rules of department of insurance, financial...

CODE OF STATE REGULATIONS 1JOHN R. ASHCROFT (4/30/17)Secretary of State

Rules ofDepartment of Insurance,Financial Institutions andProfessional Registration

Division 400—Life, Annuities and HealthChapter 5—Advertising and Material Disclosures

Title Page

20 CSR 400-5.100 Advertisements of Life Insurance and Annuities .........................................3

20 CSR 400-5.200 Deceptive Practices or Misrepresentations in the Solicitation of Life Insurance .................................................................................7

20 CSR 400-5.300 Solicitation of Insurance on Military Installations in Missouri ........................8

20 CSR 400-5.305 Scope and Definitions for Military Sales Practices Regulation ........................8

20 CSR 400-5.310 Deceptive or Unfair Military Sales Practices .............................................9

20 CSR 400-5.400 Life Insurance and Annuities Replacement ..............................................11

20 CSR 400-5.410 Disclosure of Material Facts in Annuity Sales (Rescinded March 30, 2017) ..............................................................23

20 CSR 400-5.500 Life Insurance Sold to College Students .................................................23

20 CSR 400-5.600 Missouri Life and Health Insurance Guaranty Association ...........................23

20 CSR 400-5.700 Accident and Sickness Insurance Advertising ...........................................26

20 CSR 400-5.800 Annuity Disclosure...........................................................................30

20 CSR 400-5.900 Suitability in Annuity Transactions........................................................52


Chapter 5—Advertising and Material Disclosures 20 CSR 400-5

Title 20—DEPARTMENT OFINSURANCE, FINANCIAL

INSTITUTIONS ANDPROFESSIONAL REGISTRATIONDivision 400—Life, Annuities and Health

Chapter 5—Advertising and MaterialDisclosures

20 CSR 400-5.100 Advertisements of LifeInsurance and Annuities

PURPOSE: The purpose of this rule is to setforth minimum standards and guidelines toassure a full and truthful disclosure to thepublic of material and relevant information inthe advertising of life insurance policies andannuity contracts. This rule was adopted pur-suant to the provisions of section 374.045,RSMo and effectuates and aids in the inter-pretation of sections 375.934 and 375.936,RSMo.

(1) Definitions. For the purpose of this rule—(A) “Advertisement” means material

designed to create public interest in life insur-ance or annuities or in an insurer or to inducethe public to purchase, increase, modify,reinstate, or retain a policy including:

1. Printed and published material,audio-visual material, and descriptive litera-ture of an insurer used in direct mail, news-papers, magazines, radio and televisionscripts, telemarketing scripts, billboards andsimilar displays, and the Internet or any othermass communication media;

2. Descriptive literature and sales aids ofall kinds authored by the insurer, its insur-ance producers, or third parties, issued, dis-tributed, or used by the insurer or insuranceproducer; including, but not limited to, circu-lars, leaflets, booklets, depictions, illustra-tions, and form letters;

3. Material used for the recruitment,training, and education of an insurer’s insur-ance producers which is designed to be usedor is used to induce the public to purchase,increase, modify, reinstate, borrow on,replace, or retain a policy;

4. Prepared sales talks, presentations,and materials for use by insurance producers;

(B) “Advertisement” for the purpose of thisrule shall not include—

1. Communications or materials usedwithin an insurer’s own organization and notintended for dissemination to the public;

2. Communications with policyholdersother than material urging policyholders topurchase, increase, modify, reinstate, borrowon, replace, or retain a policy; and

3. A general announcement from agroup or blanket policyholder to eligible indi-viduals on an employment or membership listthat a policy or program has been written or

arranged; provided the announcement clearlyindicates that it is preliminary to the issuanceor a booklet explaining the proposed cover-age;

(C) “Determinable elements” means ele-ments that are derived from processes ormethods that are guaranteed at issue and notsubject to company discretion, but where thevalues or amounts cannot be determined untilsome point after issue. These elementsinclude the premiums, credited interest rates(including any bonus), benefits, values, non-interest based credits, charges, or elements offormulas used to determine any of these.These elements may be described as guaran-teed but not determined at issue. An elementis considered determinable if it was calculat-ed from underlying determinable elementsonly, or from both determinable and guaran-teed elements;

(D) “Guaranteed elements” means the pre-miums, benefits, values, credits or chargesunder a policy, or elements of formulas usedto determine any of these that are guaranteedand determined at issue;

(E) “Insurance producer” means a personrequired to be licensed under the laws of thisstate to sell, solicit, or negotiate insurance;

(F) “Insurer” means any individual, cor-poration, association, partnership, reciprocalexchange, inter-insurer, Lloyd’s, fraternalbenefit society, and any other legal entitywhich is defined as an “insurer” in the insur-ance code of this state or issues life insuranceor annuities in this state and is engaged in theadvertisement of a policy;

(G) “Nonguaranteed elements” means thepremiums, credited interest rates (includingany bonus), benefits, values, non-interestbased credits, charges, or elements of formu-las used to determine any of these, that aresubject to company discretion and are notguaranteed at issue. An element is considerednonguaranteed if any underlying nonguaran-teed elements are used in its calculation;

(H) “Policy” means any policy, plan, cer-tificate, including a fraternal benefit certifi-cate, contract, agreement, statement of cover-age, rider, or endorsement which provides forlife insurance or annuity benefits;

(I) “Preneed funeral contract or prear-rangement” shall have the same meaning asset forth in section 436.405.1(8), RSMo.

(J) “Registered product” means an annuitycontract or life insurance policy subject to theprospectus delivery requirements of the Secu-rities Act of 1933.

(2) Applicability.(A) This rule shall apply to any life insur-

ance or annuity advertisement intended fordissemination in this state. In variable con-tracts and other registered products wheredisclosure requirements are established pur-

suant to federal regulation, this rule shall beinterpreted so as to eliminate conflict withfederal regulation.

(B) All advertisements, regardless of bywhom written, created, designed, or present-ed, shall be the responsibility of the insurer,as well as the producer who created or pre-sented the advertisement. Insurers shallestablish and at all times maintain a system ofcontrol over the content, form, and method ofdissemination of all advertisements of itspolicies. A system of control shall includeregular and routine notification, at least oncea year, to agents, brokers, and others autho-rized by the insurer to disseminate advertise-ments of the requirement and procedures forcompany approval prior to the use of anyadvertisements that is not furnished by theinsurer and that clearly sets forth within thenotice the most serious consequence of notobtaining the required prior approval.

(3) Form and Content of Advertisements.(A) Advertisements shall be truthful and

not misleading in fact or by implication. Theform and content of an advertisement of apolicy shall be sufficiently complete and clearso as to avoid deception. It shall not have thecapacity or tendency to mislead or deceive.Whether an advertisement has the capacity ortendency to mislead or deceive as used in thisrule shall be determined by the director fromthe overall impression that the advertisementmay be reasonably expected to create upon aperson of average education or intelligencewithin the segment of the public to which itis directed.

(B) No advertisement shall use the terms“investment,” “investment plan,” “founder’splan,” “charter plan,” “deposit,” “expansionplan,” “profit,” “profits,” “profit sharing,”“interest plan,” “savings,” “savings plan,”“private pension plan,” “retirement plan,”“preneed contract,” “preneed funeral con-tract,” “prearrangement”, or other similarterms in connection with a policy in a contextor under such circumstances or conditions asto have the capacity or tendency to mislead apurchaser or prospective purchaser of suchpolicy to believe that s/he will receive, or thatit is possible that s/he will receive, somethingother than a policy or some benefit not avail-able to other persons of the same class andequal expectation of life.

(4) Disclosure Requirements.(A) The information required to be dis-

closed by this rule shall not be minimized,rendered obscure, or presented in an ambigu-ous fashion or intermingled with the text ofthe advertisement so as to be confusing ormisleading.

(B) No advertisement shall omit materialinformation or use words, phrases, statements,

4 CODE OF STATE REGULATIONS (2/28/17) JOHN R. ASHCROFT

Secretary of State

20 CSR 400-5—DEPARTMENT OF INSURANCE,FINANCIAL INSTITUTIONS ANDPROFESSIONAL REGISTRATION Division 400—Life, Annuities and Health

references, or illustrations if this omission orthe use has the capacity, tendency, or effect ofmisleading or deceiving purchasers orprospective purchasers as to the nature orextent of any policy benefit payable, loss cov-ered, premium payable, or state or federal taxconsequences. The fact that the policy offeredis made available to a prospective insured forinspection prior to consummation of the sale,or an offer is made to refund the premium ifthe purchaser is not satisfied or that the policyor contract includes a “free look” period thatsatisfies or exceeds regulatory requirements,does not remedy misleading statements.

(C) In the event an advertisement uses“non-medical,” “no medical examinationrequired,” or similar terms where issue is notguaranteed, terms shall be accompanied by afurther disclosure of equal prominence and injuxtaposition thereto to the effect that issuanceof the policy may depend upon the answers tothe health questions set forth in the applica-tion.

(D) An advertisement shall not use as thename or title of a life insurance policy anyphrase that does not include the words “lifeinsurance” unless accompanied by other lan-guage clearly indicating it is life insurance.An advertisement shall not use as the name ortitle of an annuity contract any phrase thatdoes not include the word “annuity” unlessaccompanied by other language clearly indi-cating it is an annuity. An annuity advertise-ment shall not refer to an annuity as a CDannuity, or deceptively compare an annuity toa certificate of deposit.

(E) An advertisement shall prominentlydescribe the type of policy advertised.

(F) An advertisement of an insurance policymarketed by direct response techniques shallnot state or imply that because there is noinsurance producer or commission involvedthere will be a cost saving to prospective pur-chasers unless that is the fact. No cost savingsmay be stated or implied without justificationsatisfactory to the director prior to use.

(G) An advertisement for a life insurancepolicy containing graded or modified benefitsshall prominently display any limitation ofbenefits. If the premium is level and coveragedecreases or increases with age or duration,that fact shall be prominently disclosed. Anadvertisement of or for a life insurance policyunder which the death benefit varies with thelength of time the policy has been in forceshall accurately describe and clearly callattention to the amount of minimum deathbenefit under the policy.

(H) An advertisement for the types of poli-cies described in subsections (4)(F) and(4)(G) of this rule shall not use the words“inexpensive,” “low cost,” or other phrase orwords of similar import when the policiesbeing marketed are guaranteed issue.

(I) Premiums.1. An advertisement for a policy with

non-level premiums shall prominentlydescribe the premium changes.

2. An advertisement in which the insur-er describes a policy where it reserves theright to change the amount of premium dur-ing the policy term, but which does notprominently describe this feature, is decep-tive and misleading and is prohibited.

3. An advertisement shall not contain astatement or representation that premiumspaid for a life insurance policy can be with-drawn under the terms of the policy. Refer-ence may be made to amounts paid into anadvance premium fund, which are intended topay premiums at a future time, to the effectthat they may be withdrawn under the condi-tions of the prepayment agreement. Referencemay also be made to withdrawal rights underany unconditional premium refund offer.

4. An advertisement that represents thata pure endowment benefit has a “profit” or“return” on the premium paid, rather than apolicy benefit for which a specified premiumis paid, is deceptive and misleading and isprohibited.

5. An advertisement shall not representin any way that premium payments will not berequired for each year of the policy in orderto maintain the illustrated death benefits,unless that is the fact.

6. An advertisement shall not use theterm “vanish,” or “vanishing premium,” or asimilar term that implies the policy becomespaid up, to describe a plan using nonguaran-teed elements to pay a portion of future pre-miums.

(J) Analogies between a life insurance pol-icy’s or annuity contract’s cash values andsavings accounts or other investments andbetween premium payments and contribu-tions to savings accounts or other investmentsshall be complete and accurate. An advertise-ment shall not emphasize the investment ortax features of a life insurance policy to sucha degree that the advertisement would mis-lead the purchaser to believe the policy isanything other than a life insurance policy oran annuity contract.

(K) An advertisement shall not state orimply in any way that interest charged on apolicy loan or the reduction of death benefitsby the amount of outstanding policy loan isunfair, inequitable, or in any manner anincorrect or improper practice.

(L) If nonforfeiture values are shown inany advertisement, the values must be showneither for the entire amount of the basic lifepolicy death benefit or for each one thousanddollars ($1,000) of the initial death benefit.

(M) The words “free,” “no cost,” “with-out cost,” “no additional cost,” “at no extracost,” or words of similar import shall not be

used with respect to any benefit or servicebeing made available with a policy unlesstrue. If there is no charge to the insured, thenthe identity of the payor shall be prominentlydisclosed. An advertisement may specify thecharge for a benefit or a service or may statethat a charge is included in the premium oruse other appropriate language.

(N) No insurance producer may use termssuch as “financial planner,” “investmentadviser,” “financial consultant,” “financialcounseling,” “seller,” “preneed seller,” or“preneed agent” in such a way as to implythat he or she is generally engaged in an advi-sory business in which compensation is unre-lated to sales unless that actually is the case.This provision is not intended to precludepersons who hold some form of formal rec-ognized financial planning or consultant des-ignation from using this designation. Thisprovision also is not intended to preclude per-sons who are members of a recognized tradeor professional association having such termsas part of its name from citing the member-ship, providing that a person citing the mem-bership, if authorized only to sell insuranceproducts, shall disclose that fact. This provi-sion does not permit persons to charge anadditional fee for services that are customar-ily associated with the solicitation, negotia-tion, or servicing of policies.

(O) Nonguaranteed Elements.1. An advertisement shall not utilize or

describe nonguaranteed elements in a mannerthat is misleading or has the capacity or ten-dency to mislead.

2. An advertisement shall not state orimply that the payment or amount ofnonguaranteed elements is guaranteed.Unless otherwise specified in sections375.1500 to 375.1527, RSMo, if nonguaran-teed elements are illustrated, they shall bebased on the insurer’s current scale and theillustration shall contain a statement to theeffect that they are not to be construed asguarantees or estimates of amounts to be paidin the future.

3. Unless otherwise specified in sections375.1500 to 375.1527, RSMo, an advertise-ment that includes any illustrations or state-ments containing or based upon nonguaran-teed elements shall set forth, with equalprominence comparable illustrations or state-ments containing or based upon the guaran-teed elements.

4. An advertisement shall not use ordescribe determinable elements in a mannerthat is misleading or has the capacity or ten-dency to mislead.

5. Advertisement may describe deter-minable elements as guaranteed but notdeterminable at issue. This descriptionshould include an explanation of how theseelements operate, and their limitations, if any.



6. If an advertisement refers to anynonguaranteed element, it shall indicate thatthe insurer reserves the right to change anysuch element at any time and for any reason.However, if an insurer has agreed to limit thisright in any way; such as, for example, if ithas agreed to change these elements only atcertain intervals or only if there is a changein the insurer’s current or anticipated experi-ence, the advertisement may indicate anysuch limitation on the insurer’s right.

7. An advertisement shall not refer todividends as “tax-free” or use words of sim-ilar import, unless the tax treatment of divi-dends is fully explained and the nature of thedividend as a return of premium is indicatedclearly.

8. An advertisement may not state orimply that illustrated dividends under eitheror both a participating policy or pure endow-ment will be or can be sufficient at any futuretime to assure without the future payment ofpremiums, the receipt of benefits, such as apaid-up policy, unless the advertisementclearly and precisely explains the benefits orcoverage provided at that time and the condi-tions required for that to occur.

(P) An advertisement shall not state that apurchaser of a policy will share in or receivea stated percentage or portion of the earningson the general account assets of the company.

(Q) Testimonials, Appraisals, Analysis, orEndorsements by Third Parties.

1. Testimonials, appraisals, or analysisused in advertisements must be genuine; rep-resent the current opinion of the author; beapplicable to the policy advertised, if any;and be accurately reproduced with sufficientcompleteness to avoid misleading or deceiv-ing prospective insureds. In using testimoni-als, appraisals, or analysis; the insurer orinsurance producer makes as its own all ofthe statements contained therein, and thesestatements are subject to all the provisions ofthis rule.

2. If the individual making a testimoni-al, appraisal, analysis, or endorsement has afinancial interest in the insurer or relatedentity as a stockholder, director, officer,employee or otherwise, or receives any bene-fit directly or indirectly other than requiredunion scale wages, that fact shall be promi-nently disclosed in the advertisement.

3. An advertisement shall not state orimply that an insurer or a policy has beenapproved or endorsed by a group of individu-als, society, association, or other organizationunless such is the fact and unless any propri-etary relationship between an organizationand the insurer is disclosed. If the entitymaking the endorsement or testimonial isowned, controlled, or managed by the insur-er, or receives any payment or other consid-eration from the insurer for making theendorsement or testimonial, that fact shall be

disclosed in the advertisement.4. When a testimonial, appraisal, analy-

sis, or endorsement refers to benefits receivedunder a policy for a specific claim, the claimdate, including claim number, date of loss, andother pertinent information shall be retainedby the insurer for inspection for a period offive (5) years after the discontinuance of itsuse.

(R) An advertisement shall not contain sta-tistical information relating to any insurer orpolicy unless it accurately reflects recent andrelevant facts. The source of any such statis-tics used in an advertisement shall be identi-fied.

(S) Policies Sold to Students.1. The envelope in which insurance

solicitation material is contained may beaddressed to the parents of students. Theaddress may not include any combination ofwords which imply that the correspondence isfrom a school, college, university, or othereducation or training institution nor may itimply that the institution has endorsed thematerial or supplied the insurer with informa-tion about the student unless such is a correctand truthful statement.

2. All advertisements including, but notlimited to, informational flyers used in thesolicitation of insurance shall be identifiedclearly as coming from an insurer or insur-ance producer, if such is the case, and theseentities shall be clearly identified as such.

3. The return address on the envelopemay not imply that the soliciting insurer orinsurance producer is affiliated with a univer-sity, college, school, or other educational ortraining institution, unless true.

(T) Introductory, Initial or Special Offers,and Enrollment Periods.

1. An advertisement of an individualpolicy or combination of these policies shallnot state or imply that the policy or combina-tion of policies is an introductory, initial orspecial offer, or that applicants will receivesubstantial advantages not available at a laterdate, or that the offer is available only to aspecified group of individuals, unless that isthe fact. An advertisement shall not describean enrollment period as “special” or “limit-ed” or use similar words or phrases indescribing it when the insurer uses successiveenrollment periods as its usual method ofmarketing its policies.

2. An advertisement shall not state orimply that only a specific number of policieswill be sold, or that a time is fixed for the dis-continuance of the sale of the particular poli-cy advertised because of special advantagesavailable in the policy.

3. An advertisement shall not offer apolicy that utilizes a reduced initial premiumrate in a manner that overemphasizes theavailability and the amount of the reduced ini-tial premium. A reduced initial or first year

premium may not be described as constitutingfree insurance for a period of time. When aninsurer charges an initial premium that differsin amount from the amount of the renewalpremium payable on the same mode, all ref-erences to the reduced initial premium shallbe followed by an asterisk or other appropri-ate symbol that refers the reader to that spe-cific portion of the advertisement that con-tains the full rate schedule for the policybeing advertised.

4. An enrollment period during which aparticular insurance policy may be purchasedon an individual basis shall not be offeredwithin this state unless there has been a lapseof not less than three (3) months between theclose of the immediately preceding enroll-ment period for the same policy and the open-ing of the new enrollment period. The adver-tisement shall specify the date by which theapplicant must mail the application, whichshall be not less than ten (10) days and notmore than forty (40) days from the date onwhich the enrollment period is advertised forthe first time. This rule applies to all adver-tising media—i.e., mail, newspapers, radio,television, magazines, and periodicals—byany one (1) insurer or insurance producer.The phrase “any one (1) insurer” includes allthe affiliated companies of a group of insur-ance companies under common managementor control. This rule does not apply to the useof a termination or cutoff date beyond whichan individual application for a guaranteedissue policy will not be accepted by an insur-er in those instances where the applicationhas been sent to the applicant in response tohis or her request. It is also inapplicable tosolicitations of employees or members of aparticular group or association which other-wise would be eligible under specific provi-sions of the insurance code for group, blan-ket, or franchise insurance. In cases where aninsurance product is marketed on a directmail basis to prospective insureds by reasonof some common relationship with a sponsor-ing organization, this rule shall be appliedseparately to each sponsoring organization.

(U) An advertisement of a particular policyshall not state or imply that prospectiveinsureds shall be or become members of aspecial class, group, or quasi-group and assuch enjoy special rates, dividends, or under-writing privileges, unless that is the fact.

(V) An advertisement shall not makeunfair or incomplete comparisons of policies,benefits, dividends, or rates of other insurers.An advertisement shall not disparage otherinsurers, insurance producers, policies, ser-vices, or methods of marketing.

(W) For individual deferred annuity prod-ucts or deposit funds, the following shallapply:

1. Any illustrations or statements con-taining or based upon nonguaranteed interest


Secretary of State


rates shall likewise set forth with equalprominence comparable illustrations or state-ments containing or based upon the guaran-teed accumulation interest rates. Thenonguaranteed interest rate shall not begreater than those currently being credited bythe company unless the nonguaranteed rateshave been publicly declared by the companywith an effective date for new issues not morethan three (3) months subsequent to the dateof declaration;

2. If an advertisement states the net pre-mium accumulation interest rate, whetherguaranteed or not, it also shall disclose inclose proximity thereto and with equal promi-nence, the actual relationship between thegross and net premiums;

3. If any contract does not provide acash surrender benefit prior to commence-ment of payment of any annuity benefits, anillustration or statement concerning the con-tract shall prominently state that cash surren-der benefits are not provided; and

4. Any illustrations, depictions, or state-ments containing or based on determinableelements shall likewise set forth with equalprominence comparable illustrations, depic-tions, or statements containing or based onguaranteed elements.

(X) An advertisement of a life insurancepolicy or annuity contract that illustratesnonguaranteed values shall only do so inaccordance with current applicable state lawrelative to illustrating such values for lifeinsurance policies and annuity contracts.

(Y) An advertisement for the solicitationor sale of a preneed funeral contract or pre-arrangement as defined in subsection (1)(I)that is funded or to be funded by a life insur-ance policy or annuity contract shall ade-quately disclose the following:

1. Whether or not the insurance produceris or may be also acting on behalf of the pre-need seller and/or the preneed provider; and

2. The nature of the relationship amongthe soliciting agent or agents, the licensedpreneed seller, the licensed preneed provider,the provider of the funeral or cemetery mer-chandise services, the administrator and anyother person; and

3. Clearly state how and to whom theproceeds of the life insurance will be paidand if the insurance proceeds are to be paidto either the insurance producer or the insur-ance producer’s employer or entity withwhich the insurance producer has a contrac-tual relationship because that producer orentity is also a licensed preneed seller or pre-need provider; and

4. The fact that the insurance policy isnot a preneed contract and that if the con-sumer wishes to make arrangements for finaldisposition that a separate preneed contract isrequired.

(Z) Failure to comply with the require-

ments set forth in section (4) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies as those terms are used in section375.936(4) and (6), RSMo.

(5) Identity of Insurer.(A) The name of the insurer shall be clear-

ly identified in all advertisements about theinsurer or its products, and if any specificindividual policy is advertised it shall beidentified either by form number or otherappropriate description. If an application is apart of the advertisement, the name of theinsurer shall be shown on the application.However, if an advertisement contains a list-ing of rates or features that is a composite ofseveral different policies or contracts of dif-ferent insurers, the advertisement shall sostate, shall indicate, if applicable, that not allpolicies or contracts on which the compositeis based may be available in all states, andshall provide a rating of the lowest ratedinsurer and reference the rating agency, butneed not identify each insurer. If an adver-tisement identifies the issuing insurers, insur-ance issuer ratings need not be stated.

(B) An advertisement shall not use a tradename, an insurance group designation, nameof the parent company of the insurer, name ofa particular division of the insurer, a reinsur-er of the insurer, service mark, slogan, sym-bol, or other device or reference without dis-closing the name of the insurer, if theadvertisement would have the capacity or ten-dency to mislead or deceive as to the trueidentity of the insurer or create the impres-sion that a company other than the insurerwould have any responsibility for the finan-cial obligation under a policy.

(C) An advertisement shall not use anycombination of words, symbols, or physicalmaterials that by their content, phraseology,shape, color, or other characteristics are sosimilar to a combination of words, symbols,or physical materials used by a governmentalprogram or agency or otherwise appear to beof such a nature that they tend to misleadprospective insureds into believing that thesolicitation is in some manner connected witha governmental program or agency.

(D) Failure to comply with the require-ments set forth in section (5) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies as those terms are used in section375.936(4) and (6), RSMo.

(6) Jurisdictional Licensing and Status ofInsurer.

(A) An advertisement that is intended to beseen or heard beyond the limits of the juris-diction in which the insurer is licensed shall

not imply licensing beyond those limits.(B) An advertisement may state that an

insurer or insurance producer is licensed in aparticular state or states, provided it does notexaggerate that fact or suggest or imply thatcompeting insurers or insurance producersmay not be so licensed.

(C) An advertisement shall not create theimpression that the insurer, its financial con-dition or status, the payment of its claims, orthe merits, desirability, or advisability of itspolicy forms or kinds of plans of insuranceare recommended or endorsed by any govern-mental entity. However, when a governmentalentity has recommended or endorsed a policyform or plan, that fact may be stated if theentity authorizes its recommendation orendorsement to be used in an advertisement.

(D) Failure to comply with the require-ments set forth in section (6) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies as those terms are used in section375.936(4) and (6), RSMo.

(7) Statements About the Insurer. (A) An advertisement shall not contain

statements, pictures, or illustrations that arefalse or misleading, in fact or by implication,with respect to the assets, liabilities, insur-ance in force, corporate structure, financialcondition, age, or relative position of theinsurer in the insurance business. An adver-tisement shall not contain a recommendationby any commercial rating system unless itclearly defines the scope and extent of therecommendation including, but not limitedto, the placement of the insurer’s rating in thehierarchy of the rating system cited.

(B) Failure to comply with the require-ments set forth in section (7) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies as those terms are used in section375.936(4) and (6), RSMo.

(8) Enforcement Procedures.(A) Each insurer shall maintain at its home

or principal office a complete file containinga specimen copy of every printed, published,or prepared advertisement of its individualpolicies and specimen copies of typical print-ed, published, or prepared advertisements ofits blanket, franchise, and group policies dis-seminated in this state, with a notation indi-cating the manner and extent of distributionand the form number of any policy adver-tised. This file shall be subject to inspectionby the director. All advertisements shall bemaintained in the file for a period of five (5)years after discontinuance of its use.

(B) If the director determines that an insur-er’s or insurance producer’s advertisement



has the capacity or tendency to mislead ordeceive the public, the director may requirethe insurer or insurance producer to submitall or any part of their advertising materialfor review or approval prior to use.

(C) Each insurer subject to the provisionsof this rule shall file with the director with itsannual statement a certificate of complianceexecuted by an authorized officer of the insur-er stating that to the best of his or her knowl-edge, information, and belief the advertise-ments that were disseminated by or on behalfof the insurer in this state during the preced-ing statement year, or during the portion ofthe year when this rule was in effect, com-plied or were made to comply in all respectswith the provisions of this rule and the insur-ance laws of this state as implemented andinterpreted by this rule.

AUTHORITY: sections 374.045, 375.141,375.143, 375.144, 375.934, 375.936, and375.948, RSMo 2016.* This rule was previ-ously filed as 4 CSR 190-13.020. Originalrule filed Dec. 23, 1975, effective Jan. 2,1976. Amended: Filed July 9, 1976, effectiveFeb. 20, 1977. Amended: Filed July 12,2002, effective Jan. 30, 2003. Amended:Filed Sept. 30, 2016, effective March 30,2017.

*Original authority: 374.045, RSMo 1967, amended1993, 1995, 2008; 375.141, RSMo 1961, amended 1965,1967, 1981, 1984, 1989, 1993, 2001; 375.143, RSMo2007; 375.144, RSMo 2005; 375.934, RSMo 1959,amended 1978, 1991; 375.936, RSMo 1959, amended1967, 1969, 1971, 1976, 1978, 1983, 1991; and 375.948,RSMo 1959, amended 1978, 1991.

20 CSR 400-5.200 Deceptive Practices orMisrepresentations in the Solicitation ofLife Insurance

PURPOSE: This rule describes those state-ments which will be considered to be decep-tive practices or misrepresentations in thesolicitation of life insurance. This rule wasadopted pursuant to the provisions of section374.045, RSMo and implements and definessections 375.930–375.948, 376.500, 376.590and 376.673, RSMo.

(1) No insurance company shall deliver orissue in this state or permit its insurance pro-ducers or officers to deliver or promise toissue or deliver in this state its own stock orother stock or securities as an inducement tothe purchase of insurance. No corporation orany of its insurance producers, officers oremployees shall agree to sell, offer to sell, orgive or offer, directly or indirectly, in anymanner whatsoever any share of stock, secu-rities or bonds as an inducement to the pur-chase of insurance.

(2) The practices and representations enu-merated and listed in this rule are deemed toviolate those sections of the Missouri Insur-ance Code set out in this rule and violationsof same by companies or their insurance pro-ducers shall subject the violators to the penal-ties now contained in section 375.930,RSMo. Violations of same will consist of anyof the following statements:

(A) Statements of policy titles indicating orimplying that the policyholder will participatein the distribution of earnings or surplusother than earnings or surplus attributable, byreasonable and nondiscriminatory standards,to the participating policies of the companyand allocated to the policyholder on reason-able and nondiscriminatory standards;

(B) Statements or illustrations implyingthat a proposed policyholder will be entitledto share in any part of surplus earningsattributable to nonparticipating business or toother classes of participating business;

(C) Statements or illustrations setting forththe dividend scale of other companies (or adividend scale of the company for a plan ofinsurance no longer being offered or for aplan of insurance other than the plan beingoffered to the proposed policyholder) with theimplication that these statements or illustra-tions serve as some sort of a guideline as towhat the proposed policyholder might expectto receive under the proposed policy;

(D) Statements or representations or theuse of any documents (either in the form of acopy of a board resolution, certificate of par-ticipation or in any other manner whatsoever)in conjunction with the solicitation orissuance of a life insurance policy which pur-port that the policyholder will or might rea-sonably expect to receive any valuable con-sideration or inducement whatever, notspecified in the policy contract of insurance;

(E) Statements which do not clearly informone that dividends are not, and cannot be,guaranteed;

(F) Statements which purport or imply thataccumulated dividends will be sufficient,after an unreasonably short period of time, torequire no further cash outlay for the paymentof premiums;

(G) Statements which purport or implythat the anticipated annual dividend willequal or exceed the annual premium dueunder the policy, except in those cases wherethe company’s current rate manual soreflects;

(H) Statements indicating or implying thatthe policyholder will receive some preferen-tial or discriminatory advantage or benefitnot available to persons who purchase insur-ance from the company at future dates orunder other circumstances;

(I) Statements or representations purport-ing that only a limited number of policies willbe issued on a particular form (however truethe statements might be) since those state-ments imply preferential treatment;

(J) References to the investment nature ofa policy which state or imply that a life insur-ance policy possesses investment featuresother than those arising from the cash, loanor maturity value or the settlement optionsavailable thereunder;

(K) Statements which tend to lead theprospect to believe that the insurance produc-er is dealing in other than a life insurancecontract or that life insurance is incidental tothe purchase of the contract;

(L) Statements which tend to lead theprospect to believe that s/he is purchasingstock of the insurance company or that s/he isacquiring any right or benefit which corre-sponds to a right or benefit enjoyed by astockholder of the company;

(M) References to premiums as deposits ina manner as to lead the proposed policyhold-er to believe that they create a fund which iswithdrawable without reference to the cashsurrender or loan provisions of the policy orthe use of any passbook savings record or anyother device which leads or would tend tolead the policyholder to believe or gain theimpression that the contract represents a sav-ings plan;

(N) Statements or representations that anypart of premium payment, advance premiumpayment or of dividends will be placed in asegregated fund for the benefit of the insureds(except for those variable contracts whichmight be issued pursuant to section 376.309,RSMo);

(O) Statements which tend to lead aprospect to believe or infer that each policy-holder is given the right to purchase or allo-cate a specific number of policies;

(P) The use of comparative selling in amanner which might lead a prospect tobelieve that the company’s experience undera particular plan will be as successful as theexperience achieved under a similar plan byreference to a particular company; and

(Q) Any comparison of the policies or con-tracts of any such insurer(s), shall be deemedto be an incomplete comparison, if it does notcompare in detail the gross premiums andgross premiums less any dividend or otherreduction allowed by the insurer(s), at thedate of the comparison and the increase in


Secretary of State


any cash values and all the benefits providedby each of those policies or contracts for aperiod of twenty (20) years. The omissionfrom any comparison of any benefit or valueprovided in any such policies or contracts orof any differences as to amount or period ofpayment of premiums shall constitute thecomparison an incomplete comparison.

(3) With respect to life insurance policiesproviding for the payment of a series of pureendowments maturing periodically during thepremium paying period of the policy compa-nies are prohibited from—

(A) Using any detachable coupons, certifi-cates or passbooks or any other device whichtends to emphasize the periodic pure endow-ment benefits or which tend to create theimpression that the pure endowments repre-sent interest earnings or anything other thanbenefits which have been purchased by partof the policyholder’s premium payments;

(B) Offering pure endowment benefitswhich do not have fixed maturity dates or thepayment of which is made contingent uponthe payment of any premium becoming dueon or after their maturity dates; or

(C) Expressing pure endowment benefits inany manner other than in dollar amounts suchas by expressing them as percentages of otherquantities or in other ways.

(4) Each insurer shall notify each of its insur-ance producers of the contents of this rule.

AUTHORITY: sections 374.045, 375.930,375.948, 376.500, 376.590 and 376.673,RSMo 2000.* This rule was previously filedas 4 CSR 190-13.030. This version of rulefiled Dec. 5, 1969, effective Dec. 15, 1969.Amended: Filed Aug. 5, 1974, effective Aug.15, 1974. Amended: Filed July 12, 2002,effective Jan. 30, 2003.

*Original authority: 374.045, RSMo 1967, amended1993, 1995; 375.930, RSMo 1959, amended 1978, 1991;375.948, RSMo 1959, amended 1978, 1991; 376.500,RSMo 1939, amended 1965; 376.590, RSMo 1939; and376.673, RSMo 1967.

20 CSR 400-5.300 Solicitation of Insuranceon Military Installations in Missouri

PURPOSE: This rule clarifies by whominsurance on military installations may besolicited. This rule was adopted pursuant tothe provisions of section 374.045, RSMo andimplements sections 375.012–375.158,RSMo.

(1) Army regulation No. 210-8, effectiveFebruary 15, 1973 and Air Force regulationNo. 211-16, dated March 31, 1972, relate to

solicitation on military installations; localrules implement the rules referred to here.

(2) Solicitation of insurance on militaryinstallations or bases in Missouri shall onlybe done by authorized insurance producersduly licensed by the Missouri Department ofInsurance and the policy and applicationforms used by these insurance producersmust be approved by the Missouri Depart-ment of Insurance.

AUTHORITY: sections 374.045, RSMo 2000,and 375.012–375.158, RSMo 2000, Supp2001 and Supp. 2002.* This rule was previ-ously filed as 4 CSR 190-13.050. Originalrule filed July 27, 1964, effective Aug. 6,1964. Amended: Filed Dec. 5, 1969, effectiveDec. 15, 1969. Amended: Filed Aug. 5,1974, effective Aug. 15, 1974. Amended:Filed July 12, 2002, effective Jan. 30, 2003.

*Original authority: 374.045, RSMo 1967, amended1993, 1995 and 375.012–375.158, see Missouri RevisedStatutes.

20 CSR 400-5.305 Scope and Definitionsfor Military Sales Practices Regulation

PURPOSE: This rule sets out the scope of themilitary sales practices regulation in 20 CSR400-5.305 to 20 CSR 400-5.310 and providesdefinitions to aid in the interpretation of therules.

(1) Applicability of Rules. The rules in 20CSR 400-5.305 to 20 CSR 400-5.310 arebased upon the Military Sales PracticesModel Regulation adopted by the NationalAssociation of Insurance Commissioners(NAIC), published July 2007, fulfilling theintent of the Military Personnel FinancialServices Act, Pub. L. No. 109-290, section3(1)(C) (2006).

(A) The rules in 20 CSR 400-5.305 to 20CSR 400-5.310 apply to insurers soliciting,offering to sell or selling any life or annuityproduct, except those described in subsection(1)(B), to a member of the United StatesArmed Forces, wherever located. The rulesshall be read together with Chapter 536,RSMo.

(B) The rules in 20 CSR 400-5.305 to 20CSR 400-5.310 shall not apply to solicita-tions or sales involving:

1. Credit insurance;2. Group life insurance or group annu-

ities where there is no in-person, face-to-facesolicitation of individuals by an insuranceproducer or where the contract or certificatedoes not include a side fund;

3. An application to the existing insurer

that issued the existing policy or contractwhen a contractual change or a conversionprivilege is being exercised; or, when theexisting policy or contract is being replacedby the same insurer pursuant to a programfiled with and approved by the commissioner;or, when a term conversion privilege is exer-cised among corporate affiliates;

4. Individual stand-alone health policies,including disability income policies;

5. Contracts offered by Servicemem-bers’ Group Life Insurance (SGLI) or Veter-ans’ Group Life Insurance (VGLI), as autho-rized by 38 U.S.C. Section 1965 et seq.;

6. Life insurance contracts offeredthrough or by a non-profit military associa-tion, qualifying under Section 501(c)(23) ofthe Internal Revenue Code (IRC), and whichare not underwritten by an insurer; or

7. Contracts used to fund: A. An employee pension or welfare

benefit plan that is covered by the EmployeeRetirement and Income Security Act(ERISA);

B. A plan described by Sections401(a), 401(k), 403(b), 408(k) or 408(p) ofthe IRC, as amended, if established or main-tained by an employer and there is no in-per-son, face-to-face solicitation of individuals byan insurance producer;

C. A government or church plandefined in Section 414 of the IRC, a govern-ment or church welfare benefit plan, or adeferred compensation plan of a state or localgovernment or tax exempt organization underSection 457 of the IRC, if there is no in-per-son, face-to-face solicitation of individuals byan insurance producer;

D. A nonqualified deferred compen-sation arrangement established or maintainedby an employer or plan sponsor;

E. Settlements of or assumptions ofliabilities associated with personal injury liti-gation or any dispute or claim resolution pro-cess; or

F. Prearranged funeral contracts.(C) The rules in 20 CSR 400-5.305 to 20

CSR 400-5.310 shall not apply to: 1. General advertisements, direct mail

and Internet marketing; and 2. Telephone marketing, provided the

caller explicitly and conspicuously disclosesthat the call concerns life insurance andmakes no statement that avoids the clear andunequivocal statement that life insurance isthe subject matter of the solicitation.

3. Nothing in this subsection shall beconstrued to exclude an insurer or insuranceproducer from 20 CSR 400-5.305 to 20 CSR400-5.310 in any in-person, face-to-facemeeting established as a result of the market-ing that is exempt under this paragraph.



(D) Nothing herein shall be construed toabrogate the ability of nonprofit organizations(and/or other organizations) to educate mem-bers of the United States Armed Forces inaccordance with Department of Defense DoDInstruction 1344.07 – PERSONAL COMMER-CIAL SOLICITATION ON DOD INSTALLATIONS orsuccessor directive.

(2) Definitions. As used in rules 20 CSR 400-5.305 to 20 CSR 400-5.310 the followingterms shall mean:

(A) “Active duty,” full-time duty in theactive military service of the United Statesand includes members of the reserve compo-nent (National Guard and Reserve) whileserving under published orders for activeduty or full-time training. The term does notinclude members of the reserve componentwho are performing active duty or active dutyfor training under military calls or ordersspecifying periods of less than thirty-one (31)calendar days;

(B) “Department of Defense (DoD) Per-sonnel,” all active duty service members andall civilian employees, including nonappro-priated fund employees and special govern-ment employees, of the Department ofDefense;

(C) “Door to door,” a solicitation or salesmethod whereby an insurance producer pro-ceeds randomly or selectively from house-hold to household without prior specificappointment;

(D) “General advertisement,” an adver-tisement having as its sole purpose the pro-motion of the reader’s or viewer’s interest inthe concept of insurance, or the promotion ofthe insurer or the insurance producer;

(E) “Insurable needs,” the risks associatedwith premature death taking into considera-tion the financial obligations and immediateand future cash needs of the applicant’s estateand/or survivors or dependents;

(F) “Insurer,” an insurance companyrequired to be licensed under the laws of thisstate to provide life insurance products,including annuities;

(G) “Insurance producer,” a personrequired to be licensed under the laws of thisstate to sell, solicit or negotiate life insur-ance, including annuities;

(H) “Known” or “Knowingly,” dependingon its use herein, the insurance producer orinsurer had actual awareness, or in the exer-cise of ordinary care should have known, atthe time of the act or practice complained of,that the person solicited:

1. Is a service member; or2. Is a service member with a pay grade

of E-4 or below;(I) “Life insurance,” insurance coverage

on human lives including benefits of endow-ment and annuities, and may include benefitsin the event of death or dismemberment byaccident and benefits for disability incomeand unless otherwise specifically excluded,includes individually issued annuities;

(J) “Military installation,” any federallyowned, leased, or operated base, reservation,post, camp, building, or other facility towhich service members are assigned for duty,including barracks, transient housing, andfamily quarters;

(K) “MyPay,” a Defense Finance andAccounting Service (DFAS) web-based sys-tem that enables service members to processcertain discretionary pay transactions or pro-vide updates to personal information data ele-ments without using paper forms;

(L) “Other military survivor benefits,”includes the following, but is not limited to:the Death Gratuity, Funeral Reimbursement,Transition Assistance, Survivor and Depen-dents’ Educational Assistance, Dependencyand Indemnity Compensation, TRICAREHealthcare benefits, Survivor Housing Bene-fits and Allowances, Federal Income Tax For-giveness, and Social Security Survivor Bene-fits;

(M) “Service member,” any active dutyofficer (commissioned and warrant) or enlist-ed member of the United States ArmedForces;

(N) “SGLI,” Servicemembers’ Group LifeInsurance;

(O) “Side fund,” a fund or reserve that ispart of or otherwise attached to a life insur-ance policy (excluding individually issuedannuities) by rider, endorsement or othermechanism which accumulates premium ordeposits with interest or by other means. Theterm does not include:

1. Accumulated value or cash value orsecondary guarantees provided by a universallife policy;

2. Cash values provided by a whole lifepolicy which are subject to standard nonfor-feiture law for life insurance; or

3. A premium deposit fund which:A. Contains only premiums paid in

advance which accumulate at interest;B. Imposes no penalty for withdrawal;C. Does not permit funding beyond

future required premiums;D. Is not marketed or intended as an

investment; andE. Does not carry a commission,

either paid or calculated;(P) “Specific appointment,” a prearranged

appointment agreed upon by both parties anddefinite as to place and time;

(Q) “United States Armed Forces,” allcomponents of the Army, Navy, Air Force,

Marine Corps, and Coast Guard; and(R) “VGLI,” Veterans’ Group Life Insur-

ance.

AUTHORITY: sections 374.045, 375.934,and 375.936, RSMo 2000 and section375.144, RSMo Supp. 2007.* Original rulefiled Nov. 9, 2007, effective June 30, 2008.

*Original authority: 374.045, RSMo 1967, amended1993, 1995; 375.934, RSMo 1959, amended 1978, 1991;375.936, RSMo 1959, amended 1967, 1969, 1971, 1976,1978, 1983, 1991; and 375.144, RSMo 2005.

20 CSR 400-5.310 Deceptive or Unfair Mil-itary Sales Practices

PURPOSE: This rule describes specific actsand practices that constitute deceptive orunfair trade practices and is based upon theMilitary Sales Practices Model Regulationadopted by the NAIC during July 2007. Thespecific prohibitions are not intended to be anall-inclusive list of conduct which might vio-late sections 375.144 or 375.934, RSMo, butrather provide clear notice to insurers andinsurance producers of conduct that wouldconstitute a deceptive or unfair trade prac-tice.

(1) Unfair Trade Practices on a MilitaryInstallation.

(A) Untrue, Deceptive or Misleading Rep-resentations. The following acts or practicesin connection with the solicitation, offer tosell or sale to a service member when com-mitted on a military installation by an insureror insurance producer with respect to the in-person, face-to-face solicitation of life insur-ance constitute a deceptive sales practiceunder section 375.144, RSMo or an unfairtrade practice under section 375.936(4),RSMo:

1. Knowingly soliciting the purchase ofany life insurance product “door to door” orwithout first establishing a specific appoint-ment for each meeting with the prospectivepurchaser;

2. Soliciting service members in a groupor “mass” audience or in a “captive” audi-ence where attendance is not voluntary;

3. Knowingly making appointments withor soliciting service members during theirnormally scheduled duty hours;

4. Making appointments with or solicit-ing service members in barracks, day rooms,unit areas, or transient personnel housing orother areas where the installation commanderhas prohibited solicitation;

5. Soliciting the sale of life insurancewithout first obtaining permission from theinstallation commander or the commander’s


Secretary of State


designee;6. Posting unauthorized bulletins,

notices or advertisements;7. Failing to present DD Form 2885,

Personal Commercial Solicitation Evaluation,to service members solicited or encouragingservice members solicited not to complete orsubmit a DD Form 2885; or

8. Knowingly accepting an applicationfor life insurance or issuing a policy of lifeinsurance on the life of an enlisted member ofthe United States Armed Forces without firstobtaining for the insurer’s files a completedcopy of any required form which confirmsthat the applicant has received counseling orfulfilled any other similar requirement for thesale of life insurance established by regula-tions, directives or rules of the Department ofDefense (DoD) or any branch of the ArmedForces.

(B) Rebate or other Consideration orInducement not in Contract. The followingacts or practices in connection with the solic-itation, offer to sell or sale to a service mem-ber when committed on a military installationby an insurer or insurance producer consti-tute unfair trade practices under section375.936(9), RSMo:

1. Using DoD personnel, directly orindirectly, as a representative or agent in anyofficial or business capacity with or withoutcompensation with respect to the solicitationor sale of life insurance to service members;or

2. Using an insurance producer to par-ticipate in any United States Armed Forcessponsored education or orientation program.

(2) Unfair Trade Practices Regardless ofLocation.

(A) Untrue, Deceptive or Misleading Rep-resentations Concerning Banking. The fol-lowing acts or practices in connection withthe solicitation, offer to sell or sale to a ser-vice member constitute a deceptive salespractice under section 375.144, RSMo or anunfair trade practice under section375.936(4), RSMo:

1. Submitting, processing or assisting inthe submission or processing of any allotmentform or similar device used by the UnitedStates Armed Forces to direct a service mem-ber’s pay to a third party for the purchase oflife insurance. The foregoing includes, but isnot limited to, using or assisting in using aservice member’s “MyPay” account or othersimilar Internet or electronic medium forsuch purposes. This subsection does not pro-hibit assisting a service member by providinginsurer or premium information necessary tocomplete any allotment form;

2. Knowingly receiving funds from a

service member for the payment of premiumfrom a depository institution with which theservice member has no formal banking rela-tionship. For purposes of this section, a for-mal banking relationship is established whenthe depository institution:

A. Provides the service member adeposit agreement and periodic statementsand makes the disclosures required by theTruth in Savings Act, 12 U.S.C. section 4301et seq. and the regulations promulgated there-under; and

B. Permits the service member tomake deposits and withdrawals unrelated tothe payment or processing of insurance pre-miums;

3. Employing any device or method orentering into any agreement whereby fundsreceived from a service member by allotmentfor the payment of insurance premiums areidentified on the service member’s Leave andEarnings Statement or equivalent or succes-sor form as “Savings” or “Checking” andwhere the service member has no formalbanking relationship as defined in paragraph(2)(A)2.; or

4. Entering into any agreement with adepository institution for the purpose ofreceiving funds from a service memberwhereby the depository institution, with orwithout compensation, agrees to accept directdeposits from a service member with whomit has no formal banking relationship asdefined in paragraph (2)(A)2.

(B) Rebate or other Consideration orInducement not in Contract. The followingacts or practices in connection with the solic-itation, offer to sell or sale to a service mem-ber constitute a deceptive sales practice undersection 375.144, RSMo or an unfair tradepractice under section 375.936(9), RSMo:

1. Using DoD personnel, directly orindirectly, as a representative or agent in anyofficial or unofficial capacity with or withoutcompensation with respect to the solicitationor sale of life insurance to service memberswho are junior in rank or grade, or to thefamily members of such personnel;

2. Offering or giving anything of value,directly or indirectly, to DoD personnel toprocure their assistance in encouraging,assisting or facilitating the solicitation or saleof life insurance to another service member;

3. Knowingly offering or giving any-thing of value to a service member with a paygrade of E-4 or below for his or her atten-dance to any event where an application forlife insurance is solicited; or

4. Advising a service member with apay grade of E-4 or below to change his orher income tax withholding or state of legalresidence for the sole purpose of increasing

disposable income to purchase life insurance. (C) Untrue, Deceptive or Misleading Rep-

resentations Concerning Source, Sponsor-ship, Approval or Affiliation. The followingacts or practices in connection with the solic-itation, offer to sell or sale to a service mem-ber constitute a deceptive sales practice undersection 375.144, RSMo or an unfair tradepractice under section 375.936(4), RSMo:

1. Making any representation, or usingany device, title, descriptive name or identifi-er that has the tendency or capacity to con-fuse or mislead a service member into believ-ing that the insurer, insurance producer orproduct offered is affiliated, connected orassociated with, endorsed, sponsored, sanc-tioned or recommended by the U.S. Govern-ment, the United States Armed Forces, orany state or federal agency or governmententity. Examples of prohibited insurance pro-ducer titles include, but are not limited to,“Battalion Insurance Counselor,” “UnitInsurance Advisor,” “Servicemen’s GroupLife Insurance Conversion Consultant” or“Veteran’s Benefits Counselor.” Nothingherein shall be construed to prohibit a personfrom using a professional designation award-ed after the successful completion of a courseof instruction in the business of insurance byan accredited institution of higher learning.Such designations include, but are not limitedto, Chartered Life Underwriter (CLU),Chartered Financial Consultant (ChFC), Cer-tified Financial Planner (CFP), Master ofScience In Financial Services (MSFS), orMasters of Science Financial Planning (MS);or

2. Soliciting the purchase of any lifeinsurance product through the use of or inconjunction with any third party organizationthat promotes the welfare of or assists mem-bers of the United States Armed Forces in amanner that has the tendency or capacity toconfuse or mislead a service member intobelieving that either the insurer, insuranceproducer or insurance product is affiliated,connected or associated with, endorsed,sponsored, sanctioned or recommended bythe U.S. Government, or the United StatesArmed Forces.

(D) Untrue, Deceptive or Misleading Rep-resentations Concerning Premiums, Costs orInvestment Returns. The following acts orpractices in connection with the solicitation,offer to sell or sale to a service member con-stitute a deceptive sales practice under sec-tion 375.144, RSMo or an unfair trade prac-tice under section 375.936(4), RSMo:

1. Using or describing the creditedinterest rate on a life insurance policy in amanner that implies that the credited interestrate is a net return on premium paid; or

2. Excluding individually issued annu-ities, misrepresenting the mortality costs of alife insurance product, including stating orimplying that the product “costs nothing” oris “free.”

(E) Untrue, Deceptive or Misleading Rep-resentations Concerning Servicemembers’Group Life Insurance (SGLI) or Veterans’Group Life Insurance (VGLI). The followingacts or practices in connection with the solic-itation, offer to sell or sale to a service mem-ber constitute a deceptive sales practice undersection 375.144, RSMo or an unfair tradepractice under section 375.936(4), RSMo:

1. Making any representation regardingthe availability, suitability, amount, cost,exclusions or limitations to coverage providedto a service member or dependents by SGLIor VGLI, which is false, misleading or decep-tive;

2. Making any representation regardingconversion requirements, including the costsof coverage, or exclusions or limitations tocoverage of SGLI or VGLI to private insurerswhich is false, misleading or deceptive; or

3. Suggesting, recommending orencouraging a service member to cancel orterminate his or her SGLI policy or issuing alife insurance policy which replaces an exist-ing SGLI policy unless the replacement shalltake effect upon or after the service mem-ber’s separation from the United StatesArmed Forces.

(F) Omission of Material Disclosures. Thefollowing acts or practices in connection withthe solicitation, offer to sell or sale to a ser-vice member constitute a deceptive salespractice under section 375.144, RSMo or anunfair trade practice under section375.936(4), RSMo:

1. Deploying, using or contracting forany lead generating materials designed exclu-sively for use with service members that donot clearly and conspicuously disclose thatthe recipient will be contacted by an insur-ance producer, if that is the case, for the pur-pose of soliciting the purchase of life insur-ance;

2. Failing to disclose that a solicitationfor the sale of life insurance will be madewhen establishing a specific appointment foran in-person, face-to-face meeting with aprospective purchaser;

3. Excluding individually issued annu-ities, failing to clearly and conspicuously dis-close the fact that the product being sold islife insurance;

4. Failing to make, at the time of sale oroffer to an individual known to be a servicemember, the written disclosures required bySection 10 of the “Military Personnel Finan-cial Services Protection Act,” Pub. L. No.

109-290, p.16; or5. Excluding individually issued annu-

ities, when the sale is conducted in-personface-to-face with an individual known to be aservice member, failing to provide the appli-cant at the time the application is taken:

A. An explanation of any free lookperiod with instructions on how to cancel if apolicy is issued; and

B. Either a copy of the application ora written disclosure. The copy of the applica-tion or the written disclosure shall clearly andconcisely set out the type of life insurance,the death benefit applied for and its expectedfirst year cost. A basic illustration that meetsthe requirements of sections 375.1500 to375.1527, RSMo shall be deemed sufficientto meet this requirement for a written disclo-sure.

(G) Omission of Facts Concerning Suit-ability. The following acts or practices in con-nection with the solicitation, offer to sell orsale to a service member constitute a decep-tive sales practice under section 375.144,RSMo or an unfair trade practice under sec-tion 375.936(4), RSMo:

1. Excluding individually issued annu-ities, recommending the purchase of any lifeinsurance product which includes a side fundto a service member in pay grades E-4 andbelow unless the insurer has reasonablegrounds for believing that the life insurancedeath benefit, standing alone, is suitable;

2. Offering for sale or selling a lifeinsurance product which includes a side fundto a service member in pay grades E-4 andbelow who is currently enrolled in SGLI, ispresumed unsuitable unless, after the comple-tion of a needs assessment, the insurerdemonstrates that the applicant’s SGLI deathbenefit, together with any other military sur-vivor benefits, savings and investments, sur-vivor income, and other life insurance areinsufficient to meet the applicant’s insurableneeds for life insurance;

3. Excluding individually issued annu-ities, offering for sale or selling any lifeinsurance contract which includes a sidefund:

A. Unless interest credited accruesfrom the date of deposit to the date of with-drawal and permits withdrawals without limitor penalty;

B. Unless the applicant has been pro-vided with a schedule of effective rates ofreturn based upon cash flows of the combinedproduct. For this disclosure, the effective rateof return will consider all premiums and cashcontributions made by the policyholder andall cash accumulations and cash surrendervalues available to the policyholder in addi-tion to life insurance coverage. This schedule

will be provided for at least each policy yearfrom one to ten (1–10) and for every fifthpolicy year thereafter ending at age one hun-dred (100), policy maturity or final expira-tion; and

C. Which by default diverts or trans-fers funds accumulated in the side fund topay, reduce or offset any premiums due;

4. Excluding individually issued annu-ities, offering for sale or selling any lifeinsurance contract which after considering allpolicy benefits, including but not limited toendowment, return of premium or persisten-cy, does not comply with standard nonforfei-ture law for life insurance; or

5. Selling any life insurance product toan individual known to be a service memberthat excludes coverage if the insured’s deathis related to war, declared or undeclared, orany act related to military service except foran accidental death coverage, e.g., doubleindemnity, which may be excluded.

AUTHORITY: sections 374.045, 375.934,and 375.936, RSMo 2000 and section375.144, RSMo Supp. 2007.* Original rulefiled Nov. 9, 2007, effective June 30, 2008.

*Original authority: 374.045, RSMo 1967, amended1993, 1995; 375.934, RSMo 1959, amended 1978, 1991;375.936, RSMo 1959, amended 1967, 1969, 1971, 1976,1978, 1983, 1991; and 375.144, RSMo 2005.

20 CSR 400-5.400 Life Insurance andAnnuities Replacement

PURPOSE: This rule regulates the activitiesof insurers, agents, and brokers with respectto the replacement of existing life insuranceand annuities and protects the interests of lifeinsurance and annuity purchasers by estab-lishing minimum standards of conduct to beobserved in replacement transactions. Thisrule effectuates and aids in the interpretationof sections 375.934, 375.936, and 375.948,RSMo.

(1) Purpose and Scope.(A) The purpose of this rule is—

1. To regulate the activities of insurersand producers with respect to the replace-ment of existing life insurance and annuities;and

2. To protect the interests of life insur-ance and annuity purchasers by establishingminimum standards of conduct to beobserved in replacement or financed purchasetransactions. It will—

A. Assure that purchasers receiveinformation with which a decision can bemade in his or her own best interest; and

B. Reduce the opportunity for misrep-resentation and incomplete disclosure.



(B) Unless otherwise specifically included,this rule shall not apply to transactionsinvolving—

1. Credit life insurance;2. Group life insurance or group annu-

ities where there is no direct solicitation ofindividuals by an insurance producer. Directsolicitation shall not include any group meet-ing held by an insurance producer solely forthe purpose of educating or enrolling individ-uals or, when initiated by an individual mem-ber of the group, assisting with the selectionof investment options offered by a singleinsurer in connection with enrolling that indi-vidual in group life insurance or a groupannuity. Group life insurance or group annu-ity certificates marketed through directresponse solicitation shall be subject to theprovisions of section (7) of this rule;

3. Group life insurance or annuities usedto fund prearranged funeral contracts;

4. An application to the existing insurerthat issued the existing policy or contractwhen a contractual change or a conversionprivilege is being exercised; or, when theexisting policy or contract is being replacedby the same insurer pursuant to a new policyor contract filed with and approved by thedirector; or, when a term conversion privi-lege is exercised among corporate affiliates;

5. Proposed life insurance that is toreplace life insurance under a binding or con-ditional receipt issued by the same company;

6. (Reserved)A. Policies or contracts used to fund

1) an employee pension or welfare benefitplan that is covered by the Employee Retire-ment and Income Security Act (ERISA); 2) aplan described by Sections 401(a), 401(k) or403(b) of the Internal Revenue Code, wherethe plan, for purposes of ERISA, is estab-lished or maintained by an employer; 3) agovernmental or church plan defined in Sec-tion 414, a governmental or church welfarebenefit plan, or a deferred compensation planof a state or local government or tax exemptorganization under Section 457 of the Inter-nal Revenue Code; or 4) a nonqualifieddeferred compensation arrangement estab-lished or maintained by an employer or plansponsor.

B. Notwithstanding subparagraph(1)(B)6.A., this rule shall apply to policies orcontracts used to fund any plan or arrange-ment that is funded solely by contributions anemployee elects to make, whether on a pre-tax or after-tax basis, and where the insurerhas been notified that plan participants maychoose from among two (2) or more insurers,and there is a direct solicitation of an individ-ual employee by an insurance producer forthe purchase of a contract or policy. As usedin this subsection, direct solicitation shall notinclude any group meeting held by an insur-

ance producer solely for the purpose of edu-cating individuals about the plan or arrange-ment or enrolling individuals in the plan orarrangement or, when initiated by an individ-ual employee, assisting with the selection ofinvestment options offered by a single insurerin connection with enrolling that individualemployee in group life insurance or a groupannuity;

7. Where new coverage is providedunder a life insurance policy or contract andthe cost is borne wholly by the insured’semployer or by an association of which theinsured is a member;

8. Existing life insurance that is a non-convertible term life insurance policy thatwill expire in five (5) years or less and cannotbe renewed;

9. Immediate annuities that are pur-chased with proceeds from an existing con-tract. Immediate annuities purchased withproceeds from an existing policy are notexempted from the requirements of this rule;or

10. Structured settlements.(C) Registered contracts shall be exempt

from the requirements of paragraph (5)(A)2.and subsection (6)(B) of this rule with respectto the provision of illustrations or policy sum-maries; however, premium or contract contri-bution amounts and identification of theappropriate prospectus or offering circularshall be required instead.

(2) Definitions.(A) “Direct-response solicitation” means a

solicitation through a sponsoring or endors-ing entity or individually solely throughmails, telephone, the Internet, or other masscommunication media.

(B) “Existing insurer” means the insurancecompany whose policy or contract is or willbe changed or affected in a manner describedwithin the definition of “replacement.”

(C) “Existing contract” means an annuitycontract (contract) in force, including a con-tract under a binding or conditional receipt ora contract that is within an unconditionalrefund period.

(D) “Existing policy” means an individuallife insurance policy (policy) in force, includ-ing a policy under a binding or conditionalreceipt or a policy that is within an uncondi-tional refund period.

(E) “Financed purchase” means the pur-chase of a new policy or contract involvingthe actual or intended use of funds obtainedby the withdrawal or surrender of, or by bor-rowing from values of an existing policy orcontract to pay all or part of any premium dueon the new policy or contract. For purposesof a regulatory review of an individual trans-action only, if a withdrawal, surrender, orborrowing involving the policy or contract

values of an existing policy or contract is usedto pay premiums on a new policy or contractowned by the same policyholder and issuedby the same company within four (4) monthsbefore or thirteen (13) months after the effec-tive date of the new policy or contract, it willbe deemed prima facie evidence of the poli-cyholder’s intent to finance the purchase ofthe new policy or contract with existing poli-cy or contract values. This prima facie stan-dard is not intended to increase or decreasethe monitoring obligations contained in para-graph (4)(A)5. of this rule.

(F) “Illustration” means a presentation ordepiction that includes non-guaranteed ele-ments of a policy of life insurance or annuitycontract over a period of years as defined insection 375.1503, RSMo.

(G) “Policy summary,” for the purposes ofthis rule—

1. For policies or contracts other thanuniversal life policies, means a written state-ment regarding a policy or contract that shallcontain to the extent applicable, but need notbe limited to, the following information: cur-rent death benefit; annual contract premium;current cash surrender value; current divi-dend; application of current dividend; andamount of outstanding loan;

2. For universal life policies, means awritten statement that shall contain at leastthe following information: the beginning andend date of the current report period; the pol-icy value at the end of the previous reportperiod and at the end of the current reportperiod; the total amounts that have been cred-ited or debited to the policy value during thecurrent report period, identifying each bytype (e.g., interest, mortality, expense, andriders); the current death benefit at the end ofthe current report period on each life coveredby the policy; the net cash surrender value ofthe policy as of the end of the current reportperiod; and the amount of outstanding loans,if any, as of the end of the current report peri-od.

(H) “Producer,” for the purpose of thisrule, shall be defined to include agents, bro-kers, and producers.

(I) “Replacing insurer” means the insur-ance company that issues or proposes to issuea new policy or contract that replaces anexisting policy or contract or is a financedpurchase.

(J) “Registered contract” means an annuitycontract or life insurance policy subject to theprospectus delivery requirements of the Secu-rities Act of 1933.

(K) “Replacement” means a transaction inwhich a new policy or contract is to be pur-chased, and it is known or should be knownto the proposing producer, or to the propos-ing insurer if there is no producer, that byreason of the transaction, an existing policy


Secretary of State




or contract has been or is to be—1. Lapsed, forfeited, surrendered, or

partially surrendered, assigned to the replac-ing insurer, or otherwise terminated;

2. Converted to reduced paid-up insur-ance, continued as extended term insurance,or otherwise reduced in value by the use ofnonforfeiture benefits or other policy values;

3. Amended so as to effect either areduction in benefits or in the term for whichcoverage would otherwise remain in force orfor which benefits would be paid;

4. Reissued with any reduction in cashvalue; or

5. Used in a financed purchase.(L) “Sales material” means a sales illustra-

tion and any other written, printed, or elec-tronically presented information created,completed, or provided by the company orproducer and used in the presentation to thepolicy or contract owner related to the policyor contract purchased.

(3) Duties of Producers.(A) A producer who initiates an applica-

tion shall submit to the insurer, with or aspart of the application, a statement signed byboth the applicant and the producer as towhether the applicant has existing policies orcontracts. If the answer is “no,” the produc-er’s duties with respect to replacement arecomplete.

(B) If the applicant answered “yes” to thequestion regarding existing coverage referredto in subsection (3)(A), the producer shallpresent and read to the applicant, not laterthan at the time of taking the application, anotice regarding replacements in the form asdescribed in Appendix A, included herein, orother substantially similar form. The noticeshall be signed by both the applicant and theproducer attesting that the notice has beenread aloud by the producer or that the appli-cant did not wish the notice to be read aloud(in which case the producer need not haveread the notice aloud) and left with the appli-cant.

(C) The notice shall list all life insurancepolicies or annuities proposed to be replaced,properly identified by name of insurer, theinsured or annuitant, and policy or contractnumber if available; and shall include a state-ment as to whether each policy or contractwill be replaced or whether a policy will beused as a source of financing for the new pol-icy or contract. If a policy or contract numberhas not been issued by the existing insurer,alternative identification, such as an applica-tion or receipt number, shall be listed.

(D) In connection with a replacementtransaction, the producer shall leave with theapplicant at the time an application for a newpolicy or contract is completed the original ora copy of all sales material. With respect toelectronically presented sales material, it

shall be provided to the policy or contractowner in printed form no later than at thetime of policy or contract delivery.

(E) Except as provided in subsection(5)(C), in connection with a replacementtransaction, the producer shall submit to theinsurer to which an application for a policy orcontract is presented, a copy of each docu-ment required by this section, a statementidentifying any preprinted or electronicallypresented company approved sales materialsused, and copies of any individualized salesmaterials, including any illustrations relatedto the specific policy or contract purchased.

(F) Failure to comply with the require-ments set forth in section (3) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies and/or misrepresentation in insur-ance applications as those terms are used insection 375.936(4), (6), and (7), RSMo.

(4) Duties of Insurers that Use Producers.Each insurer shall—

(A) Maintain a system of supervision andcontrol to insure compliance with the require-ments of this rule that shall include at leastthe following:

1. Inform its producers of the require-ments of this rule and incorporate therequirements of this rule into all relevant pro-ducer training manuals prepared or distribut-ed by the insurer;

2. Provide to each producer a writtenstatement of the company’s position withrespect to the acceptability of replacements,providing guidance to its producer as to theappropriateness of these transactions;

3. A system to review the appropriate-ness of each replacement transaction that theproducer does not indicate is in accord withparagraph (4)(A)2. above;

4. Procedures to confirm that therequirements of this rule have been met; and

5. Procedures to detect transactions thatare replacements of existing policies or con-tracts by the existing insurer, but that have notbeen reported as such by the applicant or pro-ducer. Compliance with this rule mayinclude, but shall not be limited to, systemat-ic customer surveys, interviews, confirmationletters, or programs of internal monitoring;

(B) Have the capacity to monitor each pro-ducer’s life insurance policy and annuity con-tract replacements for that insurer, and shallproduce, upon request, and make suchrecords available to the department. Thecapacity to monitor shall include the abilityto produce records for each producer’s—

1. Life replacements, including financedpurchases, as a percentage of the producer’stotal annual sales for life insurance;

2. Number of lapses of policies by theproducer as a percentage of the producer’stotal annual sales for life insurance;

3. Annuity contract replacements as apercentage of the producer’s total annualannuity contract sales;

4. Number of transactions that are unre-ported replacements of existing policies orcontracts by the existing insurer detected bythe company’s monitoring system as requiredby paragraph (4)(A)5.; and

5. Replacements, indexed by replacingproducer and existing insurer;

(C) Require with, or as a part of, eachapplication for life insurance or an annuity, asigned statement by both the applicant andthe producer as to whether the applicant hasexisting policies or contracts;

(D) Require with each application for lifeinsurance or an annuity that indicates anexisting policy or contract, a completednotice regarding replacements as contained inAppendix A, included herein;

(E) When the applicant has existing poli-cies or contracts, each insurer shall be able toproduce copies of any sales material requiredby subsection (3)(E), the basic illustrationand any supplemental illustrations related tothe specific policy or contract that is pur-chased, and the producer’s and applicant’ssigned statements with respect to financingand replacement for at least five (5) yearsafter the termination or expiration of the pro-posed policy or contract;

(F) Ascertain that the sales material andillustrations required by subsection (3)(E) ofthis rule meet the requirements of this ruleand are complete and accurate for the pro-posed policy or contract;

(G) If an application does not meet therequirements of this rule, notify the producerand applicant and fulfill the outstandingrequirements;

(H) Maintains records in paper, photo-graph, microprocess, magnetic, mechanicalor electronic media, or by any process thataccurately reproduces the actual document;and

(I) Failure to comply with the requirementsset forth in section (4) of this rule shall con-stitute false information and/or misrepresen-tations and false advertising of insurance poli-cies and/or misrepresentation in insuranceapplications as those terms are used in sec-tion 375.936(4), (6), and (7), RSMo.

(5) Duties of Replacing Insurers that Use Pro-ducers.

(A) Where a replacement is involved in thetransaction, the replacing insurer shall—

1. Verify that the required forms arereceived and are in compliance with this rule;

2. Notify any other existing insurer thatmay be affected by the proposed replacementwithin five (5) business days of receipt of acompleted application indicating replacementor when the replacement is identified if notindicated on the application, and mail a copy


Secretary of State


of the available illustration or policy summa-ry for the proposed policy or available disclo-sure document for the proposed contractwithin five (5) business days of a requestfrom an existing insurer;

3. Be able to produce copies of the noti-fication regarding replacement required insubsection (3)(B), indexed by producer, for atleast five (5) years or until the next regularexamination by the insurance department of acompany’s state of domicile, whichever islater; and

4. Provide to the policy or contractowner notice of the right to return the policyor contract within thirty (30) days of thedelivery of the contract and receive an uncon-ditional full refund of all premiums or con-sideration paid on it, including any policyfees or charges or, in the case of a variable ormarket value adjustment policy or contract, apayment of the cash surrender value providedunder the policy or contract plus the fees andother charges deducted from the gross premi-ums or consideration or imposed under suchpolicy or contract. Such notice may beincluded in Appendix A or C, included here-in.

(B) In transactions where the replacinginsurer and the existing insurer are the sameor subsidiaries or affiliates under commonownership or control, allow credit for theperiod of time that has elapsed under thereplaced policy’s or contract’s incontestabili-ty and suicide period up to the face amount ofthe existing policy or contract. With regard tofinanced purchases, the credit may be limitedto the amount the face amount of the existingpolicy is reduced by the use of existing policyvalues to fund the new policy or contract.

(C) If an insurer prohibits the use of salesmaterial other than that approved by the com-pany, as an alternative to the requirementsmade of an insurer pursuant to subsection(3)(E), the insurer may—

1. Require with each application a state-ment signed by the producer that—

A. Represents that the producer usedonly company-approved sales material; and

B. States that copies of all sales mate-rial were left with the applicant in accordancewith subsection (3)(D); and

2. Within ten (10) days of the issuance ofthe policy or contract—

A. Notify the applicant by sending aletter or by verbal communication with theapplicant by a person whose duties are sepa-rate from the marketing area of the insurer,that the producer has represented that copiesof all sales material have been left with theapplicant in accordance with subsection(3)(D);

B. Provide the applicant with a tollfree number to contact company personnelinvolved in the compliance function if such isnot the case; and

C. Stress the importance of retainingcopies of the sales material for future refer-ence; and

3. Be able to produce a copy of the letteror other verification in the policy file for atleast five (5) years after the termination orexpiration of the policy or contract.

(D) Failure to comply with the require-ments set forth in section (5) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies and/or misrepresentation in insur-ance applications as those terms are used insection 375.936(4), (6), and (7), RSMo.

(6) Duties of the Existing Insurer. Where areplacement is involved in the transaction,the existing insurer shall—

(A) Retain and be able to produce allreplacement notifications received, indexedby replacing insurer, for at least five (5)years;

(B) Send a letter to the policy or contractowner of the right to receive informationregarding the existing policy or contract val-ues including, if available, an in force illus-tration or policy summary, if an in force illus-tration cannot be produced within five (5)business days of receipt of a notice that anexisting policy or contract is being replaced.The information shall be provided within five(5) business days of receipt of the requestfrom the policy or contract owner;

(C) Upon receipt of a request to borrow,surrender, or withdraw any policy values,send a notice advising the policy owner thatthe release of policy values may affect theguaranteed elements, non-guaranteed ele-ments, face amount, or surrender value of thepolicy from which the values are released.The notice shall be sent separate from thecheck if the check is sent to anyone other thanthe policy owner. In the case of consecutiveautomatic premium loans, the insurer is onlyrequired to send the notice at the time of thefirst loan; and

(D) Failure to comply with the require-ments set forth in section (6) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies and/or misrepresentation in insur-ance applications as those terms are used insection 375.936(4), (6), and (7), RSMo.

(7) Duties of Insurers with Respect to DirectResponse Solicitations.

(A) In the case of an application that is ini-tiated as a result of a direct response solicita-tion, the insurer shall require, with or as partof each completed application for a policy orcontract, a statement asking whether theapplicant, by applying for the proposed poli-cy or contract, intends to replace, discontin-ue, or change an existing policy or contract.If the applicant indicates a replacement or

change is not intended, or if the applicantfails to respond to the statement, the insurershall send the applicant, with the policy orcontract, a notice regarding replacement inAppendix B, included herein, or other sub-stantially similar form approved by the direc-tor.

(B) If the insurer has proposed the replace-ment or if the applicant indicates a replace-ment is intended and the insurer continueswith the replacement, the insurer shall—

1. Provide to applicants or prospectiveapplicants with the policy or contract anotice, as described in Appendix C, includedherein, or other substantially similar formapproved by the director. In these instancesthe insurer may delete the references to theproducer, including the producer’s signature,and references not applicable to the productbeing sold or replaced, without having toobtain approval of the form from the director.The insurer’s obligation to obtain the appli-cant’s signature shall be satisfied if it candemonstrate that it has made a diligent effortto secure a signed copy of the notice referredto in this paragraph. The requirement tomake a diligent effort shall be deemed satis-fied if the insurer includes in the mailing aself-addressed postage prepaid envelope withinstructions for the return of the signed noticereferred to in this section; and

2. Comply with the requirements of para-graph (5)(A)2., if the applicant furnishes thenames of the existing insurers, and the require-ments of paragraphs (5)(A)3., (5)(A)4., andsubsection (5)(B).

(C) Failure to comply with the require-ments set forth in section (7) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies and/or misrepresentation in insur-ance applications as those terms are used insection 375.936(4), (6), and (7), RSMo.

(8) Violations. (A) Any failure to comply with this rule

shall be considered a violation of the UnfairTrade Practice Act, sections 375.930 to375.948, RSMo, as more fully set forth inthis rule. Examples of violations include:

1. Any deceptive or misleading informa-tion set forth in sales material;

2. Failing to ask the applicant in com-pleting the application the pertinent questionsregarding the possibility of financing orreplacement;

3. The intentional incorrect recording ofan answer;

4. Advising an applicant to respond neg-atively to any question regarding replacementin order to prevent notice to the existinginsurer; or

5. Advising a policy or contract ownerto write directly to the company in such away as to attempt to obscure the identity of



the replacing producer or company.(B) Policy and contract owners have the

right to replace existing life insurance poli-cies or annuity contracts after indicating in,or as a part of, an application for new cover-age that replacement is not their intention;however, patterns of inaccurate recordationsof the expression of intention regardingreplacement by policy or contract owners ofthe same producer shall be deemed primafacie evidence of the producer’s knowledgethat replacement was intended in connectionwith the identified transactions, and thesepatterns of action shall be deemed primafacie evidence of the producer’s intent to vio-late this rule.

(C) Where it is determined that the require-ments of this rule have not been met, thereplacing insurer shall provide to the policy orcontract owner an in force illustration if avail-able or policy summary for the replacementpolicy or available disclosure document for thereplacement contract and the appropriatenotice regarding replacements in Appendix Aor C, included herein.

(9) Severability. If any section or portion of asection of this rule, or its applicability to anyperson or circumstances, is held invalid by acourt, the remainder of this rule, or the appli-cability of its provisions to other persons,shall not be affected.


Secretary of State




AUTHORITY: sections 374.045, 375.143,375.934, 375.936, and 375.948, RSMo2016.* This rule was previously filed as 4CSR 190-13.060. Original rule filed Jan. 5,1970, effective Jan. 15, 1970. Amended:Filed June 21, 1970, effective July 1, 1970.Amended: Filed Feb. 18, 1972, effective Feb.28, 1972. Amended: Filed Aug. 5, 1974,effective Aug. 15, 1974. Amended: Filed Dec.23, 1975, effective Jan. 2, 1976. Rescindedand readopted: Filed March 15, 1979, effec-tive Sept. 14, 1979. Rescinded: Filed July 3,1985, effective Oct. 25, 1985. Rescinded andreadopted: Filed Aug. 12, 1983, effectiveDec. 12, 1983. Amended: Filed July 12,2002, effective Feb. 28, 2003. Amended:Filed Sept. 30, 2016, effective May 30, 2017.

*Original authority: 374.045, RSMo 1967, amended1993, 1995, 2008; 375.143, RSMo 2007; 375.934, RSMo1959, amended 1978, 1991; 375.936, RSMo 1959, amend-ed 1967, 1969, 1971, 1976, 1978, 1983, 1991; and375.948, RSMo 1959, amended 1978, 1991.

Op. Atty. Gen. No. 23, Fink (5-5-71). Sub-section 3 of the Division of Insurance’s regu-lation 3.11 (now 4 CSR 190-13.060(1)),which defines “replacement of life insurance”is in compliance with section 374.045(1),(3), RSMo (1969) because such regulation isreasonably related to section 375.936(5),RSMo (1969).

20 CSR 400-5.410 Disclosure of MaterialFacts in Annuity Sales(Rescinded March 30, 2017)

AUTHORITY: sections 374.040, 374.045,375.013, 375.936(4) and 375.936(6), RSMo2000 and 375.144, RSMo Supp. 2005. Orig-inal rule filed July 14, 2006, effective Jan.30, 2007. Rescinded: Filed Sept. 30, 2016,effective March 30, 2017.

20 CSR 400-5.500 Life Insurance Sold toCollege Students

PURPOSE: This rule explains the practicewhich must be followed by insurance produc-ers who sell or present plans of life insuranceto college students. This rule was adoptedpursuant to the provisions of section 374.045,RSMo and implements section 375.936,RSMo.

(1) The rule and procedures following willapply to all insurers, and insurance producerswho sell or present plans of college life insur-ance to undergraduates and graduate studentsthroughout Missouri:

(A) If the applicant is a minor and executesa promissory note for the payment of any partof the premiums, the note must be cosignedby the applicant’s parent, legal guardian oradult spouse;

(B) The application form for the coveragesmust recite the terms of any promissory noteexecuted in connection with the coverages,showing the amount of the note, the balancedue, the payment provisions and any credit toreflect the down payment, the down paymentbeing required by this rule;

(C) If a note is taken to finance less thanthe full first year premium, the balance mustbe paid by the applicant at the time the appli-cation is taken;

(D) Down payments shall be made in cashor by check and may not be paid or advancedby the producing insurance producer;

(E) A copy of the note must be attached tothe policy at the time of delivery. Deliverymust be in person by a company representa-tive. In the event that personal delivery is forgood reason impractical, delivery may bemade by use of United States certified mail,return receipt requested and delivery toaddressee only;

(F) Upon delivery, a policy receipt oracceptance form must be executed whichrecites that—

1. The policy has been issued as repre-sented; and

2. The insured acknowledges and under-stands the provisions and obligations of thefinancial indebtedness that s/he has incurred;

(G) The receipt or acceptance form men-tioned in subsection (1)(F) shall be registeredby a number corresponding to the policynumber in the home office; the forms shallnot be distributed to field representatives orinsurance producers but are to be furnishedfrom and by the home office when sendingthe policy to the producing insurance produc-er;

(H) If the promissory note of the insured issold or discounted to a third party by eitherthe company or the insurance producer, thetransferor must inform the insured of the saleor transfer within thirty (30) days of same.The notice may invite questions as to whetherthe terms and conditions for payment aremodified, but if applicable, must explain thatthe policy is security for payment for thenote;

(I) Whenever insurance of this typereplaces existing life insurance, either whollyor partially, 20 CSR 400-5.400 must bestrictly observed;

(J) Insurance producers or field representa-tives of the company who are licensed by thisstate to represent the company as licensed lifeinsurance producers may not represent, referto or hold themselves out to the public underany special title or as representatives of anyspecial policy or company unless they identi-fy themselves as licensed insurance prod-ucers. No person other than a licensed insur-ance producer shall participate in thetransaction, solicitation or effectuation of life

insurance with respect to college students inthis state;

(K) Any insured may cancel his/her obliga-tions under the policy of insurance or thepromissory note connected with the policy ofinsurance within fourteen (14) days from thedelivery of the policy; a provision advisingthe insured of same shall be placed in thenotices now required by subsection (1)(F) ofthis rule. Upon the cancellation, the insuredshall be entitled to a full refund of premiumpaid; and

(L) Notwithstanding the provisions of sub-section (1)(K) of this rule, if the Departmentof Insurance determines, after a prompt andfair investigation, that the company or itsinsurance producers have violated this rule ormaterially misrepresented the contract, thepolicy issued will be cancelled, the applicantreleased from all obligations and a totalrefund made of partial or down payments.

(2) The following practices are deemeddeceptive and misleading and, if proven afterthe hearing required by section 375.940,RSMo, shall subject the insurer to the penal-ties provided by law: Violations by insuranceproducers listed in this rule shall subject themto the penalties now contained in section375.141, RSMo.

(A) Telling or informing an applicant,either directly or indirectly, that s/he willreceive the first or other year of insurancefree of charge;

(B) Representing that the cash or surrendervalue of the policy actually sold is greaterthan it is; or

(C) Making any other untrue or misleadingrepresentation about the coverage or theterms and condition for payment for the cov-erage.

AUTHORITY: sections 374.045 and 375.936,RSMo 2000.* This rule was previously filedas 4 CSR 190-13.070. Original rule filed Jan.2, 1970, effective Jan. 15, 1970. Amended:Filed June 12, 1970, effective July 1, 1970.Amended: Filed Aug. 5, 1974, effective Aug.15, 1974. Amended: Filed July 12, 2002,effective Jan. 30, 2003.

*Original authority: 374.045, RSMo 1967, amended1993, 1995 and 375.936, RSMo 1959, amended 1967,1969, 1971, 1976, 1978, 1983, 1991.

20 CSR 400-5.600 Missouri Life andHealth Insurance Guaranty Association

PURPOSE: This rule sets forth the formsrequired by section 376.756, RSMo for use inconnection with the sale of policies or con-tracts which either are or are not covered bythe Missouri Life and Health InsuranceGuaranty Fund.


Secretary of State


(1) Effective May 31, 1989 no insurer maydeliver a policy or contract described in sec-tion 376.717.2, RSMo, to a policy or contractholder unless a copy of the notice set out inAppendix One is given to the policy or con-tract holder before or at the time of delivery.

If the policy or contract is excluded undersection 376.717.3, RSMo, the notice set outin Appendix One, which is included herein,does not need to be delivered to the policy orcontract holder.

(2) No insurer or insurance producer maydeliver a contract or policy described in sec-tion 376.717.2, RSMo, and excluded undersection 376.717.3, RSMo, from coverageunder the provisions of sections 376.715—376.758, RSMo, unless the insurer or insur-ance producer, prior to or at the time ofdelivery, gives the policy or contract holder acopy of the notice set out in Appendix Two,included herein.



This notice provides a brief summary of the Missouri Life and Health Insurance Guaranty Association (“the Association”) and the protectionit provides for policyholders. This safety net was created under Missouri law, which determines who and what is covered and the amounts ofcoverage.

The Association was established to provide protection in the unlikely event that your life, annuity, or health insurance company becomes finan-cially unable to meet its obligations and is taken over by its insurance department. If this should happen, the Association will typically arrangeto continue coverage and pay claims, in accordance with Missouri law, with funding from assessments paid by other insurance companies.

The basic protections provided by the Association are as follows:

• Life Insurance• $300,000 in death benefits• $100,000 in cash surrender and withdrawal values

• Health Insurance• $500,000 in hospital, medical, and surgical insurance benefits• $300,000 in disability insurance benefits• $300,000 in long-term care insurance benefits• $100,000 in other types of health insurance benefits

• Annuities• $250,000 in withdrawal and cash values

The maximum amount of protection for each individual, regardless of the number of policies or contracts, is as follows:

• $300,000 in aggregate for all types of coverage listed above, with the exception of basic hospital, medical, and surgical insurance or major medical insurance

• $500,000 in aggregate for basic hospital, medical, and surgical insurance or major medical insurance

• $5,000,000 to one policy owner of multiple nongroup policies of life insurance, whether the policy owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons

Note: Certain policies and contracts may not be covered or fully covered. For example, coverage does not extend to any portion(s) of a policyor contract that the insurer does not guarantee, such as certain investment additions to the account value of a variable life insurance policy ora variable annuity contract. There are also various residency requirements and other limitations under Missouri law.

To learn more about the above protections, as well as protections relating to group contracts or retirement plans, please visit the Association’swebsite at www.mo-iga.org, or contact:

Missouri Life and Health Missouri Department of Insurance, FinancialInsurance Guaranty Association Institutions and Professional Registration994 Diamond Ridge, Suite 102 301 West High Street, Room 530Jefferson City, Missouri 65109 Jefferson City, Missouri 65101Ph.: 573-634-8455 Ph.: 573-522-6115Fax: 573-634-8488

Insurance companies and agents are not allowed by Missouri law to use the existence of the Association or its coverage to encourage you topurchase any form of insurance. When selecting an insurance company, you should not rely on Association coverage. If there is any inconsis-tency between this notice and Missouri law, then Missouri law will control.

APPENDIX TWONOTICE

This policy or contract is not covered by the Missouri Life and Health Insurance Guaranty Association. If the company providing this policyor contract is unable to meet its obligation by reason of insolvency or financial impairment, the fund(s) of the Missouri Life and Health Insur-ance Guaranty Association will not be available to protect the policy or contract holder or his/her beneficiaries, payees, or assignees.

APPENDIX ONE NOTICE OF PROTECTION PROVIDED BY

MISSOURI LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION

AUTHORITY: section 374.045.1(2), RSMoSupp. 2013, and section 376.756, RSMo2000.* This rule was previously filed as 4CSR 190-13.290. Original rule filed Sept. 6,1988, effective April 1, 1989. Amended:Filed Dec. 1, 1989, effective May 1, 1990.Emergency amendment filed April 30, 1990,effective May 10, 1990, expired Aug. 7, 1990.Amended: Filed April 30, 1990, effectiveSept. 28, 1990. Amended: Filed Aug. 4,1992, effective May 6, 1993. Amended: FiledJuly 12, 2002, effective Jan. 30, 2003.Amended: Filed July 29, 2005, effective Feb.28, 2006. Amended: Filed Oct. 10, 2013,effective April 30, 2014. Amended: Filed Jan.22, 2016, effective Aug. 30, 2016.

*Original authority: 374.045, RSMo 1967, amended1993, 1995, 2008 and 376.756, RSMo 1988.

20 CSR 400-5.700 Accident and SicknessInsurance Advertising

PURPOSE: This rule effectuates or aids inthe interpretation of and carries out the pro-visions of sections 354.460, 375.936,376.405, 376.777, 376.850—376.890 and379.922, RSMo.

PUBLISHER’S NOTE: The secretary of statehas determined that the publication of theentire text of the material which is incorpo-rated by reference as a portion of this rulewould be unduly cumbersome or expensive.Therefore, the material which is so incorpo-rated is on file with the agency who filed thisrule, and with the Office of the Secretary ofState. Any interested person may view thismaterial at either agency’s headquarters orthe same will be made available at the Officeof the Secretary of State at a cost not toexceed actual cost of copy reproduction. Theentire text of the rule is printed here. Thisnote refers only to the incorporated by refer-ence material.

(1) Responsibility of Insurer.(A) These rules shall apply to any accident

and sickness insurance advertisement, as thatterm is defined in this rule, intended for pre-sentation, distribution, dissemination orother advertising use in this state, when thisuse is made either directly or indirectly by oron behalf of that insurer.

(B) Every insurer shall establish and at alltimes maintain a system of control over thecontent, form and method of dissemination ofall advertisements of its policies. The insurerwhose policies are so advertised shall bedeemed responsible for all these advertise-ments, regardless of by whom written, creat-ed, presented or distributed.

(C) Each health service corporation

licensed under Chapter 354, RSMo shall beconsidered within the full scope of this ruleand consider itself an insurer issuing policieswhen doing any advertising as defined in thisrule.

(2) Definitions.(A) An advertisement for the purpose of

these rules shall include:1. Printed or published material, audio-

visual material and descriptive literature usedby or on behalf of an insurer in direct mail,newspapers, magazines, radio scripts, televi-sion scripts, billboards and similar displays;

2. Descriptive literature and sales aids ofall kinds issued by an insurer, insurance pro-ducer for presentation to members of theinsurance buying public, including, but notlimited to, circulars, leaflets, booklets, depic-tions, illustrations, form letters and lead-gen-erating devices of all kinds as defined in thisrule; and

3. Prepared sales talks, presentationsand material for use by insurance producerswhether prepared by the insurer or the insur-ance producer.

(B) Exception for the purpose of theserules shall mean any provision in a policywhere coverage for a specified hazard isentirely eliminated; it is a statement of risknot assumed under the policy.

(C) Institutional advertisement for the pur-pose of these rules shall mean an advertise-ment having as its sole purpose and presenta-tion the promotion of the reader’s interest inthe concept of accident and sickness insur-ance or the promotion of the insurer as aname in the field of accident and sicknessinsurance.

(D) Insurer for the purpose of these rulesshall include any individual, corporation,association, partnership, reciprocal exchange,interinsurer, Lloyd’s, fraternal benefit soci-ety, health maintenance organization, healthservice corporation, prepaid dental plan andany other legal entity which is regulated as aninsurer in this state and is engaged in theadvertisement of itself or a policy as policy isdefined in this rule.

(E) Invitation to contract for the purpose ofthese rules shall mean any advertisementwhich is neither clearly an invitation toinquire nor clearly an institutional advertise-ment.

(F) Invitation to inquire for the purpose ofthese rules shall mean an advertisement hav-ing as its objective the creation of a desire toinquire further about the product and whichis limited to a brief description of the loss forwhich the benefit is payable and which maycontain the dollar amount of benefit payableor the period of time during which the benefit

is payable, or both. The advertisement shallnot refer to cost. An advertisement whichspecifies either the dollar amount of benefitpayable or the period of time during whichthe benefit is payable shall conspicuouslycontain a provision substantially as follows:“For costs and further details of the coverage,including exclusions, any reductions or limi-tations and the terms under which the policymay be continued in force, see your insuranceproducer or write the company.”

(G) Lead-generating device, for the pur-pose of these rules, shall mean any communi-cation directed to the public which, regard-less of form, content or stated purpose, isintended to result in the compilation or qual-ification of a list containing names and otherpersonal information to be used to solicit res-idents of this state for the purchase of a poli-cy.

(H) Limitation for the purpose of theserules shall mean any provision which restrictscoverage under the policy other than anexception or a reduction.

(I) Policy for the purpose of these rulesshall include any policy, plan, certificate,contract, agreement, statement of coverage,rider or endorsement which provides accidentor sickness benefits or medical, surgical orhospital expense benefits, whether, on anindemnity, reimbursement, health service orprepaid basis, except when issued in connec-tion with another type of insurance other thanlife and except disability, waiver of premiumand double indemnity benefits included inlife insurance and annuity contracts.

(J) Reduction for the purpose of these rulesshall mean any provision which reduces theamount of the benefit; a risk of loss isassumed but payment upon the occurrence ofthe loss is limited to some amount or periodless than would be otherwise payable had thereductions not been used.

(3) Method of Disclosure of Required Infor-mation. All information required to be dis-closed by these rules shall be set out conspic-uously and in close conjunction with thestatements to which this information relatesor under appropriate captions of such promi-nence that it shall not be minimized,obscured or presented in an ambiguous fash-ion or intermingled with the context of theadvertisement so as to be confusing or mis-leading.

(4) Form and Content of Advertisements.(A) The format and content of an adver-

tisement of an accident or sickness insurancepolicy shall be sufficiently complete andclear to avoid deception or the capacity ortendency to mislead or deceive. Whether an


Secretary of State


advertisement has a capacity or tendency tomislead or deceive shall be determined by thedirector of insurance from the basic overallimpressions that the advertisement may cre-ate reasonably upon those persons of averageeducation and intelligence for that segment ofthe public to which it appears on its face tobe directed.

(B) Advertisements shall be truthful andnot misleading in fact or in implication.Words or phrases, the meaning of which isclear only by implication or by familiaritywith insurance terminology, shall not beused.

(5) Advertisements of Benefits Payable, Loss-es Covered or Premiums Payable.

(A) Deceptive words, phrases or illustra-tions are prohibited.

1. No advertisement shall omit informa-tion or use words, phrases, statements, refer-ences or illustrations if the omission of thisinformation or use of these words, phrases,statements, references or illustrations has thecapacity, tendency or effect of misleading ordeceiving purchasers or prospective pur-chasers as to the nature or extent of any pol-icy benefit payable, loss covered or premiumpayable. The fact that the policy offered ismade available to a prospective insured forinspection prior to consummation of the saleor an offer is made to refund the premium ifthe purchaser is not satisfied or does not rem-edy misleading statements or omissions ofpertinent fact. No advertisements mayemploy devices which create undue fear oranxiety in the minds of its readers judged bythe standards in section (4).

2. Policies advertised as Medicare sup-plements or as providing additional benefitsnot provided by Medicare or similar govern-ment programs must not create any illusion ofgreater coverage or undue anxiety in theminds of those purchasing the coverage thanis actually provided. Any advertisement isunacceptable which—

A. Exaggerates the gaps in Medicarecoverage;

B. Promotes fear of dependence uponrelatives or charity;

C. Implies that long periods of sick-ness or hospital stays are common among theelderly;

D. Does not explain the manner inwhich any advertised policy is supplementalto Medicare coverage or fails to disclose theexact benefits it is designed to supplement;

E. Describes the inpatient hospitalcoverage of Medicare as “hospital Medicare”or “Medicare Part A” when the policy doesnot supplement the nonhospital or the psychi-atric hospital benefits of Medicare Part A

(phrases to the effect of the “inhospital por-tion of Medicare Part A” are acceptable);

F. Fails to clearly describe the opera-tion of the part(s) of Medicare which the pol-icy is designed to supplement; and

G. Describes those Medicare benefitsnot supplemented by the policy in a way as tominimize their importance relative to theMedicare benefits which are supplemented.

3. No advertisement shall contain or usewords or phrases such as, “all”, “full”,“complete”, “comprehensive”, “unlimited”,“up to”, “as high as”, “this policy will helppay your hospital and surgical bills”, “thispolicy will help fill some of the gaps thatMedicare and your present insurance leaveout”, “this policy will help to replace yourincome” (when used to express loss of timebenefits) or similar words and phrases, in amanner which exaggerates any benefitsbeyond the terms of the policy.

4. An advertisement shall not containdescriptions of a policy limitation, exceptionor reduction worded in a positive manner toimply that it is a benefit, such as describing awaiting period as a “benefit builder” or stat-ing “even preexisting conditions are coveredafter two years.” Words and phrases used inan advertisement to describe the policy limi-tations, exceptions and reductions fairly andaccurately shall describe the negative featuresof these limitations, exceptions and reduc-tions of the policy offered.

5. No advertisement of a benefit forwhich payment is conditional upon confine-ment in a hospital or similar facility shall usewords or phrases such as “tax free,” “extracash,” “extra income,” “extra pay” or sub-stantially similar words or phrases in a man-ner which has the capacity, tendency or effectof misleading the public into believing thatthe policy advertised, in some way, willenable them to make a profit from being hos-pitalized.

6. No advertisement of a hospital orother similar facility confinement benefitshall advertise that the amount of the benefitis payable on a monthly or weekly basiswhen, in fact, the amount of the benefitpayable is based upon a daily pro rata basisrelating to the number of days of confinementunless the statements of these monthly orweekly benefit amounts are followed immedi-ately by equally prominent statements of thebenefit payable on a daily basis. For example,either of the following statements is accept-able: “$1000 a month at ($33.33 per day)” or“$33.33 per day ($1000 per month).” Whenthe policy contains a limit on the number ofdays of coverage provided, this limit mustappear in the advertisement.

7. No advertisement of a policy coveringonly one (1) disease or a list of specified dis-eases shall imply coverage beyond the termsof the policy. Synonymous terms shall not beused to refer to any disease so as to implybroader coverage than is the fact.

8. An advertisement for a policy provid-ing benefits for specified illnesses only, suchas cancer or for specified accidents only, suchas automobile accidents, shall clearly andconspicuously in prominent type state thelimited nature of the policy. The statementshall be substantially as follows: “THIS IS ALIMITED POLICY,” “THIS IS A CANCERPOLICY ONLY,” “THIS IS AN AUTOMO-BILE ACCIDENT ONLY POLICY.”

9. An advertisement which is also aninvitation to join an association, trust or dis-cretionary group must solicit insurance cov-erage on a separate and distinct applicationwhich requires separate signatures for eachapplication; provided, however, that a sepa-rate and distinct application which requiressignatures for each application need not bemade where the advertisement is an invitationto join a discretionary group approved undersection 376.421.2., RSMo, which has as itssole purpose the provision of group healthinsurance benefits. The insurance programmust be presented so as not to mislead ordeceive the prospective members that theyare purchasing insurance as well as applyingfor membership if that is the case.

(B) Exceptions, Reductions and Limita-tions.

1. When an advertisement which is aninvitation to contract refers to either a dollaramount or a period of time for which anybenefit is payable or the cost of the policy orspecified policy benefit or the loss for whichthe benefit is payable, it shall also disclosethose exceptions, reductions and limitationsaffecting the basic provisions of the policywithout which the advertisement would havethe capacity or tendency to mislead ordeceive.

2. When a policy contains a waiting,elimination, probationary or similar timeperiod between the effective date of the poli-cy and the effective date of coverage underthe policy or a time period between the datea loss occurs and the date benefits begin toaccrue for this loss, an advertisement as stat-ed shall disclose the existence of these peri-ods.

3. An advertisement shall not use thewords “only”, “just”, “merely”, “mini-mum” or similar words or phrases to imply aminimal applicability of any exceptions andreductions such as “This policy is subjectonly to the following minimum exceptionsand reductions.”



(C) Preexisting Conditions.1. An advertisement which is subject to

the requirements of subsection (5)(B), in neg-ative terms, shall disclose the extent to whichany loss is not covered if the cause of the lossmanifested itself prior to the effective date ofthe policy. The term “preexisting condition”or any similar phrase without an appropriatedefinition or description shall not be used.

2. When a policy does not cover lossesresulting from preexisting conditions, noadvertisement of the policy shall state orimply that the applicant’s physical conditionor medical history will not affect the issuanceof a policy or payment of a claim. If an insur-er requires a medical examination for a spec-ified policy, the advertisement if it is an invi-tation to contract must disclose that a medicalexamination is required.

3. When an advertisement contains anapplication form to be completed by theapplicant and returned by mail for a directresponse insurance product, the applicationform shall contain a question or statementwhich reflects the preexisting condition pro-visions of the policy which immediately pre-cedes the blank space for the applicant’s sig-nature. For example, this application formshall contain substantially the following ques-tion or statement: “Do you understand thatthis policy will not pay benefits during thefirst year(s) after the issue date for a diseaseor physical condition which you now have orhave had in the past? YES” or substantiallythe following statement: “I understand thepolicy applied for will not pay benefits forany loss incurred during the first _____year(s) after the issue date on account of dis-ease or physical condition which I now haveor have had in the past.”

(6) Necessity for Disclosing Policy ProvisionsRelating to Renewability, Cancellability andTermination. When an advertisement whichis an invitation to contract refers to either adollar amount or a period of time for whichany benefit is payable or the cost of the policyor a specific policy benefit or the loss forwhich the benefit is payable, it shall disclosethe provisions relating to renewability, can-cellability, termination and any modificationof benefits, losses covered or premiums in amanner which shall not minimize or renderobscure the qualifying conditions.

(7) Testimonials or Endorsements by ThirdParties.

(A) Testimonials used in advertisementsmust be genuine, represent the current opin-ion of the author, be applicable to the policyadvertised and be accurately reproduced. Theinsurer, in using a testimonial, makes as its

own all of the statements contained in the tes-timonial and the advertisement, including thisstatement, is subject to all the provisions ofthese rules.

(B) If the person making a testimonial, anendorsement or an appraisal has a financialinterest in the insurer or a related entity as astockholder, director, officer, employee orotherwise, this fact shall be disclosed in theadvertisement. If a person is compensated formaking a testimonial, endorsement orappraisal, this fact shall be disclosed in theadvertisement by language substantially asfollows: “Paid Endorsement.” The paymentof substantial amounts, directly or indirectly,for “travel and entertainment” for filming orrecording of television or radio advertise-ments requires disclosure of such compensa-tion. This rule does not apply when paymentis union scale.

(C) An advertisement shall not state orimply that an insurer or a policy has beenapproved or endorsed by any individual,group of individuals, society, association orother organizations, unless this is the fact andunless any proprietary relationship betweenan organization and the insurer is disclosed.If the entity making the endorsement or testi-monial has been formed by the insurer or isowned or controlled by the insurer or the per-son(s) who owns or controls the insurer, thisfact shall be disclosed in the advertisement.

(D) When a testimonial refers to benefitsreceived under a policy, the specific claimdata, including claim number, date of lossand other pertinent information, shall beretained and made available by the insurer forinspection for a period of four (4) years oruntil the next regular report of examination ofthe insurer, whichever is the longer period oftime.

(8) Use of Statistics.(A) An advertisement relating to any insur-

er or policy shall not use irrelevant facts orstatistics and shall accurately reflect all of therelevant facts. This advertisement shall notimply that the statistics are derived from thepolicy advertised unless this is the fact andwhen applicable to other policies or plansshall specifically so state.

(B) An advertisement shall not represent orimply that claim settlements by the insurerare “liberal” or “generous” or use words ofsimilar import or that claim settlements areor will be beyond the actual terms of the con-tract. An unusual amount paid for a uniqueclaim for the policy advertised is misleadingand shall not be used.

(C) The specific source of any statisticsused in an advertisement shall be clearlyidentified in the advertisement.

(9) Identification of Plan or Number of Poli-cies.

(A) When a choice of the amount of bene-fits is referred to, an advertisement which isan invitation to contract shall disclose thatthe—

1. Amount of benefits provided dependsupon the plan selected; and

2. Premium will vary with the plan andbenefits selected.

(B) When an advertisement which is aninvitation to contract refers to various bene-fits which may be contained in two (2) ormore policies, other than group master poli-cies, the advertisement shall disclose thatthese benefits are provided only through acombination of those policies.

(10) Disparaging Comparisons and State-ments. An advertisement shall not, directlyor indirectly, make unfair or incomplete com-parisons of policies or benefits or compar-isons of noncomparable policies of otherinsurers and shall not disparage competitors,their policies, services or business methods.It shall not disparage or unfairly minimizecompeting methods of marketing insurance.

(11) Jurisdictional Licensing and Status ofInsurer.

(A) An advertisement which is seen orheard beyond the limits of the jurisdiction inwhich the insurer is licensed shall not implylicensing beyond those limits.

(B) An advertisement shall not create theimpression directly or indirectly that theinsurer, its financial condition or status or thepayment of its claims or merits, desirabilityor advisability of its policy forms or kinds ofplans of insurance are approved, endorsed oraccredited by any division or agency of thisstate or the United States government.

(12) Identity of Insurer.(A) The name of the actual insurer shall be

stated in all of its advertisements. The formnumber(s) of the policy advertised shall bestated in an advertisement which is an invita-tion to contract. An advertisement shall notuse a trade name, any insurance group desig-nation, name of the parent company of theinsurer, name of a particular division of theinsurer, service mark, slogan, symbol orother device which without disclosing thename of the actual insurer would have thecapacity and tendency to mislead or deceiveas to the true identity of the insurer.

(B) No advertisement shall use any combi-nation of words, symbols or physical materi-als which by their content, phraseology,shape, color or other characteristics are sosimilar to a combination of words, symbols


Secretary of State


or physical materials used by agencies of thefederal government or of this state or other-wise appear to be of such a nature that ittends to confuse or mislead prospectiveinsureds into believing that the solicitation isin some manner connected with an agency ofthe municipal, state or federal government.

(C) No advertisement in the form ofenvelopes or stationery of any kind may useany name, service mark, slogan or symbol orany device in a manner that implies that theinsurer or the policy advertised, or that anyinsurance producer who may call upon theconsumer in response to the advertisement isconnected with a governmental agency, suchas the Social Security Administration.

(D) An insurance producer who makescontact with a consumer, as result of acquir-ing that consumer’s name from a lead-gener-ating device must disclose this fact in the ini-tial contact with the consumer.

(13) Group or Quasi-Group Implications. Anadvertisement of particular policy shall notstate or imply that prospective insuredsbecome group or quasi-group members cov-ered under a group policy and as such enjoyspecial rates and underwriting privileges,unless that is the fact.

(14) Introductory, Initial or Special Offers.(A) Advertising.

1. An advertisement of an individualpolicy shall not directly or by implication rep-resent that a contract or combination of con-tracts is an introductory, initial or specialoffer or that applicants will receive substan-tial advantages not available at a later date orthat the offer is available only to a specifiedgroup of individuals, unless that is the fact.An advertisement shall not contain phrasesdescribing an enrollment period as “special”,“limited” or similar words or phrases whenthe insurer uses these enrollment periods asthe usual method of advertising accident andsickness insurance.

2. An enrollment period during which aparticular insurance product may be pur-chased on an individual basis shall not beoffered within this state unless there has beena lapse of not less than three (3) monthsbetween the close of the immediately preced-ing enrollment period for substantially thesame product and the opening of the newenrollment period. The advertisement shallindicate the date by which the applicant mustmail the application which shall not be lessthan ten (10) days and not more than forty(40) days from the date that the enrollmentperiod is advertised for the first time. Thisrule applies to all advertising media—that is,mail, newspapers, radio, television, maga-

zines and periodicals—by any one (1) insurer.It is inapplicable to solicitations of employeesor members of a particular group or associa-tion which otherwise would be eligible underspecific provisions of the Insurance Code forgroup, blanket or franchise insurance. Thephrase “any one insurer” includes all theaffiliated companies of a group of insurancecompanies under common management orcontrol.

3. This rule prohibits any statement ofimplication to the effect that only a specificnumber of policies will be sold or that a timeis fixed for the discontinuance of the sale ofthe particular policy advertised because ofspecial advantages available in the policy,unless this is the fact.

4. The phrase “a particular insuranceproduct” in paragraph (14)(A)2. means aninsurance policy which provides substantiallydifferent benefits than those contained in anyother policy, different terms of renewability;an increase or decrease in the dollar amountsof benefits; an increase or decrease in anyelimination period or waiting period fromthose available during an enrollment periodfor another policy shall not be sufficient toconstitute the product being offered as a dif-ferent product eligible for concurrent or over-lapping enrollment periods.

(B) An advertisement shall not offer a pol-icy which utilizes a reduced initial premiumrate in a manner which overemphasizes theavailability and the amount of the initialreduced premium. When an insurer chargesan initial premium that differs in amountfrom the amount of the renewal premiumpayable on the same mode, the advertisementshall not display the amount of the reducedinitial premium either more frequently ormore prominently than the renewal premiumand both the initial reduced premium and therenewal premium must be stated in juxtaposi-tion in each portion of the advertisementwhere the initial reduced premium appears.

(C) Special award, such as a “safe drivers’award” shall not be used in connection withadvertisements of accident or accident andsickness insurance.

(15) Statements About an Insurer. An adver-tisement shall not contain statements whichare untrue in fact, or by implication mislead-ing, with respect to the assets, corporatestructure, financial standing, age or relativeposition of the insurer in the insurance busi-ness. An advertisement shall not contain arecommendation by any commercial ratingsystem unless it clearly indicates the purposeof the recommendations and the limitations ofthe scope and extent of the recommendation.

(16) Enforcement Procedures.(A) Advertising File. Each insurer shall

maintain at its home or principal office and atits main office in this state, if any, a completefile containing every printed, published orprepared advertisement of its individual poli-cies and typical printed, published or pre-pared advertisements of its blanket, franchiseand group policies hereafter disseminated inor into this state, with a notation attached toeach advertisement which shall indicate themanner and extent of distribution and theform number of any policy advertised. Thisfile shall be subject to regular inspection bythis department. All these advertisementsshall be maintained in this file for a period offour (4) years.

(B) Preapproval of Advertising Required onNoncompliance. Any person violating anyprovision of this rule shall be subject to thepenalties prescribed by law. The director mayalso require the insurer to file all its advertis-ing intended for use in the state no later thantwenty (20) days before the use, the filings tobe examined and approved by the accidentand health section of the Missouri Depart-ment of Insurance before use in this state. Onthese disapproved filings, the insurer mayrequest a hearing, as under section376.777.7., RSMo, Approval of Policies.

(17) Guidelines Adopted. The National As-sociation of Insurance Commissioners’ Inter-pretive Guidelines predating this rule aredeclared to be the official interpretation ofthis rule except where inconsistent with thisrule.

(18) Severability Provision. If any section orportion of a section of these rules or theapplicability of them to any person or circum-stance is held invalid by a court, the remain-der of the rules or the applicability of thatprovision to other persons or circumstances,shall not be affected by it.

AUTHORITY: sections 354.120, 374.045,375.936, 376.405 and 376.777, RSMo2000*. This rule was previously filed as 4CSR 190-14.040. This version of rule filedJuly 27, 1964, effective Aug. 6, 1964.Amended: Filed Dec. 5, 1969, effective Dec.15, 1969. Amended: Filed Dec. 20, 1974,effective Dec. 30, 1974. Amended: FiledMarch 16, 1988, effective July 1, 1988.Amended: Filed July 12, 2002, effective Jan.30, 2003.

*Original authority: 354.120, RSMo 1973, amended1983, 1993; 374.045, RSMo 1967, 1995; 375.936, RSMo1959, amended 1967, 1969, 1971, 1976, 1978, 1983,1991; and 376.405, RSMo 1959, amended 1984; and376.777, RSMo 1959, amended 1984.



20 CSR 400-5.800 Annuity Disclosure

PURPOSE: This rule effectuates and aids inthe interpretation of sections 375.141.1(8),375.143, and 375.936(4), (6), and (7),RSMo. The purpose of this rule is to providestandards for the disclosure of certain mini-mum information about annuity contracts toprotect consumers and foster consumer edu-cation. This rule specifies the minimum infor-mation which must be disclosed, the methodfor disclosing it, and the use and content ofillustrations, if used, in connection with thesale of annuity contracts. The goal of this ruleis to ensure that purchasers of annuity con-tracts understand certain basic features ofannuity contracts. This rule implements theNational Association of Insurance Commis-sioners (NAIC) Annuity Disclosure GuidelineRegulation #245.

(1) Applicability and Scope. This ruleapplies to all group and individual annuitycontracts and certificates except—

(A) Immediate and deferred annuities thatcontain no non-guaranteed elements;

(B) (Reserved)1. Annuities used to fund—

A. An employee pension plan whichis covered by the Employee RetirementIncome Security Act (ERISA);

B. A plan described by Sections401(a), 401(k), or 403(b) of the Internal Rev-enue Code, where the plan, for purposes ofERISA, is established or maintained by anemployer;

C. A governmental or church plandefined in Section 414 or a deferred compen-sation plan of a state or local government ora tax exempt organization under Section 457of the Internal Revenue Code; or

D. A nonqualified deferred compen-sation arrangement established or maintainedby an employer or plan sponsor.

2. Notwithstanding paragraph (1)(B)1.,the rule shall apply to annuities used to fund aplan or arrangement that is funded solely bycontributions an employee elects to makewhether on a pre-tax or after-tax basis, andwhere the insurance company has been noti-fied that plan participants may choose fromamong two (2) or more fixed annuity providersand there is a direct solicitation of an individ-ual employee by a producer for the purchase ofan annuity contract. As used in this subsec-tion, direct solicitation shall not include anymeeting held by a producer solely for the pur-pose of educating or enrolling employees inthe plan or arrangement;

(C) Non-registered variable annuities issuedexclusively to an accredited investor or quali-fied purchaser as those terms are defined by

the Securities Act of 1933 (15 U.S.C. Section77a et seq.), the Investment Company Act of1940 (15 U.S.C. Section 80a-1 et seq.), orthe regulations promulgated under either ofthose acts, and offered for sale and sold in atransaction that is exempt from registrationunder the Securities Act of 1933 (15 U.S.C.Section 77a et seq.);

(D) (Reserved)1. Transactions involving variable annu-

ities and other registered products in compli-ance with Securities and Exchange Commis-sion (SEC) rules and Financial IndustryRegulatory Authority (FINRA) rules relatingto disclosures and illustrations, provided thatcompliance with section (3) of this rule shallbe required after January 1, 2014, unless, oruntil such time as, the SEC has adopted asummary prospectus rule or FINRA hasapproved for use a simplified disclosure formapplicable to variable annuities or other reg-istered products.

2. Notwithstanding paragraph (1)(D)1.,the delivery of the Buyer’s Guide is requiredin sales of variable annuities, and when appro-priate, in sales of other registered products.

3. Nothing in this rule shall limit thedirector’s ability to enforce the provisions ofthis rule or to require additional disclosure;

(E) Structured settlement annuities.

(2) Definitions. For the purposes of thisrule—

(A) “Buyer’s Guide” means the NationalAssociation of Insurance Commissioners’(NAIC) approved Annuity Buyer’s Guide, asappropriate for the annuity being offered forsale, either the Buyer’s Guide for DeferredAnnuities – Variable, Buyer’s Guide forDeferred Annuities – Fixed, or the Buyer’sGuide for Deferred Annuities; use of theBuyer’s Guide for Deferred Annuities is con-sidered appropriate in all sales and is includedherein as Appendix A. A current version ofthe NAIC Annuity Buyer’s Guide and its vari-ous formats, available on the NAIC website,www.naic.org, is an acceptable substitute;

(B) “Contract owner” means the ownernamed in the annuity contract or certificateholder in the case of a group annuity con-tract;

(C) “Determinable elements” means ele-ments that are derived from processes ormethods that are guaranteed at issue and notsubject to company discretion, but where thevalues or amounts cannot be determined untilsome point after issue. These elements includethe premiums, credited interest rates (includ-ing any bonus), benefits, values, non-interestbased credits, and/or charges or elements offormulas used to determine any of these.These elements may be described as guaran-

teed but not determined at issue. An elementis considered determinable if it was calculat-ed from underlying determinable elementsonly, or from both determinable and guaran-teed elements;

(D) “Generic name” means a short titledescriptive of the annuity contract beingapplied for or illustrated such as “single pre-mium deferred annuity;”

(E) “Guaranteed elements” means the pre-miums, credited interest rates (including anybonus), benefits, values, non-interest basedcredits, charges, or elements of formulas usedto determine any of these, that are guaranteedor have determinable elements at issue. Anelement is considered guaranteed if all of theunderlying elements that go into its calcula-tion are guaranteed;

(F) “Illustration” means a personalizedpresentation or depiction prepared for andprovided to an individual consumer thatincludes non-guaranteed elements of an annu-ity contract over a period of years. A sampleillustration is included herein as Appendix B;

(G) “Market Value Adjustment” or “MVA”feature is a positive or negative adjustmentthat may be applied to the account valueand/or cash value of the annuity upon with-drawal, surrender, contract annuitization, ordeath benefit payment based on either themovement of an external index or on thecompany’s current guaranteed interest ratebeing offered on new premiums or new ratesfor renewal periods, if that withdrawal, sur-render, contract annuitization, or death bene-fit payment occurs at a time other than on aspecified guaranteed benefit date;

(H) “Non-guaranteed elements” means thepremiums, credited interest rates (includingany bonus), benefits, values, dividends, non-interest based credits, charges, or elements offormulas used to determine any of these, thatare subject to company discretion and are notguaranteed at issue. An element is considerednon-guaranteed if any of the underlying non-guaranteed elements are used in its calcula-tion;

(I) “Registered product” means an annuitycontract or life insurance policy subject to theprospectus delivery requirements of the Secu-rities Act of 1933;

(J) “Structured settlement annuity” meansa “qualified funding asset” as defined in Sec-tion 130(d) of the Internal Revenue Code oran annuity that would be a qualified fundingasset under Section 130(d) but for the factthat it is not owned by an assignee under aqualified assignment.

(3) Standards for the Disclosure Documentand Buyer’s Guide.

(A) (Reserved)


Secretary of State


1. Where the application for an annuitycontract is taken in a face-to-face meeting,the applicant shall at or before the time ofapplication be given both the disclosure doc-ument described in subsection (3)(B) of thisrule and the Buyer’s Guide, if any.

2. Where the application for an annuitycontract is taken by means other than in aface-to-face meeting, the applicant shall besent both the disclosure document and theBuyer’s Guide no later than five (5) businessdays after the completed application isreceived by the insurer.

A. With respect to an applicationreceived as a result of a direct solicitationthrough the mail—

(I) Providing a Buyer’s Guide in amailing inviting prospective applicants toapply for an annuity contract shall be deemedto satisfy the requirement that the Buyer’sGuide be provided no later than five (5) busi-ness days after receipt of the application;

(II) Providing a disclosure docu-ment in a mailing inviting a prospectiveapplicant to apply for an annuity contractshall be deemed to satisfy the requirementthat the disclosure document be provided nolater than five (5) business days after receiptof the application.

B. With respect to an applicationreceived via the Internet—

(I) Taking reasonable steps to makethe Buyer’s Guide available for viewing andprinting on the insurer’s website shall bedeemed to satisfy the requirement that theBuyer’s Guide be provided no later than five(5) business days after receipt of the applica-tion;

(II) Taking reasonable steps tomake the disclosure document available forviewing and printing on the insurer’s websiteshall be deemed to satisfy the requirementthat the disclosure document be provided nolater than five (5) business days after receiptof the application.

C. A solicitation for an annuity con-tract provided in other than a face-to-facemeeting shall include a statement that theproposed applicant may contact the insurancedepartment of the state for a free annuityBuyer’s Guide. In lieu of the foregoing state-ment, an insurer may include a statement thatthe prospective applicant may contact theinsurer for a free annuity Buyer’s Guide.

D. Where the Buyer’s Guide and dis-closure document are not provided at orbefore the time of application, a free lookperiod of no less than fifteen (15) days shallbe provided for the applicant to return theannuity contract without penalty. This freelook shall run concurrently with any otherfree look provided under state law or rule.

(B) At a minimum, the following informa-tion shall be included in the disclosure docu-ment required to be provided under this rule:

1. The generic name of the contract, thecompany product name, if different, and formnumber, and the fact that it is an annuity;

2. The insurer’s legal name, physicaladdress, website address, and telephone num-ber;

3. A description of the contract and itsbenefits, emphasizing its long-term nature,including examples where appropriate:

A. The guaranteed, and non-guaran-teed elements of the contract, and their limi-tations, if any, including for fixed indexedannuities, the elements used to determine theindex-based interest, such as the participationrates, caps, or spread and an explanation ofhow they operate;

B. An explanation of the initial credit-ing rate, or for fixed indexed annuities, anexplanation of how the index-based interest isdetermined, specifying any bonus or intro-ductory portion, the duration of the rate, andthe fact that rates may change from time totime and are not guaranteed;

C. Periodic income options both on aguaranteed and non-guaranteed basis;

D. Any value reductions caused bywithdrawals from or surrender of the contract;

E. How values in the contract can beaccessed;

F. The death benefit, if available, andhow it will be calculated;

G. A summary of the federal tax sta-tus of the contract and any penalties applica-ble on withdrawal of values from the contract;and

H. Impact of any rider, including, butnot limited to, a guaranteed living benefit orlong-term care rider;

4. Specific dollar amount or percentagecharges and fees shall be listed with an expla-nation of how they apply; and

5. Information about the current guaran-teed rate or indexed crediting rate formula, ifapplicable, for new contracts that contains aclear notice that the rate is subject to change.

(C) Insurers shall define terms used in thedisclosure statement in language that facili-tates the understanding by a typical personwithin the segment of the public to which thedisclosure statement is directed, however,insurers’ definitions of terms defined in thisrule may not deviate from the definitions inthis rule.

(D) Failure to comply with the require-ments set forth in section (3) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies and/or misrepresentation in insur-ance applications as those terms are used in

section 375.936(4), (6), and (7), RSMo.

(4) Standards for Annuity Illustrations. (A) An insurer or producer may elect to

provide a consumer an illustration at anytime, provided that the illustration is in com-pliance with this section and—

1. Clearly labeled as an illustration;2. Includes a statement referring con-

sumers to the disclosure document andBuyer’s Guide provided to them in connec-tion with their purchase for additional infor-mation about their annuity; and

3. Is prepared by the insurer or thirdparty using software that is authorized by theinsurer prior to its use, provided that theinsurer maintains a system of control over theuse of illustrations.

(B) An illustration furnished an applicantfor a group annuity contract or contractsissued to a single applicant on multiple livesmay be either an individual or compositeillustration representative of the coverage onthe lives of members of the group or the mul-tiple lives covered.

(C) The illustration shall not be providedunless accompanied by the disclosure docu-ment referenced in section (3) of this rule.

(D) When using an illustration, the illustra-tion shall not—

1. Describe non-guaranteed elements ina manner that is misleading or has the capac-ity or tendency to mislead;

2. State or imply that the payment oramount of non-guaranteed elements is guar-anteed; or

3. Be incomplete.(E) Costs and fees of any type shall be

individually noted and explained.(F) An illustration shall conform to the fol-

lowing requirements:1. The illustration shall be labeled with

the date on which it was prepared;2. Each page, including any explanatory

notes or pages, shall be numbered and showits relationship to the total number of pages inthe disclosure document (e.g., the fourthpage of a seven-page disclosure documentshall be labeled “page 4 of 7 pages”);

3. The assumed dates of premiumreceipt and benefit payout within a contractyear shall be clearly identified;

4. If the age of the proposed insured isshown as a component of the tabular detail, itshall be issue age plus the numbers of yearsthe contract is assumed to have been in force;

5. The assumed premium on which theillustrated benefits and values are based shallbe clearly identified, including rider premi-um for any benefits being illustrated;

6. Any charges for riders or other con-tract features assessed against the account



value or the crediting rate shall be recognizedin the illustrated values and shall be accom-panied by a statement indicating the nature ofthe rider benefits or the contract features, andwhether or not they are included in the illus-tration;

7. Guaranteed death benefits and valuesavailable upon surrender, if any, for the illus-trated contract premium shall be shown andclearly labeled guaranteed;

8. The non-guaranteed elements under-lying the non-guaranteed illustrated valuesshall be no more favorable than current non-guaranteed elements and shall not include anyassumed future improvement of such ele-ments. Additionally, non-guaranteed elementsused in calculating non-guaranteed illustratedvalues at any future duration shall reflect anyplanned changes, including any plannedchanges that may occur after expiration of aninitial guaranteed or bonus period;

9. In determining the non-guaranteedillustrated values for a fixed indexed annuity,the index-based interest rate and accountvalue shall be calculated for three (3) differ-ent scenarios: one (1) to reflect historical per-formance of the index for the most recent ten(10) calendar years; one (1) to reflect the his-torical performance of the index for the con-tinuous period of ten (10) calendar years outof the last twenty (20) calendar years thatwould result in the least index value growth(the “low scenario”); one (1) to reflect thehistorical performance of the index for thecontinuous period of ten (10) calendar yearsout of the last twenty (20) calendar years thatwould result in the most index value growth(the “high scenario”). The following require-ments apply:

A. The most recent ten (10) calendaryears and the last twenty (20) calendar yearsare defined to end on the prior December 31,except for illustrations prepared during thefirst three (3) months of the year, for whichthe end date of the calendar year period maybe the December 31 prior to the last full cal-endar year;

B. If any index utilized in determina-tion of an account value has not been in exis-tence for at least ten (10) calendar years,indexed returns for that index shall not beillustrated. If the fixed indexed annuity pro-vides an option to allocate account value tomore than one (1) indexed or fixed declaredrate account, and one (1) or more of thoseindexes has not been in existence for at leastten (10) calendar years, the allocation to suchindexed account(s) shall be assumed to bezero;

C. If any index utilized in determina-tion of an account value has been in existencefor at least ten (10) calendar years but less

than twenty (20) calendar years, the ten (10)calendar year periods that define the low andhigh scenarios shall be chosen from the exactnumber of years the index has been in exis-tence;

D. The non-guaranteed element(s),such as caps, spreads, participation rates, orother interest crediting adjustments used incalculating the non-guaranteed index-basedinterest rate shall be no more favorable thanthe corresponding current element(s);

E. If a fixed indexed annuity providesan option to allocate the account value tomore than one (1) indexed or fixed declaredrate account—

(I) The allocation used in the illus-tration shall be the same for all three (3) sce-narios; and

(II) The ten (10) calendar year peri-ods resulting in the least and greatest indexgrowth periods shall be determined indepen-dently for each indexed account option;

F. The geometric mean annual effec-tive rate of the account value growth over theten (10) calendar year period shall be shownfor each scenario;

G. If the most recent ten (10) calendaryear historical period experience of the indexis shorter than the number of years needed tofulfill the requirement of subsection (4)(H),the most recent ten (10) calendar year histor-ical period experience of the index shall beused for each subsequent ten (10) calendaryear period beyond the initial period for thepurpose of calculating the account value forthe remaining years of the illustration;

H. The low and high scenarios: 1)need not show surrender values (if differentthan account values); 2) shall not extendbeyond ten (10) calendar years (and thereforeare not subject to the requirements of subsec-tion (4)(H) beyond subparagraph (4)(H)1.A.;and 3) may be shown on a separate page. Agraphical presentation shall also be includedcomparing the movement of the account valueover the ten (10) calendar year period for thelow scenario, the high scenario, and the mostrecent ten (10) calendar year scenario; and

I. The low and high scenarios shouldreflect the irregular nature of the index per-formance and should trigger every type ofadjustment to the index-based interest rateunder the contract. The effect of the adjust-ments should be clear; for example, addition-al columns showing how the adjustmentapplied may be included. If an adjustment tothe index-based interest rate is not triggeredin the illustration (because no historical val-ues of the index in the required illustrationrange would have triggered it), the illustrationshall so state;

10. The guaranteed elements, if any,

shall be shown before corresponding non-guaranteed elements and shall be specificallyreferred to on any page of an illustration thatshows or describes only the non-guaranteedelements (e.g., “see page 1 for guaranteedelements”);

11. The account or accumulation valueof a contract, if shown, shall be identified bythe name this value is given in the contractbeing illustrated and shown in close proximi-ty to the corresponding value available uponsurrender;

12. The value available upon surrendershall be identified by the name this value isgiven in the contract being illustrated andshall be the amount available to the contractowner in a lump sum after deduction of sur-render charges, bonus forfeitures, contractloans, contract loan interest, and applicationof any market value adjustment, as applica-ble;

13. Illustrations may show contract ben-efits and values in graphic or chart form inaddition to the tabular form;

14. Any illustration of non-guaranteedelements shall be accompanied by a statementindicating that—

A. The benefits and values are notguaranteed;

B. The assumptions on which they arebased are subject to change by the insurer;and

C. Actual results may be higher orlower;

15. Illustrations based on non-guaranteedcredited interest and non-guaranteed annuityincome rates shall contain equally prominentcomparisons to guaranteed credited interestand guaranteed annuity income rates, includ-ing any guaranteed and non-guaranteed partic-ipation rates, caps, or spreads for fixedindexed annuities;

16. The annuity income rate illustratedshall not be greater than the current annuityincome rate unless the contract guaranteesare in fact more favorable;

17. Illustrations shall be concise andeasy to read;

18. Key terms shall be defined and thenused consistently throughout the illustration;

19. Illustrations shall not depict valuesbeyond the maximum annuitization age ordate;

20. Annuitization benefits shall be basedon contract values that reflect surrendercharges or any other adjustments, if applica-ble; and

21. Illustrations shall show both annuityincome rates per one thousand dollars($1000.00) and the dollar amounts of theperiodic income payable.

(G) An annuity illustration shall include a


Secretary of State


narrative summary that includes the followingunless there is provided at the same time in adisclosure document:

1. A brief description of any contractfeatures, riders or options, guaranteed and/ornonguaranteed, shown in the basic illustrationand the impact each may have on the benefitsand values of the contract;

2. A brief description of any otheroptional benefits or features that are selected,but not shown in the illustration and theimpact each has on the benefits and values ofthe contract;

3. Identification and a brief definition ofcolumn headings and key terms used in theillustration;

4. A statement containing in substancethe following:

A. For other than fixed indexed annu-ities—

(I) This illustration assumes theannuity’s current nonguaranteed elementswill not change. It is likely that they willchange and actual values will be higher orlower than those in this illustration but willnot be less than the minimum guarantees;

(II) The values in this illustrationare not guarantees or even estimates of theamounts you can expect from your annuity.Please review the entire Disclosure Docu-ment and Buyer’s Guide provided with yourAnnuity Contract for more detailed informa-tion;

B. For fixed indexed annuities—(I) This illustration assumes the

index will repeat historical performance andthat the annuity’s current non-guaranteed ele-ments, such as caps, spreads, participationrates, or other interest crediting adjustments,will not change. It is likely that the index willnot repeat historical performance, the non-guaranteed elements will change, and actualvalues will be higher or lower than those inthis illustration but will not be less than theminimum guarantees;

(II) The values in this illustrationare not guarantees or even estimates of theamounts you can expect from your annuity.Please review the entire Disclosure Docu-ment and Buyer’s Guide provided with yourAnnuity Contract for more detailed informa-tion; and

5. Additional explanations as follows:A. Minimum guarantees shall be

clearly explained; B. The effect on contract values of

contract surrender prior to maturity shall beexplained;

C. Any conditions on the payment ofbonuses shall be explained;

D. For annuities sold as an IRA,qualified plan, or in another arrangement

subject to the required minimum distribution(RMD) requirements of the Internal RevenueCode, the effect of RMDs on the contract val-ues shall be explained;

E. For annuities with recurring sur-render charge schedules, a clear and conciseexplanation of what circumstances will causethe surrender charge to recur; and

F. A brief description of the types ofannuity income options available shall beexplained, including:

(I) The earliest or only maturitydate for annuitization (as the term is definedin the contract);

(II) For contracts with an optionalmaturity date, the periodic income amountfor at least one (1) of the annuity incomeoptions available based on the guaranteedrates in the contract, at the later of age seven-ty (70) or ten (10) years after issue, but in nocase later than the maximum annuitizationage or date in the contract;

(III) For contracts with a fixedmaturity date, the periodic income amountfor at least one (1) of the annuity incomeoptions available, based on the guaranteedrates in the contract at the fixed maturitydate; and

(IV) The periodic income amountbased on the currently available periodicincome rates for the annuity income option inpart (4)(G)5.F.(II) or part (4)(G)5.F.(III), ifdesired.

(H) Following the narrative summary, anillustration shall include a numeric summarywhich shall include at minimum, numericvalues at the following durations:

1. (Reserved)A. First ten (10) contract years; orB. Surrender charge period if longer

than ten (10) years, including any renewalsurrender charge period(s);

2. Every tenth contract year up to thelater of thirty (30) years or age seventy (70);and

3. (Reserved)A. Required annuitization age; orB. Required annuitization date.

(I) If the annuity contains a MVA, the fol-lowing provisions apply to the illustration:

1. The MVA shall be referred to as suchthroughout the illustration;

2. The narrative shall include an expla-nation, in simple terms, of the potential effectof the MVA on the value available upon sur-render;

3. The narrative shall include an expla-nation, in simple terms, of the potential effectof the MVA on the death benefit;

4. A statement, containing in substancethe following, shall be included:

A. When you make a withdrawal the

amount you receive may be increased ordecreased by a Market Value Adjustment(MVA). If interest rates on which the MVA isbased go up after you buy your annuity, theMVA likely will decrease the amount youreceive. If interest rates go down, the MVAwill likely increase the amount you receive;

5. Illustrations shall describe both theupside and the downside aspects of the con-tract features relating to the MVA;

6. The illustrative effect of the MVAshall be shown under at least one (1) positiveand one (1) negative scenario. This demon-stration shall appear on a separate page andbe clearly labeled that it is informationdemonstrating the potential impact of a MVA;

7. Actual MVA floors and ceilings aslisted in the contract shall be illustrated; and

8. If the MVA has significant character-istics not addressed by paragraphs (4)(I)1.–(4)(I)6., the effect of such characteristicsshall be shown in the illustration.

(J) A narrative summary for a fixedindexed annuity illustration also shall includethe following unless provided at the sametime in a disclosure document:

1. An explanation, in simple terms, ofthe elements used to determine the index-based interest, including, but not limited to,the following elements:

A. The Index(es) which will be usedto determine the index-based interest;

B. The Indexing Method – such aspoint-to-point, daily averaging, monthly aver-aging;

C. The Index Term – the period overwhich indexed-based interest is calculated;

D. The Participation Rate, if applica-ble;

E. The Cap, if applicable; and F. The Spread, if applicable;

2. The narrative shall include an expla-nation, in simple terms, of how index-basedinterest is credited in the indexed annuity;

3. The narrative shall include a briefdescription of the frequency with which thecompany can re-set the elements used todetermine the index-based credits, includingthe participation rate, the cap, and thespread, if applicable; and

4. If the product allows the contractholder to make allocations to declared-ratesegment, then the narrative shall include abrief description of—

A. Any options to make allocations toa declared-rate segment, both for new premi-ums and for transfers from the indexed-basedsegments; and

B. Differences in guarantees applica-ble to the declared-rate segment and theindexed-based segments.

(K) A numeric summary for a fixed




Secretary of State


indexed annuity illustration shall include, at aminimum, the following elements:

1. The assumed growth rate of the indexin accordance with paragraph (4)(F)9.;

2. The assumed values for the participa-tion rate, cap, and spread, if applicable; and

3. The assumed allocation betweenindexed-based segments and declared-ratesegment, if applicable, in accordance withparagraph (4)(F)9.

(L) If the contract is issued other than asapplied for, a revised illustration conformingto the contract as issued shall be sent with thecontract, except that non-substantive changes,including, but not limited to, changes in theamount of expected initial or additional pre-miums and any changes in amounts ofexchanges pursuant to Section 1035 of theInternal Revenue Code, rollovers or transfers,which do not alter the key benefits and fea-tures of the annuity as applied for, will notrequire a revised illustration unless requestedby the applicant.

(M) Failure to comply with the require-ments set forth in section (4) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies and/or misrepresentation in insur-ance applications as those terms are used insection 375.936(4), (6), and (7), RSMo.

(5) Report to Contract Owners. For annuitiesin the payout period that include non-guaran-teed elements, and for deferred annuities inthe accumulation period, the insurer shallprovide each contract owner with a report, atleast annually, on the status of the contractthat contains at least the following informa-tion:

(A) The beginning and end date of the cur-rent report period;

(B) The accumulation and cash surrendervalue, if any, at the end of the previous reportperiod and at the end of the current reportperiod;

(C) The total amounts, if any, that havebeen credited, charged to the contract value,or paid during the current report period; and

(D) The amount of outstanding loans, ifany, as of the end of the current report peri-od.

(E) Failure to comply with the require-ments set forth in section (5) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies as those terms are used in section375.936(4) and (6), RSMo.

(6) Separability. If any provision of this ruleor its application to any person or circum-stance is for any reason held to be invalid byany court of law, the remainder of the rule

and its application to other persons or cir-cumstances shall not be affected.

(7) Recordkeeping. Insurers or insurance pro-ducers shall maintain, or be able to makeavailable to the director, records of the infor-mation collected from the consumer andother information provided in the disclosurestatement (including illustrations) for not lessthan three (3) years after the contract is deliv-ered by the insurer. An insurer is permitted,but shall not be required, to maintain docu-mentation on behalf of an insurance produc-er. Records required to be maintained by thisrule may be maintained in paper, photograph-ic, microprocess, magnetic, mechanical orelectronic media, or by any process that accu-rately reproduces the actual document.

APPENDIX A


Secretary of State


AUTHORITY: sections 374.045, 375.141,375.143, 375.934, 375.936, and 375.948,RSMo 2016.* Original rule filed Sept. 30,2016, effective March 30, 2017.

*Original authority: 374.045, RSMo 1967, amended1993, 1995, 2008; 375.141, RSMo 1961, amended 1965,1967, 1981, 1984, 1989, 1993, 2001; 375.143, RSMo2007; 375.934, RSMo 1959, amended 1978, 1991;375.936, RSMo 1959, amended 1967, 1969, 1971, 1976,1978, 1983, 1991; and 375.948, RSMo 1959, amended1978, 1991.

20 CSR 400-5.900 Suitability in AnnuityTransactions

PURPOSE: The purpose of the rule is torequire insurers to establish a system tosupervise recommendations and to set forthstandards and procedures for recommenda-tions to consumers that result in transactionsinvolving annuity products so that the insur-ance needs and financial objectives of con-sumers at the time of the transaction areappropriately addressed. Nothing hereinshall be construed to create or imply a pri-vate cause of action for a violation of thisrule. This rule implements the National Asso-ciation of Insurance Commissioners (NAIC)Suitability in Annuity Transactions ModelRegulation #275. This rule identifies anddefines conduct that constitutes unfair tradepractices under the Unfair Trade PracticeAct, sections 375.930–375.948, RSMo, andeffectuates and aids in the interpretation ofsections 375.141.1(8) and 375.143, RSMo,with respect to the demonstration of incompe-tence, untrustworthiness, financial irrespon-sibility, and customer suitability in the offer,sale, or exchange of annuity products.

(1) Scope. This rule shall apply to any recom-mendation to purchase, exchange, or replacean annuity made to a consumer by an insur-ance producer, or an insurer where no pro-ducer is involved, that results in the purchase,exchange, or replacement recommended.

(2) Exemptions. Unless otherwise specifical-ly included, this rule shall not apply to trans-actions involving—

(A) Direct response solicitations wherethere is no recommendation based on infor-mation collected from the consumer pursuantto this rule;

(B) Contracts used to fund— 1. An employee pension or welfare bene-

fit plan that is covered by the Employee Retire-ment and Income Security Act (ERISA);

2. A plan described by Sections 401(a),401(k), 403(b), 408(k), or 408(p) of theInternal Revenue Code (IRC), as amended, ifestablished or maintained by an employer;

3. A government or church plan defined

in Section 414 of the IRC, a government orchurch welfare benefit plan, or a deferredcompensation plan of a state or local govern-ment, or tax exempt organization under Sec-tion 457 of the IRC;

4. A nonqualified deferred compensa-tion arrangement established or maintainedby an employer or plan sponsor;

5. Settlements of or assumptions of lia-bilities associated with personal injury litiga-tion or any dispute or claim resolution pro-cess; or

6. Formal prepaid funeral contracts.

(3) Definitions.(A) “Annuity” means an annuity that is an

insurance product under state law that is indi-vidually solicited, whether the product isclassified as an individual or group annuity.

(B) “Continuing education credit” or “CEcredit” means one (1) continuing educationcredit in accordance with section 375.020,RSMo.

(C) “Continuing education provider” or“CE provider” means an individual or entitythat is approved to offer continuing educationcourses pursuant to section 375.020, RSMo.

(D) “FINRA” means the Financial IndustryRegulatory Authority or a succeeding agency.

(E) “Insurer” means a company required tobe licensed under the laws of this state to pro-vide insurance products, including annuities.

(F) “Insurance producer” means a personrequired to be licensed under the laws of thisstate to sell, solicit, or negotiate insurance,including annuities.

(G) “Recommendation” means advice pro-vided by an insurance producer, or an insurerwhere no producer is involved, to an individ-ual consumer that results in a purchase,exchange, or replacement of an annuity inaccordance with that advice.

(H) “Replacement” means a transaction inwhich a new policy or contract is to be pur-chased, and it is known or should be knownto the proposing producer, or to the propos-ing insurer if there is no producer, that byreason of the transaction, an existing policyor contract has been or is to be—

1. Lapsed, forfeited, surrendered, orpartially surrendered, assigned to the replac-ing insurer, or otherwise terminated;

2. Converted to reduced paid-up insur-ance, continued as extended term insurance,or otherwise reduced in value by the use ofnonforfeiture benefits or other policy values;

3. Amended so as to effect either areduction in benefits or in the term for whichcoverage would otherwise remain in force orfor which benefits would be paid;

4. Reissued with any reduction in cashvalue; or

5. Used in a financed purchase.

(I) “Suitability information” means infor-mation that is reasonably appropriate todetermine the suitability of a recommenda-tion, including the following:

1. Age;2. Annual income;3. Financial situation and needs, includ-

ing the financial resources used for the fund-ing of the annuity;

4. Financial experience;5. Financial objectives;6. Intended use of the annuity;7. Financial time horizon;8. Existing assets, including investment

and life insurance holdings;9. Liquidity needs;10. Liquid net worth;11. Risk tolerance; and12. Tax status.

(4) Duties of Insurers and of Insurance Pro-ducers.

(A) In recommending to a consumer thepurchase of an annuity or the exchange of anannuity that results in another insurance trans-action or series of insurance transactions, theinsurance producer, or the insurer where noproducer is involved, shall have reasonablegrounds for believing that the recommendationis suitable for the consumer on the basis of thefacts disclosed by the consumer as to his orher investments and other insurance productsand as to his or her financial situation andneeds, including the consumer’s suitabilityinformation, and that there is a reasonablebasis to believe all of the following:

1. The consumer has been reasonablyinformed of various features of the annuity,such as the potential surrender period andsurrender charge, potential tax penalty if theconsumer sells, exchanges, surrenders, orannuitizes the annuity, mortality and expensefees, investment advisory fees, potentialcharges for and features of riders, limitationson interest returns, insurance and investmentcomponents, and market risk. The require-ments of this rule are intended to supplementand do not replace any disclosure require-ments in other rules or statutes;

2. The particular annuity as a whole, theunderlying subaccounts to which funds areallocated at the time of purchase or exchangeof the annuity, and riders and similar productenhancements, if any, are suitable (and in thecase of an exchange or replacement, thetransaction as a whole is suitable) for the par-ticular consumer based on his or her suitabil-ity information; and

3. In the case of an exchange or replace-ment of an annuity, the exchange or replace-ment is suitable including taking into consid-eration whether—


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A. The consumer will incur a surren-der charge, be subject to the commencementof a new surrender period, lose existing ben-efits (such as death, living, or other contrac-tual benefits), or be subject to increased fees,investment advisory fees, charges for riders,and similar product enhancements;

B. The consumer would benefit fromproduct enhancements and improvements; and

C. The consumer has had anotherannuity exchange or replacement and, in par-ticular, an exchange or replacement withinthe preceding thirty-six (36) months.

(B) Prior to the execution of a purchase,exchange, or replacement of an annuityresulting from a recommendation, an insur-ance producer, or an insurer where no pro-ducer is involved, shall make reasonableefforts to obtain the consumer’s suitabilityinformation.

(C) Except as permitted under subsection(4)(D), an insurer shall not issue an annuityrecommended to a consumer unless there is areasonable basis to believe the annuity is suit-able based on the consumer’s suitabilityinformation.

(D) (Reserved)1. Except as provided under paragraph

(4)(D)2. of this rule, neither an insuranceproducer, nor an insurer, shall have any obli-gation to a consumer under subsections(4)(A) or (4)(C) of this rule related to anyannuity transaction if—

A. No recommendation is made;B. A recommendation was made and

was later found to have been unknowinglyprepared based on materially inaccurateinformation provided by the consumer;

C. A consumer refuses to provide rel-evant suitability information and the annuitytransaction is not recommended; or

D. A consumer decides to enter intoan annuity transaction that is not based on arecommendation of the insurer or the insur-ance producer.

2. An insurer’s issuance of an annuitysubject to paragraph (4)(D)1. of this ruleshall be reasonable under all the circum-stances actually known to the insurer at thetime the annuity is issued.

(E) An insurance producer or, where noinsurance producer is involved, the responsi-ble insurer representative, shall at the time ofsale—

1. Make a record of any recommenda-tion subject to subsection (4)(A) of this rule;

2. Obtain a customer signed statementdocumenting a customer’s refusal to providesuitability information, if any; and

3. Obtain a customer signed statementacknowledging that an annuity transaction isnot recommended if a customer decides to

enter into an annuity transaction that is notbased on the insurance producer’s or insur-er’s recommendation.

(F) (Reserved)1. An insurer shall establish a supervi-

sion system that is reasonably designed toachieve the insurer’s and its insurance pro-ducers’ compliance with this rule, including,but not limited to, the following:

A. The insurer shall maintain reason-able procedures to inform its insurance pro-ducers of the requirements of this rule andshall incorporate the requirements of this ruleinto relevant insurance producer trainingmanuals;

B. The insurer shall establish stan-dards for insurance producer product trainingand shall maintain reasonable procedures torequire its insurance producers to complywith the requirements of section (5) of thisrule;

C. The insurer shall provide product-specific training and training materials whichexplain all material features of its annuityproducts to its insurance producers;

D. The insurer shall maintain proce-dures for review of each recommendationprior to issuance of an annuity that aredesigned to ensure that there is a reasonablebasis to determine that a recommendation issuitable. Such review procedures may apply ascreening system for the purpose of identify-ing selected transactions for additional reviewand may be accomplished electronically orthrough other means including, but not limit-ed to, physical review. Such an electronic orother system may be designed to require addi-tional review only of those transactions iden-tified for additional review by the selectioncriteria;

E. The insurer shall maintain reason-able procedures to detect recommendationsthat are not suitable. This may include, but isnot limited to, confirmation of consumer suit-ability information, systematic customer sur-veys, interviews, confirmation letters, andprograms of internal monitoring. Nothing insubparagraph (4)(F)1.E. prevents an insurerfrom complying with subparagraph(4)(F)1.E. by applying sampling procedures,or by confirming suitability information afterissuance or delivery of the annuity; and

F. The insurer shall annually providea report to senior management, including tothe senior manager responsible for auditfunctions, which details a review, with appro-priate testing, reasonably designed to deter-mine the effectiveness of the supervision sys-tem, the exceptions found, and correctiveaction taken or recommended, if any.

2. (Reserved)A. Nothing in this subsection restricts

an insurer from contracting for performance ofa function (including maintenance of proce-dures) required under paragraph (4)(F)1. ofthis rule. An insurer is responsible for takingappropriate corrective action and may be sub-ject to sanctions and penalties pursuant to sec-tion (6) of this rule regardless of whether theinsurer contracts for performance of a functionand regardless of the insurer’s compliancewith subparagraph (4)(F)2.B. of this rule.

B. An insurer’s supervision systemunder paragraph (4)(F)1. of this rule shallinclude supervision of contractual perfor-mance under subsection (4)(F) of this rule.This includes, but is not limited to, the fol-lowing:

(I) Monitoring and, as appropriate,conducting audits to assure that the contract-ed function is properly performed; and

(II) Annually obtaining a certifica-tion from a senior manager who has respon-sibility for the contracted function that themanager has a reasonable basis to represent,and does represent, that the function is prop-erly performed.

3. An insurer is not required to includein its system of supervision an insurance pro-ducer’s recommendations to consumers ofproducts other than the annuities offered bythe insurer.

(G) An insurance producer shall not dis-suade, or attempt to dissuade, a consumerfrom—

1. Truthfully responding to an insurer’srequest for confirmation of suitability infor-mation;

2. Filing a complaint; or3. Cooperating with the investigation of

a complaint.(H) (Reserved)

1. Sales made in compliance withFINRA requirements pertaining to suitabilityand supervision of annuity transactions shallsatisfy the requirements under this rule. Thissubsection applies to FINRA broker-dealersales of annuities if the suitability and super-vision is similar to those applied to variableannuity sales. However, nothing in this sub-section shall limit the director’s ability toenforce (including investigate) the provisionsof this rule.

2. For paragraph (4)(H)1. of this rule toapply, an insurer shall—

A. Monitor the FINRA member bro-ker-dealer using information collected in thenormal course of an insurer’s business; and

B. Provide to the FINRA memberbroker-dealer information and reports thatare reasonably appropriate to assist theFINRA member broker-dealer to maintain itssupervision system.

(I) Failure to comply with the requirements




Secretary of State


set forth in section (4) of this rule shall con-stitute false information and/or misrepresen-tations and false advertising of insurance poli-cies and/or misrepresentation in insuranceapplications as those terms are used in sec-tion 375.936(4), (6), and (7), RSMo.

(5) Insurance Producer Training.(A) An insurance producer shall not solicit

the sale of an annuity product unless theinsurance producer has adequate knowledgeof the product to recommend the annuity andthe insurance producer is in compliance withthe insurer’s standards for product training.An insurance producer may rely on insurer-provided product-specific training standardsand materials to comply with this subsection.

(B) (Reserved)1. (Reserved)

A. An insurance producer whoengages in the sale of annuity products shallcomplete a one- (1-) time four (4) credittraining course approved by the director andprovided by a director-approved educationprovider.

B. Insurance producers who hold alife insurance line of authority on the effec-tive date of this rule and who desire to sellannuities shall complete the requirements ofthis subsection within six (6) months after theeffective date of this rule. Individuals whoobtain a life insurance line of authority on orafter the effective date of this rule may notengage in the sale of annuities until the annu-ity training course required under this subsec-tion has been completed.

2. The minimum length of the trainingrequired under subsection (5)(B) of this ruleshall be sufficient to qualify for at least four(4) CE credits, but may be longer.

3. The training required under subsec-tion (5)(B) of this rule shall include informa-tion on the following topics:

A. The types of annuities and variousclassifications of annuities;

B. Identification of the parties to anannuity;

C. How product specific annuity con-tract features affect consumers;

D. The application of income taxationof qualified and non-qualified annuities;

E. The primary uses of annuities; andF. Appropriate sales practices,

replacement, and disclosure requirements.4. Providers of courses intended to com-

ply with subsection (5)(B) of this rule shallcover all topics listed in the prescribed out-line and shall not present any marketinginformation or provide training on sales tech-niques or provide specific information abouta particular insurer’s products. Additionaltopics may be offered in conjunction with and

in addition to the required outline.5. A provider of an annuity training

course intended to comply with subsection(5)(B) of this rule shall register as a CEprovider in this state and comply with therules and guidelines applicable to insuranceproducer continuing education courses as setforth in section 375.020, RSMo.

6. Annuity training courses may be con-ducted and completed by classroom or self-study methods in accordance with section375.020, RSMo.

7. Providers of annuity training shallcomply with the reporting requirements inaccordance with section 375.020, RSMo.

8. The satisfaction of the trainingrequirements of another state that are sub-stantially similar to the provisions of this sub-section shall be deemed to satisfy the trainingrequirements of this subsection in this state.

9. An insurer shall verify that an insur-ance producer has completed the annuitytraining course required under this subsectionbefore allowing the producer to sell an annu-ity product for that insurer. An insurer maysatisfy its responsibility under this subsectionby obtaining certificates of completion of thetraining course or obtaining reports providedby director-sponsored database systems orvendors or from a reasonably reliable com-mercial database vendor that has a reportingarrangement with approved insurance educa-tion providers.

(C) Failure to comply with the require-ments set forth in section (5) of this rule shallconstitute false information and/or misrepre-sentations and false advertising of insurancepolicies and/or misrepresentation in insur-ance applications as those terms are used insection 375.936(4), (6), and (7), RSMo.

(6) Recordkeeping.(A) Insurers, general agents, independent

agencies, and insurance producers shallmaintain or be able to make available to thedirector records of the information collectedfrom the consumer and other informationused in making the recommendations thatwere the basis for insurance transactions for aperiod of not less than three (3) years afterthe insurance transaction is completed by theinsurer. An insurer is permitted, but shall notbe required, to maintain documentation onbehalf of an insurance producer.

(B) Records required to be maintained bythis rule may be maintained in paper, photo-graphic, micro-process, magnetic, mechani-cal, or electronic media, or by any processthat accurately reproduces the actual docu-ment.

AUTHORITY: sections 374.045, 375.020,

375.141, 375.143, 375.144, 375.934,375.936, and 375.948, RSMo 2016.* Origi-nal rule filed Sept. 30, 2016, effective March30, 2017.

*Original authority: 374.045, RSMo 1967, amended1993, 1995, 2008; 375.020, RSMo 1988, amended 1990,1991, 1993, 2001, 2007, 2009, 2014; 375.141, RSMo1961, amended 1965, 1967, 1981, 1984, 1989, 1993,2001; 375.143, RSMo 2007; 375.144, RSMo 2005;375.934, RSMo 1959, amended 1978, 1991; 375.936,RSMo 1959, amended 1967, 1969, 1971, 1976, 1978,1983, 1991; and 375.948, RSMo 1959, amended 1978,1991.

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