuse or mislead prospective buyers into believing that the solicitation is in some manner connected with such a government agency.