Section 2010.APPENDIX A   Interpretive Guidelines

Section 2010.ILLUSTRATION N   Guideline to Section 2010.70

Advertisements of cancellable Medicare supplement policies must state that the contract is cancellable or renewable at the option of the company as the case may be.  With respect to noncancellable policies and guaranteed renewable policies, the policy provisions, with respect to renewability, must be set forth and defined where appropriate.

This Section also requires a statement of the qualifying conditions which constitute limitations on the permanent nature of the coverage.  These customarily fall into three categories:  (1) age limits, (2) reservation of a right to increase premiums, and (3) the establishment of aggregate limits.  For example, "noncancellable and guaranteed renewable" does not fulfill the requirements of this Section if the policy contains a terminal age.  In such a case, a proper statement would be "Noncancellable and guaranteed renewable to age _____."  If a guaranteed renewable policy reserves the right to increase premiums, the statement must be expanded into language similar to "guaranteed renewable to age ______, but the company reserves the right to increase premium rates on a class basis."  If the contract contains an aggregate limit after which no further benefits are payable, the above statement must be amplified with the phrase "subject to a maximum aggregate amount of $50,000" or similar language.  A Medicare supplement insurance policy may have one or more of the three basic limitations and an advertisement must describe each of those which the policy contains.  Over fifty percent of new individual policy issues are guaranteed renewable; therefore, the fact that a policy is guaranteed renewable shall not be exaggerated.

An advertisement for a Medicare supplement insurance policy which provides for age step-rated premium rates based upon the policy year or the insured's attained age must disclose such rate increases and the times or ages at which such premium increases.