SPECIFIC COMPLIANCE STANDARDS FOR ACCIDENT
AND HEALTH INSURANCE
§ 51.41. Benefits payable.
(a) An advertisement of a benefit for which payment is conditional upon confinement in a hospital or similar facility may not use words or phrases such as ‘‘tax free’’; ‘‘extra cash’’; ‘‘extra income’’; ‘‘extra pay’’; or substantially similar words or phrases because the words and phrases have the capacity, tendency or effect of misleading the public into believing that the policy advertised will, in some way, enable them to make a profit from being hospitalized. An advertisement may use complete and accurate terminology explaining the IRS rules applicable to the taxation of types of accident and sickness benefits.
(b) An advertisement which represents benefits which may be payable under a contract shall provide in close conjunction therewith, either a statement of applicable limitation of time over which the benefits will be paid, or a statement of the number of payments which will be made if by the terms of the contract payment of benefits is limited in time or number. The statement shall be made each time the benefit is so listed, if the failure to do so would result in the capacity or tendency to mislead or deceive.
(c) An advertisement of a hospital or other similar facility confinement benefit may not represent or imply that the amount of the benefit is payable on a monthly or weekly basis when, in fact, the amount of the benefit payable is based upon a daily pro rata basis relating to the number of days of confinement.
(d) An advertisement of a hospital indemnity shall state that the benefits are payable during hospital confinement only.
(e) Words or phrases such as ‘‘up to’’ or ‘‘as high as’’ which are descriptive of upper limits of dollar amounts payable for represented loss or expenses may not be used in an advertisement unless the contract provides benefit payments up to such an amount in all cases for such losses or expenses actually sustained by a policyholder, or unless there is full and conspicuous disclosure in close conjunction with such words or phrases of either of the following:
(1) The complete schedule of payments provided by the contract.
(2) The specific loss or expense for which the advertised dollar amount is provided by the contract, and an equally prominent disclosure that benefits provided by the contract for losses or expenses of the kind advertised vary in amount depending on the particular kind of loss or expense incurred, and where the advertisement refers to specific dollar amounts in connection with surgical benefits, it shall set forth at least six surgical procedures for which benefits are provided by the contract, including the operations which pay the minimum and maximum benefits, and additional operations representative of the more frequently performed surgical procedures.
(f) An advertisement may not represent or imply that claim settlements by the company are ‘‘liberal’’ or ‘‘generous’’ or use words of similar import, or that claim settlements are or will be beyond the actual terms of the contract. An unusual amount paid for a unique claim for the policy advertised is misleading and may not be used.
(g) An advertisement of a contract covering only one disease or a list of specified diseases may not imply coverage beyond the terms of the contract. Synonymous terms may not be used to refer to a disease so as to imply broader coverage than is the fact.
(h) An advertisement for a contract providing benefits for specified illnesses only, or for specified accidents only, such as automobile accidents, shall clearly and conspicuously in prominent type state the limited nature of the policy. The statement shall be worded in language identical to, or substantially similar to the following: ‘‘THIS IS A LIMITED POLICY’’; ‘‘THIS IS AN AUTOMOBILE ACCIDENT ONLY POLICY.’’
(i) An advertisement may not offer a contract which utilizes a reduced initial premium rate when the use is misleading or deceptive. Over-emphasizing the availability and the amount of the initial reduced premium shall be considered misleading or deceptive. When a company charges an initial premium that differs in amount from the amount of the renewal premium payable on the same mode, the advertisement may not display the amount of the reduced initial premium either more frequently or more prominently than the renewal premium, and both the initial reduced premium and the renewal premium must be stated in juxtaposition in each portion of the advertisement where the initial reduced premium appears.
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