Subject 120-2-26 FINANCING OF PREMIUMS OF LIFE INSURANCE POLICIES
This Regulation is made and promulgated by the undersigned Insurance Commissioner pursuant to the authority set forth in Section 33-2-9 of the Insurance Laws of this State, and especially Chapter 33-6 of the Georgia Code Annotated.
The purpose of this Regulation is:
|(1)||To implement the Insurance Laws of this State with respect to the financing of premiums of life insurance in this State;|
|(2)|| To protect the interests
of the life insurance public by establishing minimum standards of conduct to be
observed in the financing of life insurance policies, and by making available
full and clear information on which an applicant for life insurance can make a
decision in his own best interest by reducing the opportunity for
The following Regulation and standards shall be observed and followed in the financing of life insurance policy premiums. Failure to observe said Regulation and standards is hereby deemed an unfair method of competition and an unfair and deceptive act or practice prohibited by Chapter 33-6 of the Insurance Laws of the State of Georgia.
This Regulation shall not apply to a credit life insurance policy financed by lending institutions, or merchants financing consumer products.
In the event the insured is a minor, and executes a promissory note for the payment of part or all of the first year's premium, such note must be witnessed or acknowledged by at least one of the insured's parents, legal guardian, or adult spouse.
|(1)|| The fact that a promissory note is to be
executed by the insured must:
|(2)||A down payment of at least ten dollars ($10.00) must be paid by the insured at the time the application is signed.|
|(3)||The down payment must be paid by the applicant in cash, or its equivalent, and any payment made directly or indirectly by the agent to or for the benefit of the applicant in connection with the sale shall be presumed to be a rebate or special inducement.|
|(1)||If the payee of the Note is an insurer or any affiliate thereof, except the agent, a copy of the Note must be delivered with the policy at the time of delivery.|
|(2)||If the payee is the agent, a copy of the Note must be delivered with the policy at the time of policy delivery.|
|(3)||Delivery must be in person by a company representative.|
|(4)||In the event that personal delivery is, for good reason, impractical, delivery may be made by use of the United States Certified Mail - Return Receipt Requested. Delivery must be to addressee only.|
|(5)|| Upon delivery, a policy
receipt or acceptance form must be executed which recites that:
|(6)||It shall be the responsibility of the company representative to read the policy receipt or acceptance form to the insured. In the event that delivery is made by use of the United States Mail as in Item 4 above, the Company shall request the insured to sign and return the policy receipt or acceptance form.|
|(1)|| If the Company, or any affiliate thereof,
except the agent, be the payee and the promissory note is sold or otherwise
transferred, the Company shall:
|(2)|| If the agent, or a party other than the
Company or any affiliate thereof be the payee:
|(3)||If the payee or intended assignee of the Note is the insurer or any affiliate thereof, except the agent, the promissory note shall not be sold or otherwise transferred by the payee, nor any commissions on the sale paid to the agent until the form outlined in Item 2 above has been received in the home office of the Company.|
|(1)||The maximum amount of any financing arrangement which may be executed in connection with such a transaction shall be in accordance with reasonable and sound underwriting and business practices.|
|(2)||A financed program shall not be sold to an undergraduate on a basis where premiums would come due prior to the anticipated date of graduation by the insured.|
|(1)||The cash values shown at the time of presentation shall be a specimen of the policy being offered and not for a larger policy. (Example: if $10,000 policy is being sold, values for this policy shall be shown - not those for a $50,000 or $75,000 program.) This leads to misunderstanding on the part of the insured when he receives his $10,000 policy and the cash values are less than those shown at the time of sale.|
|(2)||In the event a sales presentation is made for an amount of insurance greater than that actually sold, then an approximate summary must be given to the insured for the exact amount of the policy sold, not later than the date of delivery.|
|(1)|| An agent or field representative who is
licensed by this State as a life insurance agent shall not represent, refer to,
or hold himself out to the public under any special title which would obscure
the fact that he is a licensed agent of the Company. Identification as an agent
or representative of a special division of such company may be permitted,
|(1)||Impressions left with the applicant that he will receive the first year's insurance free will be considered an improper presentation of the sales transaction by the agent involved.|
|(2)||Repeated complaints of "free insurance" for the first year shall be considered strong evidence of failure on the part of the agent to clearly explain the note process and its payment.|
In the event an insured expresses a desire to cancel such a policy and premium arrangement, the Georgia Insurance Department will expect the cooperation of the Company and its agents in bringing such matters to a satisfactory conclusion as expeditiously as possible.
If it should be determined that the Company or agent has violated this Regulation, or if it is determined that there has been a material misrepresentation of the contract, the policy may, at the option of the insured, be returned to the Company with a signed request for release. The said policy will then be cancelled, and the applicant released from any liability, and refund made of any down payment.
Any insurer, agent, representative, officer, or employee of such insurer, failing to comply with the requirements of this Regulation shall be subject to such penalties as may be appropriate under the Insurance Laws of this State.
This Regulation shall become effective August 1, 1972.