The National Association for Fixed Annuities is joining with the National Association of Independent Financial Advisors to respond to a Florida bill that would regulate annuity sales to seniors.
NAFA, Milwaukee, says it also is working with carriers to respond to the bill, S.B. 1372, the Safeguard our Seniors Act.
One provision of the bill would prohibit sales of annuities with long surrender periods to consumers ages 65 and older.
The bill would limit surrender limits on annuities sold to seniors to 5 years, with a maximum surrender charge of 5%.
NAFA says it is lobbying lawmakers to change the provisions to allow producers and insurers to sell seniors annuities with surrender periods of up to 10 years and minimum surrender charges of 10%.
“NAFA understands that the bill’s author is willing to consider changes to certain elements of the bill,” the association says in a statement.
Because S.B. 1372 has support from Florida Chief Financial Officer Alex Sink, who oversees the state’s Office of Insurance it is likely the Safeguard our Seniors Act will be enacted, NAFA reports.
But “there is still an opportunity today to use our membership to influence the outcome,” NAFA says.
In a posting on an insurance agent message board, one annuity producer predicts the bill would suppress annuity sales in Florida.
Nearly 20% of the nation’s seniors live in Florida, “which means that millions of seniors who need the safety and guarantees of annuities may soon lose access to these valuable products,” writes Sheryl Moore, president of Advantage Group Associates Inc., Des Moines, Iowa. “Why? The shorter the surrender charge, the lower the rates on the annuity.”
Shorter surrender periods also mean lower agent commissions, “not to mention the fact that if surrender charges are limited to 5 years/5%, no premium bonuses will be available on these products, as you cannot price a bonus into a 5-year chassis,” she writes in a posting on the Insurance Forums board.