ALBANY, N.Y._A health insurer whose TV commercials promised "peace of mind" for just $5 a day must stop running the national ads and pay a fine of $700,000 after New York officials accused it of leaving patients only with huge hospital bills.

The American Medical and Life Insurance Co., advertising through an intermediary called Cinergy, marketed health insurance as a lower cost option for the uninsured and underinsured. It was pitched as costing just $5 a day, or the cost of a hamburger or pack of cigarettes.

In one ad, the narrator said the insurance is available "regardless of any pre-existing conditions," while the print on the screen stated "most pre-existing conditions accepted" and the fine print stated there is a six-month waiting period.

Acting Insurance Superintendent Kermitt J. Brooks said Wednesday that the cases uncovered in New York's two-year investigation included a Rochester woman who had $419 a month charged to her credit card for the insurance, only to have the company cover just $1,164 of her $28,000 hospitalization. A 36-year-old New Yorker who had a stroke found his policy covered just $250, leaving him with a bill for $29,917.

In both cases, the company paid off the balances after the state intervened.

"Many New Yorkers are desperate for affordable health insurance," said Gov. David Paterson. "Unfortunately, some businesses are taking advantage of that need to sell limited health insurance in ways that mislead consumers into believing they are getting full coverage. "

As part of a settlement announced Wednesday, the state Insurance Department forced the company to agree to halt the nationwide ads.

In a written statement, John Ollis, American Medical's president, said the company has been cooperating with the state Insurance Department since it brought the matter to the agency's attention last year, "when we became aware of the unapproved actions of a marketing entity with whom we no longer do business."

"We have taken substantial measures to protect the interests of those persons who purchased insurance and rely on the value of the product they purchased, and to prevent the recurrence of such unapproved activity in the future," Ollis said.

The New York City-based company sells policies in 38 other states and the District of Columbia. It sold about 12,000 policies in New York, about 5,000 of which have lapsed, and about 38,000 nationwide.

The state is also prohibiting the company from selling its partial coverage policies in New York, in part because state officials said the company failed to fully disclose the extent of coverage or use licensed agents as required.

A second unidentified company has agreed to suspend sales of its nationally marketed policies while the state investigates its practices.

The American Medical and Life ad concludes: "Five dollars a day helps you buy peace of mind ... so don't wait another day."

According to New York officials, the company was licensed to sell policies in Alaska, Alabama, Arkansas, Arizona, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, Mississippi, Montana, North Carolina, North Dakota, Nebraska, New Jersey, New York, Nevada, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, Wisconsin, West Virginia, Wyoming and in the District of Columbia. Officials said the company also sold policies in Louisiana, but had no license.