Chapter 4 — Solicitation, Discounts & Consumer Protections

Insurers authorized to transact insurance in Florida cannot refuse to issue and deliver a policy of life insurance solely because the person to be insured has the sickle-cell trait. No life insurance policy issued and delivered in Florida can carry a higher premium rate or charge solely because the person to be insured has the sickle-cell trait. [§626.9706]

The same protections apply to disability insurance. No insurer authorized to transact insurance in Florida shall refuse to issue and deliver any disability insurance policy solely because the person to be insured has the sickle-cell trait, nor carry a higher premium rate or charge solely because of the sickle-cell trait. [§626.9707]

Statute §626.99 requires insurers to provide purchasers of life insurance: information that will improve the buyer’s ability to select the most appropriate plan of life insurance; improve the buyer’s understanding of the basic features of the policy; and improve the ability of the buyer to evaluate the relative costs of similar plans. [§626.99]

Unless otherwise specifically included, the following are exempt from this statute:

• Annuities (except paragraphs specifically on annuities)
• Credit life insurance
• Group life insurance
• Life insurance policies issued in connection with pension and welfare plans subject to ERISA
• Variable life insurance under which the death benefits and cash values vary in accordance with unit values of investments held in a separate account

• Buyer’s Guide — A document that contains all the requirements of, and is substantially similar to, the NAIC Shoppers Guide, written for the consumer
• Cash dividend — The current illustrated dividend that can be applied toward payment of the gross premium
• Generic name — A short title descriptive of the premium and benefit patterns of a policy or a rider
• Policy summary — A written statement describing the elements of the policy including a prominently placed title: “STATEMENT OF POLICY COST AND BENEFIT INFORMATION”

• An agent is required to inform the prospective purchaser, prior to commencing a life insurance sales presentation, that the agent is acting as a life insurance agent and will inform the prospective purchaser of the full name of the insurance company being represented
• Terms such as “financial planner,” “investment adviser,” “financial consultant,” or “financial counseling” are not to be used in any way that implies the insurance agent is generally engaged in an advisory business in which compensation is unrelated to sales, unless this is actually the case
• Any reference to policy dividends must include a statement that dividends are not guaranteed
• A system or presentation that does not recognize the time value of money through the use of appropriate interest adjustments cannot be used for comparing the cost of two or more life insurance policies
• A presentation of benefits cannot display guaranteed and nonguaranteed benefits as a single sum unless they are shown separately in close proximity to one another
• The annual premium for a basic policy or rider, for which the insurer reserves the right to change the premium, will be the maximum annual premium

Any insurer soliciting life insurance in Florida must adopt and use a Buyer’s Guide. Failure to provide or deliver a Buyer’s Guide or policy summary constitutes an omission which misrepresents the benefits, advantages, conditions, or terms of an insurance policy. [§626.99(6) and §626.99(7)]

Rates are set by each state, but premium discounts are available. Applying discounts to insureds not meeting the requirements is fraud. Insureds pay their premiums for the risk taken by the insurer. Those who are a greater risk pay a greater premium; those who are a lower risk receive premium discounts and pay a lower premium.

Consider two 47-year-old prospective customers and how their risk profiles differ:

Elizabeth is the lower risk: she leads a healthy lifestyle, doesn’t smoke or drink, schedules healthcare regularly, carries no points on her license, and hasn’t had a motor vehicle accident for 17 years — and was not at fault. Barbara’s lifestyle includes thrill-seeking activities, smoking, daily alcohol use, insomnia, and a physically demanding job with injury risk. Regardless of whether you’re writing health or life policies, Elizabeth’s premium is going to be less for the same coverage.

Tobacco use greatly affects the amount paid for insurance, especially coverage relating to health and longevity. Florida allows charging smokers a maximum increase of 50 percent above standard rates.

Tobacco use is typically defined as: “any tobacco product, including cigarettes, cigars, chewing tobacco, snuff, and pipe tobacco, used four or more times a week within the past six months.”

E-cigarettes and vapor products are treated the same as traditional tobacco products by insurance companies, since the FDA places traditional cigarettes and e-cigarettes in the same category. Studies show that smokers who used e-cigarettes were 67% less likely to quit tobacco products compared to those who did not use e-cigarettes.

Life insurance companies typically have three broad rate classifications: standard, preferred, and preferred-plus. Nicotine users pay significantly higher premiums within each class. The definition of “nicotine user” typically includes any form of nicotine delivery — cigarettes, vapors, cigars, chewing tobacco, nicotine patches, and nicotine gum. The look-back period varies by insurer, but many look at the past five years.

Wellness programs equate to spending less on insurance premiums in many cases. Weight loss, stopping smoking, and anything that improves an individual’s likelihood of fewer insurance claims is good for the insurer. An inactive person, for example, spends $1,500 more on health costs each year. Healthy people equate to better profits for insurers and employers.

Both life and health insurers often give premium discounts when both spouses apply simultaneously for the same type of coverage. Long-term care insurance is the best-known example — almost all LTC policies allow discounts for married couples, with discounts as high as 40 percent in some cases. Insurers do this because when one spouse needs care, it is likely that the other spouse will provide care at home initially, reducing the number of claims paid.