Waiver of Premium Benefit
Some companies offer a benefit which will pay premiums for you if you become disabled. A charge is made for this benefit.
HOW MUCH SHOULD I BUY?
Before buying, ask yourself these questions:
1. How much annuity income will I need in addition to social security, pension savings and investments?
2. Will I need an income only for myself or also for someone else?
3. How much can I afford to pay in premiums?
4. How will the annuity contract fit in with my total financial planning?
HOW TO BUY AN ANNUITY
Buying an annuity contract is a major financial decision which should be considered carefully. The prospective purchaser of an annuity contract should consider the offerings of as many different companies and agents as possible.
CONTRACT SUMMARY
In addition to receiving this Buyer's Guide, you must receive either a Preliminary Contract Summary or a Contract Summary prior to the time you pay the initial premium. If you did not receive a Contract Summary with this Buyer's Guide, you must receive one when the contract is delivered or you can ask for one. You should review the contract summary thoroughly.
Accumulated values and surrender values under the contract are illustrated for various years on this summary. During the first few years, these values may be less than premiums paid. This is why an annuity contract should not be purchased for short term purposes.
Also illustrated are the yields on gross premiums at specified times. Yields take into account not only the interest credited under the contract, but also the effect of all charges. The yield on gross premiums is a figure you can use to compare annuity contracts. Be careful in comparing this yield with yields available on other investments. The tax treatment of annuity earnings is usually substantially different from that of earnings from other investments.
One reason for buying an annuity contract is to obtain an income, so you should review the life income figures.
Values and income figures may be shown on both a "guaranteed"and an "illustrated" basis. The guaranteed basis shows the minimum values and income which would be paid under the contract. The "illustrated" basis shows the values and income which would be paid if the current interest and benefit rates were to continue in effect. Since it is impossible to predict future interest and benefit rates, you will have to decide whether to rely on any illustrated basis values when making your purchase decision.
OTHER POINTS TO CONSIDER
Be certain you understand all charges that will be made and how they may reduce the value of the annuity.
Be certain you can afford the premium payments.
Check whether the annuity contract allows you to change the amount and frequency of your premium payments. Find out what happens if you stop paying premiums.
You may want to obtain and compare Contract Summaries for similar contracts from several companies. Comparing these should help you in your selection.
If you are buying an annuity contract for an Individual Retirement Account (IRA) or another tax deferred retirement program, make sure that you are eligible. Make sure that you understand any restrictions and tax implications connected with the program.
If you are shown a presentation which illustrates tax savings, be sure the assumptions, such as the tax bracket, apply in your case.
Some companies offer deposit fund arrangements with their life insurance policies or annuity contracts. These arrangements allow you to pay amounts in addition to your premiums that will be accumulated at interest in much the same way as under a deferred fixed annuity contract.
READ THE CONTRACT
When you receive your new annuity contract read it carefully. Ask the agent or the company for an explanation of anything you do not understand.
If you have a specific complaint or cannot get the answers you need from the agent or company, please contact the
Office of the Commissioner of Insurance
P.O. Box 7873
Madison, WI 53707-7873
Phone: (608) 266-0103
or
1-800-236-8517
This Guide Does Not Endorse Any Company Or Policy
Ins 2.16
Ins 2.16 Advertisements of and deceptive practices in life insurance and annuities. Ins 2.16(1)
(1)
Purpose. This section safeguards the interests of prospective purchasers of life insurance and annuities by providing the prospective purchasers with clear and unambiguous statements, explanations, advertisements and written proposals concerning the life insurance policies and annuity contracts offered to them. The commissioner may best achieve this purpose by establishing certain minimum standards of and guidelines for conduct in the advertising and sale of life insurance and annuities. These minimum standards and guidelines prevent unfair competition among insurers and are conducive to the accurate presentation and description to the insurance buying public of policies or contracts of life insurance and annuities. This section interprets and implements, including but not limited to, the following Wisconsin statutes: ss.
601.01 (2) and
(3) and
628.34, Stats. The requirements of this section are in addition to and not a substitute for the requirements set forth in
ss. Ins 2.14,
2.15, and
2.17.
Ins 2.16(2)(a)(a) Unless otherwise provided under a particular provision of this section, the section applies to any person who makes, directly or indirectly on behalf of an insurer, fraternal benefit society, or intermediary, an advertisement, representation, or solicitation in this state of any insurance specified in
s. Ins 6.75 (1) (a).
Ins 2.16(2)(b)2.
2. Group life insurance purchased, established, or maintained by an employer including a corporation, partnership, or sole proprietorship, or by an employee organization, or both, except for group life insurance purchased, established or maintained by these persons in connection with a multiple employer welfare arrangement as defined under
29 USC 1002 (40).
Ins 2.16(2)(b)3.
3. Life insurance policies issued in connection with pension and welfare plans as defined by and which are subject to the federal employee retirement income security act of 1974 (ERISA),
29 USC 1001 to
1461.
Ins 2.16(2)(b)4.
4. Variable life insurance policies under which the death benefits and cash values vary in accordance with unit values of investments held in a separate account.
Ins 2.16(2)(b)6.
6. Group annuity and pure endowment contracts purchased under a retirement plan or plans of deferred compensation established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or both.
Ins 2.16(2)(b)7.
7. Immediate annuity contracts, which are arrangements under which payments begin within 13 months of the issue date.
Ins 2.16(2)(b)8.
8. Annuity contracts issued in connection with employee benefit plans as defined by
29 USC 1002 (3) of the federal employee retirement income security act of 1974 (ERISA), except annuity contracts issued in connection with plans providing for the purchase of annuity contracts solely by reason of salary reduction agreements under
26 USC 403 (b) of the internal revenue code.
Ins 2.16(2)(b)9.
9. A policyholder's deposit account established solely to facilitate payment of regular premiums.
Ins 2.16(3)(a)1.a.
a. Printed and published material, audio visual material and descriptive literature of an insurer or intermediary used in direct mail, newspapers, magazines, other periodicals, radio and TV scripts, billboards and similar displays, excluding advertisements prepared for the sole purpose of obtaining employees, intermediaries or agencies;
Ins 2.16(3)(a)1.b.
b. Descriptive literature and sales aids of all kinds authored, issued, distributed or used by an insurer, intermediary or third party for presentation to members of the public, including but not limited to circulars, leaflets, booklets, depictions, illustrations and form letters. Descriptive literature and sales aids do not include material in house organs of insurers, communications within an insurer's own organization not intended for dissemination to the public, individual communications of a personal nature, and correspondence between a prospective group or blanket policyholder and an insurer in the course of negotiating a group or blanket policy, and general announcements from group or blanket policyholders to eligible individuals that a contract has been written;
Ins 2.16(3)(a)1.c.
c. Prepared sales talks, presentations and material for use by intermediaries and representations made by intermediaries in accordance therewith, excluding materials to be used solely by an insurer for the training and education of its employees or intermediaries; and
Ins 2.16(3)(b)
(b) "Analysis" means the separation of a life insurance policy or annuity contract into constituent parts for comparison, special emphasis, or other purposes.
Ins 2.16(3)(c)
(c) "Appraisal" means an evaluation or estimate of the quality or other features of a life insurance policy or annuity contract. Appraisal does not include a statement which is also an endorsement or testimonial.
Ins 2.16(3)(d)
(d) "Endorsement" means any statement promoting the insurer, its policy, or both, made by an individual, group of individuals, society, association or other organization which makes no reference to the endorser's experience under the policy.
Ins 2.16(3)(e)
(e) "Guaranteed interest rate" means the lowest rate of interest which an insurer may pay under the terms of a policy during the duration of the policy.
Ins 2.16(3)(f)
(f) "Illustrated rate" means a rate shown in an advertisement, representation, or solicitation which an insurer may guarantee for a limited period of time, but not guarantee for the duration of the policy.
Ins 2.16(3)(g)
(g) "Individual policy issued on a group basis" means an individual policy issued for which:
Ins 2.16(3)(g)1.
1. Coverage is provided to employees or members or classes of employees or members defined in terms of conditions pertaining to employment or membership in an association or other group which is eligible for franchise or group insurance as defined in s.
600.03 (22) and
(23), Stats.;
Ins 2.16(3)(g)2.
2. The coverage is not available to the general public and can be obtained and maintained only because of the covered person's membership in or connection with the group;
Ins 2.16(3)(g)3.
3. The employer, association or other group, or a designated person acting on behalf of one of these persons, pays premiums or subscription charges to the insurer; and
Ins 2.16(3)(g)4.
4. The employer, association or other group sponsors the insurance plan.
Ins 2.16(3)(h)
(h) "Institutional advertisement" means an advertisement which is prepared solely to promote the reader's or listener's interest in the concept of life insurance or annuities, or of promoting the insurer sponsoring the advertisement, or both.
Ins 2.16(3)(j)
(j) "Policy" means any document, including a policy, plan, contract, agreement, rider or endorsement, used to set forth in writing life insurance or annuity benefits.
Ins 2.16(3)(k)
(k) "Representation" means any communication, other than an advertisement or solicitation, relating to an insurance policy, the insurance business, any insurer, or any intermediary.
Ins 2.16(3)(L)
(L) "Solicitation" means an attempt to persuade a person to make an application for an insurance policy.
Ins 2.16(3)(m)
(m) "Testimonial" means any statement made by a policyholder, certificate holder or other person covered by the insurer which promotes the insurer and its policy or contract by describing the person's benefits, favorable treatment or other experience under the policy or contract.
Ins 2.16(4)(a)(a) The commissioner shall construe this section in a manner which does not unduly restrict, inhibit or retard the promotion, sale and expansion of life insurance policies or annuity contracts. The commissioner shall consider differences in the purposes served by various advertisements and in the insurance product being advertised when interpreting this section. When applying this section to a specific advertisement, the commissioner shall consider the detail, character, purpose, use and entire content of the advertisement.
Ins 2.16(4)(b)
(b) The extent to which a person subject to this section shall disclose policy provisions in an advertisement will depend on the content, detail, character, purpose and use of the advertisement and the nature of any qualifications involved. The principal criterion is whether the advertisement has the capacity or tendency to mislead or deceive if such a provision is not disclosed.
Ins 2.16(4)(c)
(c) The commissioner shall determine whether an advertisement has the capacity or tendency to mislead or deceive from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed.
Ins 2.16(5)
(5) Advertisements, representations, and solicitations in general. Ins 2.16(5)(a)(a) Advertisements, representations, and solicitations shall be truthful and not misleading in fact or in implication and shall accurately describe the policy, the insurance business, any insurer, or any intermediary to which they apply. No advertisement may contain words or phrases the meaning of which is clear only by implication or by familiarity with insurance terminology.
Ins 2.16(5)(b)
(b) Oral representations and solicitations shall conform to the requirements of this section.
Ins 2.16(6)
(6) Suitability of policies. No insurer or intermediary may recommend to a prospective buyer the purchase or replacement of any individual life insurance policy or annuity contract without reasonable grounds to believe that the recommendation is not unsuitable to the applicant. The insurer or intermediary shall make all necessary inquiries under the circumstances to determine that the purchase of the insurance is not unsuitable for the prospective buyer. This subsection does not apply to an individual policy issued on a group basis.
Ins 2.16(7)
(7) Deceptive words, phrases or illustrations. Ins 2.16(7)(a)(a) No person subject to this section may use an advertisement that exaggerates a benefit or minimizes cost by overstatement, understatement or incompleteness. No advertisement may omit information or contain words, phrases, statements, references or illustrations if the omission or use has the capacity, tendency, or effect of misleading or deceiving purchasers or prospective purchasers as to the nature or extent of any policy benefit payable, loss covered, premium payable or state or federal tax consequences. An advertisement referring to any policy benefit payable, loss covered, premium payable, or state or federal tax consequences shall be sufficiently complete and clear as to avoid deception or the capacity or tendency to mislead or deceive.
Ins 2.16(7)(b)
(b) No advertisement may state or imply that life insurance arrangements are the same as savings accounts or deposits in banking or savings institutions. No person subject to this section may use policies which resemble savings bank passbooks. If savings accounts or deposits in banking and savings institutions are utilized in connection with life insurance arrangements, this paragraph does not prohibit the use of an accurate description of the life insurance arrangement.
Ins 2.16 Note
Note: Annuity contracts are subject to the same limitations under s.
Ins 2.15 (9) (h).
Ins 2.16(7)(c)
(c) No advertisement may contain the terms "investment,""investment plan," "founder's plan," "charter plan," "deposit,""expansion plan," "profit," "profits," "profit sharing," "interest plan," "savings," "savings plan," or other similar terms in connection with a policy in a context or under circumstances or conditions as to have the capacity or tendency to mislead a purchaser or prospective purchaser of the policy to believe that he or she will receive, or that it is possible that he or she will receive, something other than a policy or some benefit not available to other persons of the same class and equal expectation of life.
Ins 2.16(7)(d)
(d) An advertisement may refer to immediate coverage or guaranteed issuance of a policy only if suitable administrative procedures exist so that the policy is issued within a reasonable time after the application is received.
Ins 2.16(7)(e)
(e) No advertisement may refer to a policy or coverage as"special" unless a person subject to this section can show that a reasonable basis exists for the use of this term.
Ins 2.16(8)(a)(a) Each advertisement shall clearly identify the insurer. If an application is a part of the advertisement, the application shall show the name of the insurer.
Ins 2.16(8)(b)
(b) No advertisement may contain a trade name, an insurance group designation, the name of the parent company of the insurer, the name of a government agency or program, the name of a department or division of an insurer, the name of an agency, the name of any other organization, a service mark, a slogan, a symbol or any other device which has the capacity or tendency to mislead or deceive as to the identity of the insurer or create the impression that an entity other than the insurer has any responsibility for the financial obligation under any policy.
Ins 2.16(8)(c)
(c) No advertisement may contain any combination of words, symbols or materials which, by its content, phraseology, shape, color, nature or other characteristics, is so similar to combinations of words, symbols or materials used by federal, state or local government agencies that it tends to confuse or mislead prospective buyers into believing that the solicitation is in some manner connected with such a government agency.
Ins 2.16(8)(d)
(d) No advertisement may refer to an affiliate of the insurer without disclosing that the 2 organizations are separate legal entities.
Ins 2.16(8)(e)
(e) No advertisement may indicate an address for an insurer in any manner that may mislead or deceive as to the insurer's identity or licensing status. An advertisement which indicates an address for an insurer other than that of its home office shall clearly identify the address other than that of its home office and clearly disclose the actual city and state of domicile of the insurer.
