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Texas Department of Insurance
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Commissioner’s Bulletin # B-0054-07

December 21, 2007


Re:   Suspicious Practices Targeting Senior Citizens

The Department has recently been informed that suspicious practices targeting senior citizens have been occurring throughout the United States and wants to inform and alert the Texas insurance industry about these transactions. The Department takes allegations of deceptive practices targeting senior citizens very seriously and will prosecute any such violations to the fullest extent possible.

Longevity, Health, or Behavioral "Studies" or "Surveys"

The Department has been notified that insurance agents have been used to facilitate a "survey" or "study" of senior citizens. The survey is designed to elicit sensitive and detailed health and financial information from senior citizens. Although the Department has not yet been able to verify the purpose of these surveys, the information gathered in the surveys may be used for the evaluation, pre-underwriting, and possible solicitation of a life insurance policy that is purchased for the sole purpose of selling the policy to a viatical or life settlement provider.

The Department has adopted rules (Subchapter R, §§3.1701 - 3.1717, Viatical and Life Settlements) that provide consumer protection to life settlors and viators and require registration of persons involved in the business of viatical or life settlements. The Department is investigating whether the dissemination of the surveys is in violation of these rules. The information contained in the surveys is possibly being sold to persons that may be involved with zero premium life insurance arrangements. Zero premium life insurance arrangements are known by other names including "new issue life settlements," "high net worth settlements," "estate maximization plans" or "no cost to the insured plans." For further information on zero premium life insurance arrangements see the Department's May 2007 consumer, agent, and insurer alerts available on the Department's website at

Printed material that is intended to result in an insurance sale is defined by 28 TAC §21.102 as an advertisement. Advertisements used to market viatical and life settlements or the services of viatical and life settlement providers, provider representatives, and brokers must be filed with the Department for review pursuant to 28 TAC §3.1707. For more information on advertising requirements relating to viatical and life settlement providers, see Commissioner's Bulletin #B-0026-07.

Nursing Home Annuity Sales Practices

The Department has received complaints regarding questionable annuity sales practices directed at seniors residing in nursing homes. Texas agents have purportedly approached nursing home personnel and solicited them to gather information from nursing home residents in an effort to make an annuity sale. The Department has also been notified of agent annuity presentations in nursing homes that it is investigating as deceptive sales practices.

The Department reminds insurers and agents involved in life insurance and annuity sales that new laws relating to suitability (Texas Insurance Code Chapter 1115) and replacement (Texas Insurance Code Chapter 1114) will govern transactions beginning on January 1, 2008. Additionally, on December 7, 2007, the Department adopted Subchapter NN, §§3.9501-3.9506, Consumer Notices for Life Insurance Policy and Annuity Contract Replacements, implementing Insurance Code Chapter 1114.

Texas Insurance Code §701.051 gives insurers and agents an affirmative duty to report fraudulent insurance acts to the Department and Insurance Code Chapter 34 provides certain immunities from civil liability for the reporting of fraudulent activities. The Insurance Code also provides for the assessment of various administrative penalties, including the revocation of an insurance agent's license, for failure to comply with any provision of the Insurance Code, including provisions relating to unauthorized insurance; deceptive trade practices; advertising violations; rebating and other prohibited inducements; and fraudulent or dishonest conduct. If warranted, the Department will make referrals to the appropriate criminal authorities for further action.

The Department expects the industry and other interested parties to be mindful of the practices described in this bulletin and to report any information that may be helpful in the Department's prosecution of such acts to the Enforcement Division, Compliance Intake Unit, Mail Code 110-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

Mike Geeslin

Commissioner of Insurance

For more information, contact:

Last updated: 3/23/2020