The New York State Insurance Department has fined a financial advisory firm $255,000 in connection with product replacement moves.
David Lerner Associates Inc., Syosset, N.Y., paid the fine in connection with allegations involving 527 replacements of variable life insurance and 259 replacements of variable annuity contracts that occurred between November 1998 and February 2004, New York department officials say.
Lerner cooperated with the investigation and has complied with disclosure rules about contract replacement since 2004, department officials say.
Under New York laws and regulations, a producer selling a replacement for a life insurance or annuity contract must give the consumer information needed to make an informed decision, including why the new policy or contract is being recommended and why the existing contract could not meet the consumer’s needs. The comparison should show, for instance, if getting a higher interest rate on an annuity would pay off in the long run in light of surrender charges he or she may have to pay to close out the old contract, officials say.
Department rules require that consumers sign a
form acknowledging receipt of the required disclosures.