It would be nice if there were no such thing as an “unethical” agent, but unfortunately this is not the case. Therefore, regulations are in force to correct the practices that cause irreparable harm to our industry and to our profession. The most often targeted of our population by these miscreants are the elderly for a variety of reasons. Fortunately the Departments of Insurance and legislatures – locally, state and federal – have created special types of regulation protection these citizens, and this is true in the field of annuity sales. There is a chapter of this text dedicated to the problems of the senior citizens with discussions of appropriate regulations and penalties for those who ignore or disregard these regulations. This section discusses the sales practices of agents marketing annuities to anyone regardless of age, recognizing that some of this will be repeated in the later discussion of marketing to the seniors.
For the purpose of this discussion and regulations, “advertising” applies not only to “ads” (which actually is an abbreviation for advertisement…). brochures, newspaper and other media articles, television and radio advertising – but primarily printed material. Envelopes, stationery, business cards and any other material that is used by an agent or insurer that are designed to describe the insurance product and to attempt to encourage a purchase of the insurance product – annuity for this discussion.
Simply put, the regulations89 are intended to insure that the insurers and agents treat their clients honestly and openly. Therefore, any advertising must not mislead those who read it and act upon the information contained in the material (with special obligations to seniors, discussed later).
Advertising is also the material that is used to generate leads through reader response, generally followed by an agent calling. It can advertise a meeting or seminar at which information is provided (also covered in detail in a separate section), or simply advertising the product of the insurer. If the advertisement is directed towards those age 65 or older, if the advertisement is used for leads, the advertiser must disclose in the advertisement that an agent may contact the person – if this is intended.
If the name of the prospect is obtained from a lead source, the source must be disclosed to those over age 65.
Even though it is in nearly all agent’s contracts, it does not hurt to point out that the insurance company must give an agent permission in writing before the agent can advertise the product.
SEMINARS, CLASSES, INFORMATIONAL MEETINGS
Agents and others who market financial products, attempt to obtain new clients by holding seminars, classes or information meetings. This is particular applicable in the Senior market, and is so discussed later in the text. Basically, the regulations require that for such a meeting to be advertised (to any age) that the advertiser must disclose their intention by adding “and insurance sales presentation” immediately following the words “seminar,” “class,” or “informational meeting.”
ADVERTISING TO THE SENIOR MARKET
Marketing of annuities to those over age 65 have stricter prohibitions, and are so set forth in the chapter “Providing Annuities to the Senior Market.”
PENALTIES FOR VIOLATION OF THE REGULATIONS
Any person or business in violation of the advertising regulations is subject to a stiff fine levied by the Insurance Commissioner. The fine for the first offense is $200, for the second offense it goes to $500, and for the third and later offenses, $1,000. The maximum fine for any one violation is $1,000. And if you are interested, the money goes into the Insurance Fund.63C