Chapter 3

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" colspan=2 height=90 BGCOLOR="#006699" TEXT="#080000" bgproperties="fixed" background="122285a1erlcgo.gif"> <div> <FONT SIZE="5" COLOR="#FFCC66" FACE="Arial" ><B>Agent Ethics</B></FONT><B>     |     </B><A HREF="index.htm" TARGET="_top" TITLE="Agent Ethics"><U><B>home</B></U></A><B>            </B><A HREF="id15.htm" TARGET="_top" TITLE="TABLE OF CONTENTS"><U>TABLE OF CONTENTS</U></A>   |   <A HREF="id54.htm" TARGET="_top" TITLE="GLOSSARY"><U>GLOSSARY</U></A>   |   <A HREF="id67.htm" TARGET="_top" TITLE="Print Version"><U>Print Version</U></A>   |   <A HREF="id56.htm" TARGET="_top" TITLE="Review Questions"><U>Review Questions</U></A>   |   <A HREF="id55.htm" TARGET="_top" TITLE="FINAL EXAMINATION"><U>FINAL EXAMINATION</U></A></div> <bR> <div> </div> </td> </tr><tr> <td valign="top" width=210 BGCOLOR="#FFCC66" TEXT="#080000" background="121d2c00dkelyh.gif"> <div> <A HREF="mailto:instructor@wallstreetinstructors.com" TARGET="_top" TITLE="mailto:instructor@wallstreetinstructors."><U><IMG SRC="12caf630.gif" border=0 width="175" height="99" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A></div> <div> <TABLE BORDER="2" CELLPADDING="2" CELLSPACING="1" WIDTH="83" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=TOP HEIGHT= 16 ><NOBR><div> <A HREF="mailto:instructor@wallstreetinstructors.com" TARGET="_top" TITLE="mailto:instructor@wallstreetinstructors."><U>Instructor</U></A></div> </NOBR></tD> </tR> </TABLE></div> <bR> <div> Copyright ©2004 Wall Street Instructors, Inc. All rights reserved. No portion of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means electronic, mechanical, photocopying, recording or otherwise without prior written permission of Wall Street Instructors, Inc.</div> <bR> </td> <td valign="top" height=390 BGCOLOR="#FFFFFF" TEXT="#080000"> <div> <I>Chapter 3</I></div> <DIV ALIGN="LEFT"></DIV> <div> <B>Chapter Three:  Ethical Guidelines for Reviewing Sales Tools</B></div> <bR> <bR> <div> <I><B>Important Lesson Points</B></I></div> <bR> <div> The important points addressed in this lesson are:</div> <bR> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">The term "sales tools" includes almost everything used by the financial services practitioner to create interest in purchasing or keeping financial products</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Information contained on the practitioner's letterhead and business cards must be sufficient to identify the practitioner and his or her company without misleading the prospect</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Advertising and direct mail present special ethics challenges because their necessary brevity makes it impossible for them to provide full disclosure</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Personal brochures give the practitioner an opportunity to showcase his or her experience, education, skills and credentials but must not mislead the prospect</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Magazine articles published under the practitioner's name are generally designed to position him or her as an expert in the subject of the article; an ethical problem may arise if that implication is incorrect  </div> <bR> <div> <I><B>Introduction</B></I></div> <bR> <div> In the discussion so far, we have spent time in establishing the legal foundation for compliance and the philosophical underpinnings of ethics.  It is now time to deal with the more concrete and begin an examination of the ethical guidelines for the sales tools that agents use.</div> <bR> <div> The sales tools that agents and other financial services practitioners generally use include:</div> <bR> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">stationery and business cards</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">advertising and direct mail</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">personal brochures</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">magazine and other articles</div> <bR> <div> In fact, the term "sales tools" includes almost everything that the practitioner uses to communicate with the prospect or client that is designed <I>to create interest in purchasing or keeping </I>the products sold by the practitioner.  Falling into that broad general category are the stationery and business cards used, the advertising placed, the direct mail sent, the personal brochures that are distributed, the magazine articles that are written, the seminar scripts used and the product illustrations presented.  </div> <bR> <div> Every communications medium designed to influence a decision to purchase or retain a product that is seen or heard by the client or prospective client should be considered a sales tool.  Although this interprets sales tools broadly, it may be no broader than the courts would interpret the term.  The overriding sales tools ethical issue is that they convey information fairly and honestly without misleading the client.  </div> <bR> <div> <I><B>Stationery and Business Cards</B></I></div> <bR> <div> Practitioners generally have fairly wide latitude in designing stationery and business cards with respect to both the design and language that is used.  Some companies, of course, may have more stringent requirements than others.  A practitioner's letterhead and business cards must include sufficient information to adequately identify him or her and the company being represented without being misleading.  </div> <bR> <div> An example of a business card for a certified financial planner (CFP) would be Sarah Smith, CFP and Associates.  A similar-but possibly improper-business card might read Sarah Smith and Associates, Certified Financial Planners.  The problem with this latter card is that, unless all of Sarah's associates are CFPs, it gives the client inaccurate information.  The second example implies that all associates are CFPs when, in fact, only Sarah Smith may be a CFP.  If the practitioner is a stockbroker or registered representative both the letterhead and business cards should indicate that and should also provide the name and address of the registered broker/dealer.  </div> <bR> <div> In addition, the practitioner needs to provide his or her company affiliation on both the letterhead and business cards.  For those practitioners that use the products of multiple companies, it is important that if products are listed the company with whom each product is placed and its principal home office address should also be supplied.  How the practitioner identifies him- or herself on a business card or letterhead is important since these are, typically, the first pieces of sales material received by the client that identify the practitioner.</div> <bR> <div> The way the practitioner refers to him- or herself presents similar ethical concerns.  The rule that needs to guide the individual is that the title used must not state or imply something that is not true either as to credentials, licensing or special skills.  For example, the term "financial planner" should not be used by a life insurance agent unless the individual using the title is a Registered Investment Adviser.  Although it is clear that the use of the designations CPCU, CLU, CFP, ChFC or CPA would be improper and deceptive unless the practitioner had earned them, the use of a title such as "financial consultant," "financial planner," "investment planner," etc. would also be improper unless the individual had registered with the SEC and/or the appropriate state attorney general as an investment adviser.  </div> <bR> <div> It is important that a practitioner's business card and letterhead permit the client or prospect to properly identify him or her as a property and casualty agent, a life insurance agent, a stockbroker, a registered representative, a registered investment adviser, etc.  In addition, when a client receives the piece he or she should be able to determine what the practitioner sells.</div> <bR> <bR> <div> <I><B>Advertising and Direct Mail</B></I></div> <bR> <div> Advertising and direct mail present a special compliance challenge, especially for someone in the insurance business.  The overriding consideration from an ethical perspective is that the reader of the advertising or direct mail not be misled by the communication.  </div> <bR> <div> It is vital that special care be taken to present the material in an honest way but also to be understandable.  To accomplish this, the practitioner needs to ensure that the language used not only be truthful but that it also consider the level of understanding of the target audience.  The practitioner's deliberate use of truthful information which would serve to deceive because of the target audience's lack of sophistication is unethical.  </div> <bR> <div> Direct mail is normally used to generate interest in the recipient in order to schedule a sales appointment.  Obviously, it is important to generate the maximum interest possible in the financial products and services highlighted in the direct mail being used.  The principal ethical difficulty with respect to direct mail and advertising is its relative brevity.  It is often impossible to make a full disclosure in a piece of direct mail or in an advertisement.  There just isn't sufficient time.  Since the advertising or direct mail used must be brief as well as capable of generating prospective client interest it is particularly important that care be taken to ensure that the practitioner not misrepresent either the product or himself.  </div> <bR> <div> Since reader interest must be caught quickly, there may be a tendency to puffery-to present the product in an exaggerated manner by ascribing to it qualities it does not have.  For example, the writer may describe the product as new and unique or revolutionary.  In many cases involving products other than insurance or investment products, these words are just puffery.  In the insurance and investment business, however, the use of language that describes the offering as "new" or "best"-unless it clearly is and can be verified-or any other exaggeration must be scrupulously avoided.   Both legally and ethically, it must not be done.  </div> <bR> <div> The limited space normally available in direct mail letters makes including qualifying information that might be necessary to a complete understanding of the offering difficult.  As a result, information concerning exclusions, conditions, and other limitations is not included.  </div> <bR> <div> One of the important advantages enjoyed by life insurance products is its favorable tax treatment.  An agent may want to emphasize that benefit in direct mail letters.  Language such as "tax-free," "tax-favored," "tax-advantaged," or other words that point to the tax benefits of life insurance should not be used without additional qualifying language that invites the reader to check with his tax adviser for applicability in his specific situation.  </div> <bR> <div> Because of the inability to provide complete disclosure, it is a good idea to avoid discussing specific products or product features in advertising or direct mail.  Unless the product or feature can be explained completely, the direct mail or advertising that discusses them runs a good chance of misleading the reader.  Because full disclosure is generally impractical in these communications, specific product discussion should usually be avoided.  Furthermore, the use of superlatives-words like best, lowest cost, lowest risk, safest, and other similar words-unless they are true and can be verified could mislead the reader and should be avoided. </div> <bR> <div> Specific Florida rules governing advertising are covered at the end of this Chapter.</div> <bR> <bR> <div> <I><B>Personal Brochures</B></I></div> <bR> <div> Agents and other financial services practitioners are often interested in differentiating their practice from that of other agents or practitioners.  They may choose to highlight their differences through the use of personal brochures that describe some aspect of their practice.</div> <bR> <div> The typical brochure highlights personal achievements, education, professional designations, membership in civic and professional associations as well as the products and services being offered.  As in so many other communications, the ethical requirement is to avoid anything that would mislead the brochure's reader.  Areas in a personal brochure that may be abused include:</div> <bR> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Claiming to have a professional designation, expertise or education not really possessed</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Misstating personal or professional accomplishments</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Failure to include important information, such as that the services offered or results claimed are provided through the use of stocks, bonds, life insurance, mutual funds, annuities, etc.</div> <bR> <div> The guiding ethical principle when developing a personal brochure is that-at the very least-the brochure must provide information sufficient to allow the reader to understand:</div> <bR> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">The identity of the practitioner</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">The business that the practitioner is in</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">The products sold to accomplish the objectives stated in the brochure</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">The companies represented, their addresses and telephone numbers</div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">The practitioner's address and telephone number</div> <bR> <div> Personal brochures can provide a big lift to an agent's marketing efforts.  It is important for ethical and legal reasons, however, to follow these guidelines when creating a personal brochure.</div> <bR> <div> <I><B>Magazine Articles  </B></I></div> <bR> <div> Writing articles for magazines that serve the markets in which the agent or other practitioner wishes to sell can help to quickly position the practitioner as an individual possessing knowledge that is important to the market.  As a result, agents sometimes publish articles in order to develop a reputation as an authority in a particular field or as a specialist in the needs of a specific target market.  The ultimate purpose behind such an article is to provide recognition to the author with the eventual result that business is generated.  In light of that intent, the article should be considered an advertisement and judged ethically by the criteria that apply to advertising.  As with all other forms of advertising in the insurance and investment business, the information provided must be factually correct, understandable to the expected audience and not misleading.  </div> <bR> <div> As insurers and broker-dealers have begun to appreciate the desirability of target marketing and the importance of positioning practitioners within markets, they have come to realize the importance of providing articles for publication in magazines serving those markets.  Many companies maintain a large number of such articles on various financial and insurance subjects that are suitable for many markets.  Often, the practitioner needs only to add his or her name to the article and send it to the publisher.  Since these articles are usually written by home office specialists and reviewed by compliance attorneys, they can be expected to be factually correct and not misleading.  </div> <bR> <div> The ethical issue for the practitioner in appending his or her name to an article written by a specialist is twofold: the purported author did not write the piece, and the practitioner may not possess the expertise and specialized knowledge implied by the published article.  The first ethical concern may be resolved through the use of language clearly stating the article is made available by the practitioner rather than having been written by him or her.  The second ethical concern-that the implied expertise may not be possessed-can be overcome by ensuring that the practitioner not have articles published unless he or she actually possesses the expertise implied.</div> <bR> <bR> <div> <TABLE BORDER="2" CELLPADDING="2" CELLSPACING="1" WIDTH="147" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" ALIGN="LEFT" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=TOP HEIGHT= 101 ><NOBR><div> <B><IMG SRC="145755e0.gif" border=0 width="117" height="94" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></B></div> </NOBR></tD> </tR> </TABLE></div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B>SPECIFIC FLORIDA LAWS AND RULES</B></div> <bR> <bR> <bR> <bR> <bR> <div> Florida law specifically outlaws misleading or false advertising under Section 626.9541(a) and (b):</div> <bR> <div> (a) <I>Misrepresentations and false advertising of insurance policies.</I>--Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which: </div> <div> 1. Misrepresents the benefits, advantages, conditions, or terms of any insurance policy. </div> <div> 2. Misrepresents the dividends or share of the surplus to be received on any insurance policy. </div> <div> 3. Makes any false or misleading statements as to the dividends or share of surplus previously paid on any insurance policy. </div> <div> 4. Is misleading, or is a misrepresentation, as to the financial condition of any person or as to the legal reserve system upon which any life insurer operates. </div> <div> 5. Uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature thereof. </div> <div> 6. Is a misrepresentation for the purpose of inducing, or tending to induce, the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy. </div> <div> 7. Is a misrepresentation for the purpose of effecting a pledge or assignment of, or effecting a loan against, any insurance policy. </div> <div> 8. Misrepresents any insurance policy as being shares of stock or misrepresents ownership interest in the company. </div> <div> 9. Uses any advertisement that would mislead or otherwise cause a reasonable person to believe mistakenly that the state or the Federal Government is responsible for the insurance sales activities of any person or stands behind any person's credit or that any person, the state, or the Federal Government guarantees any returns on insurance products or is a source of payment of any insurance obligation of or sold by any person. </div> <bR> <div> (b) <I>False information and advertising generally.</I>--Knowingly making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public: </div> <div> 1. In a newspaper, magazine, or other publication, </div> <div> 2. In the form of a notice, circular, pamphlet, letter, or poster, </div> <div> 3. Over any radio or television station, or </div> <div> 4. In any other way, </div> <div> an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance, which is untrue, deceptive, or misleading. </div> <bR> <div> The Department of Financial Services has issued lengthy regulations governing advertising of insurance products.  These rules are designed to provide clear, unambiguous and truthful advertisements. Its aim is to provide the insuring public with accurate information to make informed decisions.  For regulations on life insurance advertisements refer to <A HREF="http://fac.dos.state.fl.us/faconline/chapter04.pdf" TARGET="_top" TITLE="http://fac.dos.state.fl.us/faconline/cha"><U>Rule 4-150.</U></A></div> <bR> <div> The definition of advertisement covers a broad range of marketing media designed to solicit insurance business including:</div> <bR> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">printed or published literature used by or on behalf of an insurer, </div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">audio-visual presentations, including radio and television broadcasts, </div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">direct mail pieces, brochures, pamphlets, circulars, </div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">billboards and other displays, and </div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">prepared sales talks, presentations, and announcements. </div> <bR> <div> Items <I><B>not </B></I>considered advertisements are:</div> <bR> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">materials used for employee/agent training purposes, </div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">materials and communications designed for exclusive internal use, </div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">individual communication with existing policyholders concerning existing coverage (communications with existing clients for renewal or expansion of coverage are considered advertising), </div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">announcements by group policyholders to eligible participants, </div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">correspondence with a group policy holder as part of a negotiation of a group contract, and </div> <div> <IMG BORDER="0" SRC="Symb075c00b700f000000000.gif" HEIGHT="16" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">court approved materials sent under a court order.</div> <bR> <div>  <A NAME="compliance_1"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A><I><B>Compliance</B></I></div> <bR> <div> An insurance company is responsible for any advertisement that directly or indirectly benefits the company. This applies to ads placed directly by the company, or advertisements placed by agents, brokers or others (who have the actual or apparent authority to do so) on behalf of the company. Department rules require agents and agencies to obtain insurance company approval before placing an advertisement that benefits the company (and was not furnished by the company).* Agents may either receive written permission before placing the ad, or obtain prior verbal approval with subsequent written approval from the insurer. Insurers must remind their agents, at least once each year, that prior approval by the insurer is required when placing ads that were not provided by the insurer. <I><B>Please note:</B></I><I> even minor changes to the wording of an advertisement may change the meaning so that it no longer complies with the Department's rules. Agents should either use company-provided advertisements exactly as written, or obtain company approval before making any changes. If an agent places an advertisement that may benefit more than one company, the agent should obtain approval from at least one of the companies.  *Most agent contracts contain a prior approval provision for any agent-placed advertising.</I></div> <bR> <div> Department regulations require insurers to print an identifying form number on each individual marketing piece. Insurers must keep a file, for four years, of all printed advertisements of its individual policies and samples of group insurance advertisements - including advertisements submitted to the insurer by agents or others. The company must note the manner and extent of its distribution in Florida. Insurers must, as part of their annual reporting to the Department, file a Certificate of Compliance stating that the firm's advertising complies with Department rules. </div> <bR> <div> The Department may also require insurers to file advertisements 30 days before first use. The Department currently requires 30-day prior approval of any advertisement by radio, television and cable broadcasts that will be distributed to more than 25% of Florida's population.</div> <bR> <bR> <div> <I> <A NAME="types_of_advertisements_1"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></I><FONT SIZE="3" COLOR="#000000" FACE="Times New Roman" ><I><B>Types of advertisements</B></I></FONT></div> <bR> <div> Department regulations classify advertisements in several ways: "institutional", "invitation to inquire", "invitation to contract". <I>Institutional advertisement </I>is promotion of insurance or annuity products as a concept, or general promotion of the company. This is advertising of the most general type - details of specific policies are not discussed. <I>Invitations to inquire</I> aim to create a desire for more information concerning an insurance product. This type of advertisement contains a brief description of the policy, but does not mention costs or rates. That information is provided by contacting the agent or company. Invitations to inquire must contain a statement (if applicable) that the policy may be subject to exclusions, limitations or reductions in benefits. Any advertisement that is not institutional or an invitation to inquire is an <I>invitation to contract. </I>Invitations to contract are the most specific type of advertising and may contain rate information and other detailed policy provisions.</div> <div> Each "invitation for contract" must contain the name of a Florida agent licensed to handle that kind of insurance. In addition, this type of advertisement must clearly describe the type of plan offered, the identifying form number, the premium amount and payment period, and any changes to the contract's face value. The advertisement also must mention any limitations or exclusions affecting the basic provisions of the policy. Actual insurance coverage cannot begin until the policy has been explained to the client and an application is completed. All advertisements containing an application must contain the name of a resident Florida agent and a space for the agent's signature. These applications must be returned to a Florida resident agent.</div> <bR> <div> Disclosures required by law or Department rule must be in the same size type as the body of information - and the disclosure must be presented near the information it discusses. Any attempt to minimize or obscure these disclosures is deemed deceptive and illegal. "Invitations to contract" also must reveal any policy limitations, exclusions or reductions in benefits. If the ad displays an interest rate or rates of return, it also must mention any limitations or conditions that affect ultimate return such as administrative charges, surrender charges, etc. </div> <bR> <div> Advertisements must clearly identify the product advertised as either an "insurance policy" or "annuity contract". In addition, the advertisement must refer to the product's "generic name", such as "whole life insurance", "group term life", or "deferred, variable annuity contract". To avoid deception, advertising materials must be truthful, unambiguous and not misleading. Insurance jargon is not permitted; nor are deceptive names and titles. For example, an advertisement may not refer to a fixed annuity as a "CD annuity" or any other phrase implying a negotiable instrument, deposit insurance, or anything other than an annuity contract. Similarly, premium payments may not be called "deposits". Advertisements may not imply government approval or use names or logos deceptively similar to the name or logo of any government agency. The rules also prohibit advertisements designed to create undue anxiety. Direct mail or direct response materials may not use phrases such as "no salesperson will call" or "by eliminating the agent we can offer at a lower cost". </div> <bR> <div>  <A NAME="other_advertising_rules__1"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A><I><B>Other Advertising Rules </B></I></div> <bR> <div>  <A NAME="dividends_1"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A>All statements regarding policy dividends must clearly say that dividends are not guaranteed. Nor may the statement create the impression that the policyholder will benefit from the growth of the company. Any comparisons between participating (par) policies that may pay dividends, and non-participating (non-par) policies that do not pay dividends must be fair and accurate. Department rules require agents to compare par and non-par policies using net premiums.</div> <bR> <div>  <A NAME="gift_rule_1"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A>Agents and companies may, for advertising purposes, provide applicants with gifts valued up to $25. Department rules define gifts as <I>"articles of merchandise".</I> The Department does not recognize gift certificates, memberships or other services as "merchandise". Consequently, agents who give away auto club memberships, gift certificates or cash violate the Insurance Code.</div> <bR> <div> Advertisements may not contain disparaging comments when comparing competing policies or competitors. Comparisons must be between policies of equal terms and conditions. Incomplete comparisons are deceptive and prohibited. </div> <bR> <div> Endorsements and testimonials must be genuine and represent the current opinion of the author. If a company spokesperson has a financial interest in the insurance company (subsidiary or parent company), exercises control over the insurer, or is compensated for the testimonial the endorsement must be labeled as a "paid endorsement". </div> <bR> <div> When using statistics in an advertisement, the ad must reveal the source of the statistics, and the policy to which the statistics apply. If an advertisement refers to a rating system, the ad must explain the purpose and limitations of the rating. </div> <bR> <div> Department rules allow the use of such terms as "introductory", "initial", "special" only if the policy's rates, provisions or benefits will change substantially in the future, or the coverage is available to certain persons only. </div> <bR> </td> </tr></table></body>