Sec. 31.15.02.03. Advertisements of Benefits Payable, Losses Covered, or Premiums Payable

A. Deceptive Words, Phrases, or Illustrations. Words, phrases, or illustrations may not be used in a manner which misleads or has the tendency to deceive as to the extent of any policy benefit payable, loss covered, or premium payable. An advertisement relating to any policy benefit payable, loss covered, or premium payable shall be sufficiently complete and clear as to avoid deception or the tendency to deceive.

Agency Note:

(1) The words and phrases "all", "full", "complete", comprehensive", "unlimited", "up to", "as high as", "this policy will pay your hospital and surgical bills", or "this policy will replace your income", or similar words and phrases may not be used so as to exaggerate any benefit beyond the terms of the policy, but may be used only in such manner as fairly to describe the benefit.

(2) A policy covering only one disease or a list of specified diseases may not be advertised so as to imply coverage beyond the terms of the policy. Synonymous terms may not be used to refer to any disease so as to imply broader coverage than is the fact.

(3) The benefits of a policy which pays varying amounts for the same loss occurring under different conditions or which pays benefits only when a loss occurs under certain conditions may not be advertised without disclosing the limited conditions under which the benefits referred to are provided by the policy.

(4) Phrases such as "this policy pays $1,800 for hospital room and board expenses" shall be considered incomplete unless the maximum daily benefit and the maximum time limit for hospital room and board expenses are indicated.

B. Exceptions, Reductions, and Limitations. When an advertisement refers to any dollar amount, period of time for which any benefit is payable, cost of policy, or specific policy benefit or the loss for which the benefit is payable, it shall disclose those exceptions, reductions, and limitations affecting the basic provisions of the policy without which the advertisement would have the tendency to mislead or deceive.

Agency Note:

(1) The term "exception" means any provision in a policy whereby coverage for a specified hazard is entirely eliminated. It is a statement of a risk not assumed under the policy.

(2) The term "reduction" means any provision which reduces the amount of the benefit. A risk of loss is assumed but payment upon the occurrence of the loss is limited to some amount or period less than would be otherwise payable had the reduction clause not been used.

(3) The term "limitation" means any provision which restricts coverage under the policy other than an exception or a reduction.

(4) Waiting, Elimination, Probationary, or Similar Periods. When a policy contains a time period between the effective date of the policy and the effective date of coverage under the policy or a time period between the date a loss occurs and the date benefits begin to accrue for the loss, an advertisement covered by §B of this regulation shall disclose the existence of these periods.

(5) Preexisting Conditions.

(a) An advertisement covered by §B of this regulation shall disclose the extent to which any loss is not covered if the cause of the loss is traceable to a condition existing before the effective date of the policy.

(b) When a policy does not cover losses traceable to preexisting conditions, an advertisement of the policy may not state or imply that the applicant's physical condition or medical history will not affect the issuance of the policy or payment of a claim under it. This limits the use of the phrase "no medical examination required" and phrases of similar import.