States should forbid insurers and agents from using misleading annuity illustrations at any time, not simply during the sales process, a regulator says.
Jodi Lerner, a senior staff counsel at the California Department of Insurance, has written about annuity illustration standards in a comment on a draft annuity disclosure regulation update developed by the Annuity Disclosure Working Group at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo.
Lerner notes that one section of the draft update would set a standard prohibiting “illustrations used in the sale of an annuity contract from describing non-guaranteed elements in a misleading manner.”
“This prohibition should be extended,” Lerner says. “Insurers and producers should be prohibited from disseminating misleading illustrations as well as illustrations that have the capacity or tendency to mislead, regardless of the timing of the dissemination of said illustration.”