The solicitation or sale of annuities or deposit fund contracts not in conformity with this chapter shall be deemed an Unfair Trade Practice in violation of Insurance Article, Title 27, Annotated Code of Maryland. 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: Individual deferred annuities other than: Variable annuities, Investment annuities; and Deposit funds (that is, arrangements under which amounts to accumulate at interest are paid in addition to life insurance premiums or annuity considerations under provisions of individual life insurance policies or annuity contracts). This chapter does not apply to: Group annuity contracts whose cost is borne in whole or in part by the annuitant's employer or by an association of which the annuitant is a member, provided the employer or the association bears all or part of the cost of the same or similar contracts insuring not less than ten employees or members. The cost of a contract may not be deemed to be borne by an annuitant's employer to the extent the annuitant's salary is reduced or the annuitant foregoes a salary increase. Immediate annuity contracts. A single advance payment of specific premiums equal to the discounted value of these premiums. A policyholder's deposit account established primarily to facilitate payment of regular premiums and when the anticipated balance of this account does not exceed twice the sum of the premiums payable in 1 year on all policies for which premiums are being paid from this account. 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: A prominently placed title as follows: STATEMENT OF BENEFIT INFORMATION. (This shall be followed by an identification of the annuity contract or deposit fund, or both, to which the statement applies.) The name and address of the insurance agent or, if no agent is involved, a statement of the procedure to be followed in order to receive responses to inquiries regarding the contract summary. The full name and home office or administrative office address of the insurer which will issue the annuity contract or administer the deposit fund. The death benefits for the deposit fund, and for the annuity contract during the deferred period, and the form of the annuity payout. In the case where a choice of annuity payout form is provided, this item shall show the payout options guaranteed and the form of annuity payout selected in §A(6), (7), and (9) of this regulation. A prominent statement that the contract does not provide cash surrender values if that is the case. The amount of the guaranteed annuity payments at the scheduled commencement of the annuity, based on the assumption that all scheduled considerations are paid and there are no prior withdrawals from or partial surrenders of the contract and no indebtedness to the insurer on the contract. Illustrative Annuity Payments. On the same basis as §A(6) of this regulation except for guarantees, illustrative annuity payments not greater in amount than those based on(i) the current dividend scale and the interest rate currently used to accumulate dividends under these contracts, or the current excess interest rate credited by the insurer, and (ii) current annuity purchase rates. A dividend scale or excess interest rate which has been publicly declared by the insurer with an effective date not more than 2 months after the date of declaration shall be considered a current dividend scale or current excess interest rate. For annuity contracts or deposit funds for which guaranteed cash surrender values at any duration are less than the total considerations paid, a prominent statement that this contract or fund may result in loss if kept for only a few years, together with a reference to the schedule of guaranteed cash surrender values required by §A(9)(c) of this regulation. The following amounts, when applicable, for the first 5 contract years and representative contract years thereafter sufficient to clearly illustrate the patterns of considerations and benefits, including but not limited to the 10th and 20th contract years and at least one age from 60 through 65 or the scheduled commencement of annuity payments, if any, whichever is earlier: The gross annual or single consideration for the annuity contract. Scheduled annual or single deposit for the deposit fund, if any. 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. Values for a deposit fund shall be shown separately from those for a basic contract. Total Illustrative Cash Value. The total illustrative cash value or paid-up annuity at the end of the year, not greater in amount than that based on (aa) the current dividend scale and the interest rate currently used to accumulate dividends under these contracts or the current excess interest rate credited by the insurer, and (bb) current annuity purchase rates. A dividend scale or excess interest rate which has been publicly declared by the insurer with an effective date not more than 2 months after the date of declaration shall be considered a current dividend scale or current excess interest rate. 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 these values are illustrations and are not guaranteed. The date on which the contract summary is prepared. 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. Insurance Article, §§2-109 and 27-202, Annotated Code of Maryland Effective date: January 1, 1980 (6:15 Md. R. 1271) Chapter recodified from COMAR 09.30.28 to COMAR 31.15.04 effective September 7, 1998 (25:18 Md. R. 1439)