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NAIC Proposes Military Sales Model

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The National Association of Insurance Commissioners has proposed a rule that would set new standards for the sale of insurance products on military bases.

One provision of the model rule would require insurers that market products with a “side” or savings fund to demonstrate suitability for junior enlisted service members in pay grades E-4 and below.

The proposal would make it a deceptive trade practice to solicit in barracks, day rooms and other restricted areas.

If adopted, the model rule also would make more than 20 identified practices illegal under state law.

Under the proposal, certain product features would be prohibited altogether, regardless of suitability. These include deceptive interest crediting methodologies and automatic premium payment provisions, which divert accumulations from side funds to pay for life insurance in the event of default.

The proposed model is the best way of “ensuring the quality and appropriateness” for selling life insurance products to the military both on and off military installations in the United States and abroad, according to John Oxendine, Georgia insurance commissioner and co-chair of the Military Life Insurance Working Group at the NAIC, Kansas City, Mo.

The other co-chair is Mike Geeslin, Texas insurance commissioner.

The report, prepared in consultation with the U.S. Department of Defense, was presented late Thursday to Congress by the NAIC.

The report was required by the Military Personnel Financial Services Protection Act, a law enacted in September 2006.

The act requires the NAIC to give Congress a final report on implementation efforts by Sept. 29.


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