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IRI Study: Investors Favor Summary Prospectus When Deciding on a VA

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Investors prefer to read summary prospectuses when determining whether to add variable annuities to their portfolios, according to a survey released today.

The survey, commissioned by the Insured Retirement Institute, Washington, D.C., found that investor demand for a variable annuity summary prospectus remains strong, with 95% of investors demonstrating a preference for a shorter paper summary prospectus. 

In addition, 59% of investors state that having a short summary prospectus written in easy-to-understand language would positively their decision to consider a variable annuity as part of their investment portfolio, the survey found.

Conducted for IRI by Cogent Research, Cambridge, Mass., the study was released at IRI’s annual government, legal and regulatory conference, now underway in Washington, D.C.

“IRI research consistently shows that investor demand for brief and easy-to-read variable annuity investment detail remains high,” says IRI President and CEO Cathy Weatherford. “This new research strongly underscores this desire.”

She adds that IRI members are seeing a decline in the number of investors who state they actually read the full prospectus.

“Rather than provide consumers with relevant investment information, the sheer length of the full prospectus has created a barrier to investor education,” she says.

Weatherford adds that, as an industry, “We are committed to ensuring that consumers have access to educational resources that can help them make informed investment decisions. We believe the time is now to allow the variable annuity summary prospectus into the marketplace.”

Among the other key research findings:

Only 17% of individuals report reading any part of a full prospectus in 2012.  This represents a 5% decline from 2011, when 22% reported they read the 150-300 page prospectus.

Among the small percentage of individuals who say they do read the prospectus, only 7 to 16 percent of the document is read.

Most individuals do not refer back to the prospectus after they have purchased a variable annuity.  In fact, 90% of individuals say they never or rarely use the prospectus to answer questions about their VA.


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