The Securities and Exchange Commission has unanimously approved a new registration form that is tailor-made for variable life insurance.
The approval, which came during the Commissions April 11 meeting, is the culmination of a nearly 10-year long effort by life insurers to develop a form specifically suited to variable life.
Carl Wilkerson, chief counsel with the American Council of Life Insurers, Washington, notes that no one has seen the final version of the registration form that the SEC approved.
During the April 11 meeting, Wilkerson notes, the commissioners discussed the form and voted on whether to accept it, but it will take another five to seven days before the form is published.
Nonetheless, Wilkerson says, he is confident that the new form will be simpler, streamlined, shorter and provide information to consumers in plain English.
Indications from the meeting are that the SEC incorporated some changes suggested by ACLI to the form that was proposed in 1998, he says.
For life insurers, Wilkerson says, the new form will have significant savings in terms of printing, postage and storage costs thanks to the streamlined disclosure and plain English requirements.
Moreover, he says, it will put variable life on an equal footing with mutual funds, which have had a streamlined prospectus for some time.
The new form will also benefit consumers, Wilkerson says, since it will be easier for them to read variable life documents and thus make a more informed purchasing decision.
Wilkerson notes that the current variable life registration form is a blend of pre-existing forms that were never designed for this product.
Wilkerson says that while he is confident the new form will be streamlined, insurers will not know how the SEC resolved certain important issues until the form is published.
These issues, he says, include the depiction of fees and charges and the standards for policy illustrations.
In other regulatory news, the National Association of Insurance and Financial Advisors, Falls Church, Va., is asking the Federal Trade Commission to state explicitly that those engaged in the business of insurance are exempt from a proposed rule on telemarketing.
“As the primary regulators of the business of insurance, the states have extensive expertise and experience with respect to insurance,” NAIFA says in a formal comment to the FTC.