The Commonwealth of Massachusetts has a government agency completely dedicated to insurance law, the Division of Insurance. While the body oversees insurance generally, the state also has laws that specifically regulate life insurance. Before you start shopping for life insurance on the open market, familiarize yourself with state law. This will allow you to purchase insurance with knowledge of your rights as a consumer and your insurance carrier's responsibilities.
Solicitation
Massachusetts law attempts to compel life insurance companies to provide consumers with the insurance policy most in line with their needs. To that end, the law requires insurers to provide potential customers with a buyer's guide before the company accepts the customer's first insurance premium payment. The company must provide prospective buyers with a summary of benefits that includes only guaranteed benefits. Those selling life insurance must clearly identify themselves as insurance salesmen. Commonwealth law specifically prohibits using terms such as "financial planner" or "investment advisor" that attempt to obscure the fact that the insurance agent is selling life insurance policies.
Investment
Commonwealth of Massachusetts law provides restrictions on what types of investment life insurance companies incorporated in the state may make. Life insurance companies may not purchase more than a 25 percent stake in another insurance company. Life insurance companies are expressly allowed to make other types of investments, including controlling ownership in other types of companies.
Illustrations
Life insurance companies must inform the state insurance commissioner of which policies they sell with the aid of illustrations. Any policies that are not so registered with the state may not have accompanying illustrations. The law further requires specific information to be included on illustrations used for selling life insurance. Illustrations must include the name and address of the insurer, a generic policy name, initial death benefit and the rating classification on which the illustration is based. Insurance agents are forbidden from using illustrations to represent the policy as anything other than life insurance or from highlighting elements of the policy that are not guaranteed in a manner designed to mislead.
HIV/AIDS-Related Information
Insurance companies must hold all information related to an applicant or customer's HIV/AIDS status in the highest confidence. Insurers likewise cannot require a client to undergo an HIV/AIDS test unless the client has authorized such a test in advance. Such tests cannot be performed in an unfair or discriminatory manner. Insurance providers who become aware that their employees have violated this law are required by the same law to vigorously investigate the violation.
