Suitability and senior designation standards for the sale of investment products have been tightened by the New York Insurance Department under new regulations finalized last month.
According to Marc Tract, a partner at Katten Muchin Rosenman LLP, the regulations first became effective on an emergency basis on Dec. 30, 2010, and were re-adopted on an emergency basis as of March 25.
Regulation No. 187 prohibits sales of annuities that are unsuitable for the insurance needs and financial objectives of consumers.
The regulation also requires that purchasers of annuities be informed of the features of the annuity being sold. Among these are surrender periods, charges, fees and the tax implications if the consumer sells, surrenders or annuitizes the contract and death benefits.
Regulation No. 199 prohibits insurance producers from using misleading titles, such as “certified elder planning specialist,” to gain seniors’ trust to sell them life insurance policies and annuities.