South Dakota § 58-33-129 - Certain additional life insurance sales practices considered false, misleading, deceptive, or unfair.

§ 58-33-129. Certain additional life insurance sales practices considered false, misleading, deceptive, or unfair.

The following acts or practices by an insurer or insurance producer with respect to the sale of certain life insurance products are declared to be false, misleading, deceptive, or unfair:

(1)    Excluding individually issued annuities, recommending the purchase of any life insurance product which includes a side fund to a service member in pay grades E-4 and below unless the insurer has reasonable grounds for believing that the life insurance death benefit, standing alone, is suitable;

(2)    Offering for sale or selling a life insurance product which includes a side fund to a service member in pay grades E-4 and below who is currently enrolled in Servicemembers' Group Life Insurance (SGLI), is presumed unsuitable unless, after the completion of a needs assessment, the insurer demonstrates that the applicant's SGLI death benefit, together with any other military survivor benefits, savings and investments, survivor income, and other life insurance are insufficient to meet the applicant's insurable needs for life insurance;

For the purposes of this subdivision, insurable needs, are the risks associated with premature death taking into consideration the financial obligations and immediate and future cash needs of the applicant's estate and survivors or dependents.

For the purposes of this subdivision, other military survivor benefits, include the death gratuity, funeral reimbursement, transition assistance, survivor and dependents' educational assistance, dependency and indemnity compensation, federal TRICARE health care benefits, survivor housing benefits and allowances, federal income tax forgiveness, and social security survivor benefits; or

(3)    Excluding individually issued annuities, offering for sale or selling any life insurance contract which includes a side fund:

(a)    Unless interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;

(b)    Unless the applicant has been provided with a schedule of effective rates of return based upon cash flows of the combined product. For this disclosure, the effective rate of return shall consider all premiums and cash contributions made by the policyholder and all cash accumulations and cash surrender values available to the policyholder in addition to life insurance coverage. This schedule shall be provided for at least each policy year from one to ten and for every fifth policy year thereafter ending at age one hundred, policy maturity, or final expiration; and

(c)    Which by default diverts or transfers funds accumulated in the side fund to pay, reduce or offset any premiums due;

(4)    Excluding individually issued annuities, offering for sale or selling any life insurance contract which after considering all policy benefits, including endowment, return of premium, or persistency, does not comply with standard nonforfeiture law for life insurance; or

(5)    Selling any life insurance product to a person known to be a service member that excludes coverage if the insured's death is related to war, declared or undeclared, or any act related to military service except for an accidental death coverage, which may be excluded.

Source: SL 2008, ch 272, § 13.