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TITLE 28INSURANCE
PART 1TEXAS DEPARTMENT OF INSURANCE
CHAPTER 21TRADE PRACTICES
SUBCHAPTER BADVERTISING, CERTAIN TRADE PRACTICES, AND SOLICITATION
DIVISION 1INSURANCE ADVERTISING
RULE §21.113Rules Pertaining Specifically to Accident and Health Insurance Advertising and Health Maintenance Organization Advertising

(a) Coverage details. An invitation to inquire that specifies either the dollar amount of benefit payable or the period of time during which the benefit is payable shall contain a provision in effect as follows: "For specific costs and further details of the coverage, including exclusions, any reductions or limitations and the terms under which the policy may be continued in force, see your agent or write to the company."

(b) Illustration of rates. Subject to the Insurance Code Chapter 1214 and the Insurance Code Chapter 541 Subchapter B, an invitation to inquire concerning a health benefit plan may include rate information without including information about all benefit exclusions and limitations so long as any rate mentioned in any advertisement disseminated under this subsection indicates the age, gender, and geographic location on which that rate is based and so long as the advertisement includes prominent disclaimers clearly indicating that:

  (1) the rates are illustrative only;

  (2) a person should not send money to the issuer of the health benefit plan in response to the advertisement;

  (3) a person cannot obtain coverage under the health benefit plan until the person completes an application for coverage; and

  (4) benefit exclusions and limitations may apply to the health benefit plan.

(c) Identification of policy.

  (1) The form number or numbers of the policy advertised shall be clearly identified in an invitation to contract.

  (2) If an advertisement refers to various benefits that are contained in two or more policies or riders, but excepting group master policies, the advertisement shall disclose that such benefits are provided only through a combination of such policies or riders.

  (3) An advertisement may not use the word "plan" without first identifying the subject as an "insurance plan" or an "HMO plan," as appropriate.

(d) Description of benefits.

  (1) An invitation to contract referring to a dollar amount, a period of time for which a benefit is payable, the cost of the policy, or a specific policy benefit or the loss for which such benefit is payable shall also disclose those exclusions, reductions, and limitations affecting the basic provisions of the policy, without which the advertisement would have the capacity and tendency to mislead or deceive.

  (2) If a policy pays varying amounts of benefits for the same loss occurring under different conditions or that pays benefits only when a loss occurs under certain conditions, any reference to these benefits in an invitation to contract shall be accompanied by a clear and conspicuous disclosure of the different or limited conditions.

  (3) No advertisement may refer to a benefit payable under a "family group" policy if the full amount of the benefit is not payable upon the occurrence of the contingency insured against to each member of the family, unless clear and conspicuous disclosure of such fact is made in the advertisement.

  (4) No advertisement may be used that represents or implies:

    (A) that the condition of the applicant's or insured's health prior to, or at the time of issuance of a policy, or thereafter, will not be considered by the insurer in issuing the policy or in determining its liability or benefits to be furnished for or in the settlement of a claim if such is not a fact;

    (B) If an insurer requires a medical examination for a specified policy, the advertisement, if it is an invitation to contract, shall disclose that a medical examination is required.

  (5) An invitation to contract for a policy which provides coverage for loss due to accident only for a specified period of time from its effective date shall state this fact clearly and conspicuously.

  (6) If any covered benefits are, by the terms of the policy, limited to a certain age group or are reduced at a certain age, an invitation to contract shall clearly and conspicuously disclose such fact.

  (7) An advertisement may not contain representations of an aggregate amount payable without clear and conspicuous disclosure in close conjunction therewith of any maximum daily benefit and maximum time limit.

  (8) No advertisement of a policy providing benefits for which payment is conditioned upon confinement in a hospital, extended care facility, or at home may advertise that the amount of the benefit is payable on a monthly or weekly basis if, in fact, the amount of the benefit payable is based upon a daily pro rata basis relating to the number of days of confinement unless such statements of monthly or weekly benefit amounts are followed immediately by equally prominent statements of the benefit payable on a daily basis. For example, either of the following statements is acceptable: "$1,000 a Month ($33.33 a Day)" or "$33.33 a Day ($1,000 a Month)." If the policy contains a limit on the number of days of coverage provided, such limit must appear in the advertisement.

  (9) An advertisement offering assistance or information concerning Medicare may not state or imply that an obligation is imposed by the receipt of such information.

  (10) An advertisement of benefits payable in conjunction with Medicare shall disclose the Medicare benefits (Part A or B) they are designed to supplement.

  (11) A Medicare-related advertisement shall state in a prominent place the following or similar words: "Not connected with or endorsed by the United States government or the federal Medicare program."

  (12) References to Medicare may not be used in such a manner in an advertisement so as to be misleading or deceptive.

  (13) Advertisements referenced as being "Important Notices" or similar language and directed primarily to Medicare recipients or senior citizens are presumed to be misleading or having the capacity or tendency to mislead unless shown otherwise.

  (14) The words, numerals, and phrases "all," "100%," "full," "complete," "comprehensive," "unlimited," "up to," "as high as," "this policy will pay your hospital and surgical bills," or "this policy will replace your income," or similar words, numerals, and phrases may not be used to exaggerate any benefit beyond the terms of the policy, but may be used only in a manner as fairly and accurately describes the benefit.

  (15) An advertisement may not contain descriptions of a policy limitation, exclusion, or reduction, worded or stated in a manner to imply that it is a benefit, for example, describing a waiting period as a "benefit builder," or stating "even pre-existing conditions are covered after two years." Words and phrases used in an advertisement to describe policy limitations, exclusions, and reductions shall accurately describe the negative features of such limitations, exclusions, and reductions of the policy offered.

  (16) No advertisement of a benefit, if payment of the benefit is conditioned upon confinement in a hospital or similar extended care facility, or at home, may use words or phrases such as "tax free," "extra cash," "extra income," "extra pay," or similar words or phrases. In those cases such words and phrases have the capacity, tendency, or effect of misleading the public and cause the belief that the policy advertised enables a profit to be made from being hospitalized. This section prohibits the misleading use of the phrase "tax free," but it does not prohibit the use of complete and accurate terminology explaining the Internal Revenue Service rules applicable to the taxation of accident and sickness benefits. Prominence either by caption, lead-in, boldface, or large type shall not be given in any manner to any statements relating to the tax status of such benefits.

  (17) Except as permitted under §21.109(a) of this division (relating to Unlawful Inducement), an advertisement may not list goods and services other than those set out in the policy as possible benefits.

  (18) A policy covering only one disease or a list of specific diseases or accidents may not be advertised so as to imply coverage beyond the terms of the policy. Synonymous terms may not be used to refer to any disease to imply broader coverage than that provided.

  (19) An advertisement that is an invitation to contract for a limited benefit policy, a supplemental coverage policy, or a nonconventional coverage policy, as defined in Chapter 3, Subchapter S of this title (relating to Minimum Standards and Benefits and Readability for Accident and Health Insurance Policies), shall clearly and conspicuously, in prominent type, state in language identical to or substantially similar to whichever of the following is applicable "THIS IS A LIMITED BENEFIT POLICY," "THIS IS A CANCER ONLY POLICY," "THIS IS A SUPPLEMENTAL POLICY," or "THIS IS AN AUTOMOBILE ACCIDENT ONLY POLICY." The insurer or agent shall use the foregoing statement to clearly advise the public of the nature of the policy.

(e) Exceptions, reductions, and limitations.

  (1) If a policy contains a waiting, elimination, probationary, or similar time period between the effective date of the policy and the effective date of coverage under the policy, or a time period between the date a loss occurs and the date benefits begin to accrue for such loss, an invitation to contract shall disclose the existence of such periods.

  (2) An advertisement may not use the words "only," "just," "merely," "minimum," or similar words or phrases to unfairly describe the applicability or any exclusions, limitations, or reductions, such as "This policy is subject to the following minimum exclusions and reductions."

(f) Pre-existing condition.

  (1) An advertisement that states or implies that pre-existing conditions may apply must define the applicable pre-existing condition provisions.

  (2) An advertisement that is an invitation to contract shall, in accurate terms, disclose the extent to which a loss is not covered if the cause of the loss is traceable to a condition existing prior to the effective date of the policy.

(g) Disclosure of policy provisions relating to renewability, cancellability, and termination.

  (1) An advertisement that is an invitation to contract shall disclose the provisions in respect of renewability, cancellability, and termination, and each modification of benefits, covered losses or premiums either because of age or for other reasons, in a manner that does not minimize or render obscure the qualifying conditions.

  (2) An advertisement for a policy stating or implying that the policy is "guaranteed renewable" shall:

    (A) have a clear and conspicuous statement that coverage may terminate at certain ages, if such is a fact; and

    (B) include, in a prominent place, a statement indicating that rates for the policy may change if the advertisement suggests or implies that rates for the product will not change. Such statement must generally identify the manner in which rates may change, such as by age, by health status, by class, or through application of other general criteria.

  (3) No advertisement may represent or imply that an insurance policy may be continued in effect indefinitely or for any period of time, if the policy provides that it may not be renewed or may be cancelled by the insurer, or terminated under any circumstances over which the insured has no control, during the period of time represented.

  (4) The term "noncancellable" or derivation thereof may not be used by an insurer or agent to describe a policy if the insurer has a right to periodically, by individual or class, revise rates or premiums.

  (5) An invitation to contract shall contain a notice stating that the person to whom the policy is issued is permitted to return the policy within 10 days (or more as stated in the policy) of its delivery to that person and to have the premium paid refunded.

(h) Description of premiums, cost, and interest.

  (1) Consideration paid or to be paid for individual insurance, including policy fees, shall be in all instances described as premium, consideration, cost, or payments.

  (2) Consideration paid or to be paid for group insurance, including enrollment fees, dues, administrative fees, membership fees, service fees, and other similar charges paid by the employees, shall be disclosed in an invitation to contract advertisement as a part of the cost and consideration.

  (3) An advertisement may not offer a policy that utilizes a reduced initial premium rate in a manner that overemphasizes the availability and the amount of the initial reduced premium. If an insurer charges an initial premium that differs in amount from the amount of the renewal premium payable, the advertisement may not display the amount of the reduced initial premium more prominently than the renewal premium.

  (4) A reduced initial or first-year premium may not be described by an insurer or agent as constituting free insurance for a period of time.

  (5) An advertisement of an insurance product may not imply that it is "a low cost plan" or use other similar words or phrases without a substantial present or past cost record for the policy advertised or similar policy, demonstrating a composite of lower production, administrative, and claim cost resulting in a low premium rate to the public.

  (6) The words "deposits," "savings," "investment," and other phrases used to describe premiums may not be used by an insurer or agent to hide or untruthfully minimize the cost of the hazards insured against.

Cont'd...

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