It’s hard to believe that the men and women that make up the combined might of the United States Armed Forces need to be protected from unscrupulous sales practices. But it makes sense, in a way. After all, the agents and producers who would stoop to take advantage of the people risking their lives for our country are the same ones who prey upon old people. When soldiers being deployed overseas purchase life insurance, they are mainly concerned about providing for their families, not deciphering the nuances of policy terms. So they become victims—easy prey—in spite of their (really big) guns.

No wonder then that the majority of states have by now adopted regulations relating to Military Sales Practices. Under the federal Military Personnel Financial Services Protection Act, P.L. No.109-290 (2006), the states are required to takes steps to protect members of the United States Armed Forces and their families from predatory insurance sales practices. These protections aim to forestall any possible unscrupulous transactions.

The Department of Defense and the National Association of Insurance Commissioners developed a model rule based on the Act. Most states have used the model rule in implementing their regulations. Further, the NAIC has established a Military Sales Online Reporting System (MSORS) to fulfill the Act's requirement for a national system to report disciplinary actions taken against anyone that sells or solicits the sale of any life insurance product on any United States military installation.

The various states' regulations place a number of limitations on solicitation of life insurance products to military personnel. Prohibited practices include soliciting without an appointment, during known duty hours, or without permission of the relevant commander. Sales personnel are also restricted from making misleading statements regarding the cost of the insurance product or the interest rate on a life insurance policy. Affected insurers and sales personnel take special note: some requirements aren’t as obvious as others, and the penalties for noncompliance are severe. Talk about big guns.

To date, 17 states have adopted regulations relating to life insurance sales to military personnel; proposed regulations are pending in 21 states. The Military Sales regulations for each state that has adopted them can be found on LexisNexis Insurance Compliance along with all the latest up-to-date information on insurance regulations and compliance.