The purpose of this chapter is to require carriers to deliver to purchasers of life insurance information which will improve the purchaser's: Ability to select the most appropriate plan of life insurance for the purchaser's needs; and Understanding of the basic features of the policy which has been purchased or which is under consideration. This chapter does not prohibit the use of additional material which is not in violation of this chapter or any other Maryland regulation or statute. In this chapter, the following terms have the meanings indicated. Terms Defined. “Buyer's guide” means the most current version of the Life Insurance Buyer's Guide adopted by the National Association of Insurance Commissioners (NAIC). “Carrier” means: An insurer; or A fraternal benefit society. “Current scale of nonguaranteed elements” means a formula or other mechanism that produces values for an illustration as if there is no change in the basis of those values after the time of illustration. “Element” means any of the following: A premium; A credited interest rate, including any bonus; A benefit; A value; A non-interest-based credit; A charge; and Any item in a formula used to determine any of the items listed in §B(4)(a)—(f) of this regulation. “Generic name” means a short title that is descriptive of the premium and benefit patterns of a policy or a rider. Nonguaranteed Element. “Nonguaranteed element” means an element that is subject to carrier discretion and not guaranteed at issue. “Nonguaranteed element” includes any element calculated using a nonguaranteed element. “Policy data” means a display or schedule of numerical values, both guaranteed and nonguaranteed for each policy year, or a series of designated policy years, of the following information: Illustrated annual, other periodic, and terminal dividends; Premiums; Death benefits; Cash surrender values; and Endowment benefits. “Policy summary” means a written statement describing the elements of the policy. “Preneed funeral contract or prearrangement” means an agreement by or for an individual before that individual's death relating to the purchase or provision of specific funeral or cemetery merchandise or services. With the exception of §C of this regulation, this chapter applies to a solicitation, negotiation, or procurement of life insurance occurring within this State. Regulation .05D of this chapter applies only to an existing nonexempt policy held by a policyowner residing in Maryland. Unless otherwise specifically included, this chapter does not apply to: Individual and group annuity contracts; Credit life insurance; Group life insurance, except for disclosures relating to preneed funeral contracts or prearrangements; Life insurance policies issued in connection with pension and welfare plans as defined by and subject to the federal Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §1001 et seq., as amended; or Variable life insurance under which the amount or duration of the life insurance varies according to the investment experience of a separate account. A carrier shall include in a policy summary all of the following: A prominently placed title as follows: STATEMENT OF POLICY COST AND BENEFIT INFORMATION; The name and address of the insurance producer, or, if an insurance producer is not involved, a statement of the procedure to be followed in order to receive responses to inquiries regarding the policy summary; The full name and home office or administrative office address of the carrier in which the life insurance policy is to be or has been written; The generic name of the basic policy and each rider; The following amounts, when applicable, for the first 5 policy years and representative policy years thereafter sufficient to clearly illustrate the premium and benefit patterns, including at least one age from 60 years old through 65 years old and policy maturity: The annual premium for the basic policy; The annual premium for each optional rider; The amount payable upon death at the beginning of the policy year regardless of the cause of death, other than suicide or other specifically enumerated exclusions, which is provided by the basic policy and each optional rider, with benefits provided under the basic policy and each rider shown separately; The total guaranteed cash surrender values at the end of the year with values shown separately for the basic policy and each rider; and Any endowment amounts payable under the policy which are not included under cash surrender values above; and The date on which the policy summary is prepared. The policy summary shall include the effective policy loan annual interest rate, if the policy contains a policy loan provision, specifying whether the effective policy loan annual interest rate is applied in advance or in arrears. If the policy loan interest rate is adjustable, the policy summary shall also indicate that the annual percentage rate will be determined by the carrier in accordance with the provisions of the policy and the applicable law. Except as provided in §B of this regulation, the carrier shall provide a buyer's guide to all prospective purchasers before accepting the applicant's initial premium or premium deposit. If the policy for which application is made contains an unconditional refund provision of at least 10 days, the carrier shall provide the buyer's guide with the policy or before delivery of the policy. Policy Forms Not Marketed with an Illustration. When a carrier issues a form not marketed with an illustration, the carrier shall comply with the requirements in §C(2) of this regulation. Requirements for Forms Not Marketed with an Illustration. The carrier shall provide a policy summary, showing guarantees only, to prospective purchasers. The policy summary shall consist of a separate document with all required information set out in a manner that does not minimize or render any portion of the summary obscure. Any amounts that remain level for 2 or more years of the policy may be represented by a single number if it is clearly indicated what amounts are applicable for each policy year. The amounts listed in Regulation .04A(5) of this chapter shall be listed in total, not on a per thousand or per unit basis. If more than one insured is covered under one policy or rider, death benefits shall be displayed separately: For each insured; or For each class of insureds if death benefits do not differ within the class. Zero amounts shall be displayed numerically or as a blank space. Delivery of the policy summary shall be consistent with the time for delivery of the buyer's guide as specified in §§A and B of this regulation. Requirements Applicable to Existing Policies. Upon request by the policyowner, the carrier shall furnish either policy data or an in-force illustration as follows: For policies issued prior to the effective date of COMAR 31.09.09, the carrier shall furnish, at the carrier's option, policy data, or an in-force illustration which meets the requirements of COMAR 31.09.09; For policies issued after the effective date of COMAR 31.09.09, which were declared not to be used with an illustration, the carrier shall furnish policy data limited to guaranteed values if the carrier has chosen not to furnish an in-force illustration meeting the requirements of COMAR 31.09.09; If the policy was issued after the effective date of COMAR 31.09.09 and declared to be used with an illustration, an in-force illustration shall be provided; The policy data shall be provided for 20 consecutive years beginning with the previous policy anniversary, unless otherwise requested; The statement of the policy data shall include: Nonguaranteed elements according to the current scale; The amount of outstanding policy loans; and The current policy loan interest rate; and Policy values shown on the statement of the policy data shall be based on the current application of nonguaranteed elements in effect at the time of the request. The carrier may charge a reasonable fee, not to exceed $50, for preparation of the statement. When a carrier changes its method of determining scales of nonguaranteed elements on existing policies, it shall, not later than when first payment is made on the new basis, advise each affected policy owner residing in Maryland of this change and of its implication for affected policies. The requirement in §D(3) of this regulation does not apply to policies for which the amount payable upon death under the basic policy as of the date when advice would otherwise be required does not exceed $5,000. If the carrier makes a material revision in the terms and conditions under which it will limit its right to change any nonguaranteed factor, it shall, not later than the first policy anniversary following the material revision, advise each affected policy owner residing in Maryland. At the time an application is made for a preneed funeral contract or prearrangement that is funded by a life insurance policy, and before accepting the applicant's initial premium or deposit, the carrier shall adequately disclose to the applicant, in writing, the following information: The fact that a life insurance policy is involved or being used to fund a prearrangement; The nature of the relationship among the soliciting insurance producer or insurance producers, the provider of the funeral or cemetery merchandise or services, the administrator, and any other individual; The relationship of the life insurance policy to the funding of the prearrangement, and the nature and existence of any guarantees relating to the prearrangement; The impact of the prearrangement on any: Changes in the life insurance policy, including but not limited to changes in the assignment, beneficiary designation, or use of the proceeds; Penalties to be incurred by the policyholder as a result of failure to make premium payments; and Penalties to be incurred by the policyholder or monies to be received as a result of cancellation, or surrender of the life insurance policy; A list of all merchandise and services which are applied or contracted for in the prearrangement and all relevant information concerning the price of the funeral services, including an indication that the purchase price is either guaranteed at the time of purchase or to be determined at the time of need; All relevant information concerning what occurs and whether any entitlements or obligations arise if there is a difference between the proceeds of the life insurance policy and the amount actually needed to fund the prearrangement; Any penalties or restrictions, including but not limited to: Geographic restrictions; or The inability of the provider to perform on the delivery of merchandise, services or the prearrangement guarantee; and If a sales commission or other form of compensation is being paid: The fact that a sales commission or other form of compensation is being paid; and The identity of the individuals or entities to whom the sales commission or other form of compensation is paid. The disclosure requirements of this regulation apply to the issuance or delivery of certificates, as well as to the master policy. Each carrier shall maintain at its home office or principal office a complete file containing one copy of each document authorized by the carrier for use pursuant to this chapter. The file described in §A of this regulation shall contain one copy of each authorized form for a period of 3 years following the date of its last authorized use unless otherwise provided by this chapter. An insurance producer shall inform the prospective purchaser, before commencing a life insurance sales presentation, that the insurance producer is acting as a life insurance producer and shall inform the prospective purchaser of the full name of carrier which the insurance producer is representing to the buyer. In sales situations in which an insurance producer is not involved, the carrier shall identify its full name. Unless an insurance producer's compensation is unrelated to insurance sales, the terms “financial planner”, “investment advisor”, “financial consultant”, “financial analyst”, “financial counselor”, and other similar terms may not be used by the insurance producer in such a way as to imply that the insurance producer's compensation is unrelated to insurance sales in any of the following: The name of the insurance producer's agency; Letterheads; Logos; Advertising or solicitation material; or Any sales presentation soliciting insurance. Section E of this regulation is not intended to preclude individuals who hold a formal recognized financial planning or consultant designation from using this designation even when they are only selling insurance. Section E of this regulation is not intended to preclude individuals from citing membership in a recognized trade or professional association which has terms listed in §E of this regulation as part of its name. An individual citing membership in a recognized trade or professional association, if authorized only to sell insurance products, shall disclose that fact. An insurance producer may not charge an additional fee for services that are customarily associated with the solicitation, negotiation, or servicing of policies. Any reference to nonguaranteed elements shall include a statement that the element is not guaranteed and is based on the carrier's current scale of nonguaranteed elements. If a nonguaranteed element would be reduced by the existence of a policy loan, a statement to that effect shall be included in any reference to nonguaranteed elements. A presentation or depiction of a policy issued after the effective date of COMAR 31.09.09 that includes nonguaranteed elements over a period of years shall be governed by COMAR 31.09.09. Failure of a carrier to provide or deliver a buyer's guide or a policy summary as provided in Regulation .04 of this chapter shall constitute an omission that misrepresents the benefits, advantages, conditions, or terms of an insurance policy. An insurance producer shall be held accountable for any policy summary, comparison statement, or other materials which the insurance producer uses in connection with the solicitation of insurance. If any material in §B of this regulation is prepared by a consulting firm, the insurance producer shall personally review and sign the material before presenting it to the insurance producer's prospect. A carrier is charged with the duty of supervising every insurance producer for whom the carrier has applied for a license and shall be held accountable for the actions of the carrier's insurance producers unless the carrier proves to the satisfaction of the Commissioner that the carrier exercised appropriate supervision and the insurance producer acted contrary to the carrier's instructions. If the Commissioner determines that a carrier, insurance producer, representative, officer, or employee of a carrier failed to comply with the requirements of this chapter, the Commissioner shall impose penalties as authorized under the Insurance Article, Annotated Code of Maryland, including: Suspending or revoking the license of the carrier, insurance producer, or both; Assessing a penalty of not less than $100, but not more than $125,000, on a carrier and not less than $100, but not more than $500, on an insurance producer for each offense; and Requiring the carrier or insurance producer to make restitution to an individual who has suffered financial injury or damage as a result of a violation of this chapter by the carrier or insurance producer. Insurance Article, §§2-109(a)(1) and 27-202, Annotated Code of Maryland Effective date: January 1, 1980 (6:15 Md. R. 1271) Chapter recodified from COMAR 09.30.27 to COMAR 31.15.03 effective September 7, 1998 (25:18 Md. R. 1439) Regulations .01—.08, Solicitation of Life Insurance, repealed and new Regulations .01—.08, Life Insurance Disclosure, adopted effective May 18, 2009 (36:10 Md. R. 719) Regulation .05C amended effective December 6, 2018 (45:24 Md. R. 1164) Regulation .06A amended effective June 19, 2017 (44:12 Md. R. 589)