Chapter 04. Solicitation of Annuity and Deposit Fund Contracts

The purpose of this chapter is to require insurers to deliver to prospects for annuity contracts or for deposit funds accepted in conjunction with life insurance policies or annuity contracts, information which helps the prospect select an annuity or deposit fund, or both, appropriate to the prospect's needs, improves the prospect's understanding of the basic features of the plan under consideration and improves the prospect's ability to evaluate the relative benefits of similar plans.

This chapter does not prohibit the use of additional material which is not in violation of this chapter or any other regulation or statute.

To the extent provided here, this chapter shall apply to any solicitation, negotiation, or procurement of annuity contracts or deposit funds accepted in conjunction with individual life insurance policies or with annuity contracts which are subject to this chapter, occurring within this State. The chapter shall apply to an issuer of life insurance policies or annuity contracts including fraternal benefit societies.

This chapter shall apply to:

This chapter does not apply to:

For the purposes of this chapter, “contract summary” means a written statement describing the elements of the annuity contract and deposit fund, including but not limited to:

The contract summary shall be a separate document. All information required to be disclosed shall be set out in such a manner as not to minimize or render any portion obscure. Any amounts which remain level for 2 or more contract years may be represented by a single number if it is clearly indicated what amounts are applicable for each contract year. Amounts in §A(4), (6), (7), and (9) of this regulation shall, in the case of flexible premium annuity contracts, be determined either according to an anticipated pattern of consideration payments or on the assumption that considerations payable will be $1,000 per year. If not specified in the contract, annuity payments shall be assumed to commence at age 65 or 10 years from issue, whichever is later. Zero amounts shall be displayed as zero and may not be displayed as blank spaces.

The insurer shall provide to all prospective purchasers a contract summary before accepting the applicant's initial consideration for the annuity contract, or in the case of a deposit fund, before acceptance of the applicant's initial consideration for the associated life insurance policy or annuity contract, unless the annuity contract or associated life insurance policy for which the application is made provides for an unconditional refund period of at least 10 days or unless the contract summary contains such an unconditional refund offer, in which event the contract summary shall be delivered with or before the delivery of the annuity contract or associated life insurance policy.

The insurer shall provide a contract summary to a prospective purchaser upon request.

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 chapter. This 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.

An agent shall inform the prospective purchaser, before commencing a sales presentation, that the agent is acting as a life insurance agent and shall inform the prospective purchaser of the full name of the insurance company which the agent is representing to the buyer. In sales situations in which an agent is not involved, the insurer shall identify its full name.

Terms such as “financial planner”, “investment advisor”, “financial consultant”, “financial analyst”, “financial counsellor”, and the like, may not be used by the agent in the name of his agency, in letterheads, logos, or in advertising or solicitation material, or in sales presentations soliciting insurance to mislead or in any way that implies that his compensation is unrelated to insurance sales, unless this is actually the case.

A reference to dividends or to excess interest credits shall include a statement that these dividends or credits are not guaranteed.

A presentation of benefits may not display guaranteed and non-guaranteed benefits as a single sum unless guaranteed benefits are shown separately in proximity and with equal prominence.

Sales promotion literature and contract forms may not state or imply that annuity contracts or deposit funds are the same as savings accounts or deposits in banking or savings institutions. The use of passbooks which resemble savings bank passbooks is prohibited.

Failure of an insurer to provide or deliver a contract summary as provided in Regulation .05 of this chapter shall constitute an omission which misrepresents the benefits, advantages, conditions, or terms of an annuity contract or of an insurance policy.

An agent shall be held accountable for any contract summary or other materials which he used in connection with the solicitation. If any of these materials is prepared by a consulting computer firm, the agent shall personally review and sign it before presenting it to his prospect.

An insurer is charged with the duty of supervising every agent for whom it has applied for a license and shall be held accountable for the actions of its agents unless it proves to the satisfaction of the Commissioner that it exercised appropriate supervision and the agent acted contrary to its instructions.

Any insurer, agent, representative, officer, or employee of an insurer who fails to comply with the requirements of this chapter shall be subject to such disciplinary action and penalties as may be appropriate under Insurance Article, Annotated Code of Maryland. This action may include the suspension or revocation of the license of the insurer or of the agent or both. The Commissioner may also impose monetary fines of $100 to $50,000 on an insurer and of $25 to $500 on an agent for each offense. In addition, the Commissioner may order the insurer or the agent, or both, to make restitution to any person who has suffered financial injury or damage as a result of any violation of this chapter by the insurer or agent.