North Dakota Insurance Commissioner Jim Poolman has called for the National Association of Insurance Commissioners to review and develop new standards for the sale of life insurance and annuities that would protect consumers of all ages.
Poolman, chairman of the NAIC’s Life Insurance and Annuities (A) Committee, addressed the American Council of Life Insurers (ACLI), at their recent meeting suggesting that age should not be a discrimintating factor when consumers purchase life or annuity products. He called for the NAIC to develop “standards for suitability” for all sales of life insurance and annuities.
Poolman said currently protections are limited to persons over the age of 65, but the purchase of life and annuity products can be complicated and confusing to consumers of all ages. Poolman said the there has been an increase in reports of inappropriate sales to consumers of all ages.
“It’s time to expand protections to include every,” Poolman said.
In 2000, the NAIC adopted a white paper calling for the development of suitability standards for non-registered products, similar to those that had existed for some time under the Securities and Exchange Commission (SEC) for registered products. The result of that white paper was a working group that drafted a model setting suitability standards for all life insurance and annuity products.
The NAIC Life Insurance and Annuities Committee decided to focus first on the area that had been identified as subject to the greatest abuse: the inappropriate sales of annuities to persons over the age of 65. The resulting Senior Protection in Annuity Transactions Model Regulation was adopted by the NAIC in 2003. Many states have adopted the suitability or similar suitability regulations to protect consumers where it was appropriate within their state laws.
Poolman indicated that with the first model drafted by the NAIC, seniors were the main focus. He said that it has become clearer now that problems are expanding to include people under 65.
The issue of suitability of sales of life insurance has recently been raised by Congress and the General Accounting Office (GAO) in the context of inappropriate sales on military bases. The GAO’s recently released report urges states to adopt standards for suitability of sales to military personnel.
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