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Virginia Administrative Code
Title 14. Insurance
Agency 5. State Corporation Commission, Bureau of Insurance
Chapter 41. Rules Governing Advertisement of Life Insurance and Annuities
11/23/2024

14VAC5-41-60. Nonguaranteed policy elements.

A. An advertisement shall not utilize or describe nonguaranteed policy elements in a manner that is misleading or has the capacity or tendency to mislead. In this connection, analogies and comparisons between dividends payable on shares of stock and dividends payable under a policy are prohibited unless the advertisement fully, clearly, and accurately describes the differences.

B. An advertisement shall not state or imply that the payment or amount of nonguaranteed policy elements is guaranteed. If nonguaranteed policy elements are illustrated, they shall be based on the insurer's current scale, and the illustration shall contain a prominent statement to the effect that the nonguaranteed policy elements are not to be construed as guarantees of amounts to be paid in the future.

C. An advertisement shall not state or imply that illustrated dividends or other nonguaranteed policy elements under either or both a participating policy or pure endowment will be or can be sufficient at any future time to assure without the future payment of premiums, the receipt of benefits, such as a paid-up policy, unless the advertisement clearly and precisely explains the benefits or coverage provided at that time and the conditions required for that to occur.

D. An advertisement shall not state or imply that dividends are other than mainly a refund or return of part of the premium paid or that dividends are guaranteed. An advertisement may if true state or imply that dividends are dependent on the investment earnings, lapse experience, mortality experience, and expense experience of the insurer.

E. An advertisement shall not state or imply that a prospective policyholder will receive dividends or other nonguaranteed benefits, or special or favored treatment in the allowance or payment of amounts or other monetary benefits not expressly provided in the policy.

F. An advertisement shall not refer to dividends as "tax free" or use words of similar import, unless the tax treatment of dividends is fully explained and the nature of the dividend as a return of premium is indicated clearly.

G. If a dividend illustration is determined in a manner involving substantial deviation from the contribution principle, an advertisement showing illustrated dividends shall prominently display the following caution: "The illustrated dividends for this policy were determined in a manner inconsistent with generally accepted practices."

Statutory Authority

§§ 12.1-13 and 38.2-223 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 27, Issue 14, eff. July 1, 2011.

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