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Your Clients' Life Insurance Buyer's Guide May Change Soon

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Life insurers and consumer groups are skirmishing over what every individual life insurance shopper should know about permanent life insurance products.

A team of state insurance regulators is looking at that issue, and others, as it continues to work on a revision of the National Association of Insurance Commissioners’ Life Insurance Buyer’s Guide.

(Related: Regulators Tackle Life Buyer Guide Update)

The current edition of the NAIC’s buyer’s guide already tells shoppers that the death benefit from employer-provided life insurance “is usually far below what you need.”

The NAIC names people to speak up for consumers in NAIC proceedings.

The NAIC’s buyer’s guide includes a section with the title “Compare the Different Kinds of Insurance Policies.” The current version states that “there are two basic types of life insurance: term insurance and cash value insurance.”

“Cash value life insurance may be one of several types: whole life, universal life, and variable life,” according to the current version.

The consumer reps want the NAIC to keep that section pretty much the same.

The American Council of Life Insurers has suggested rewriting some of the definitions for products such as universal life insurance and whole life insurance.

The ACLI also wants to see the guide emphasize the need for a consumer to talk to a professional advisor — such as a life insurance agent, financial planner or lawyer —  when selecting the beneficiaries for the death benefits, rather than offering a suggestion such as “Consider leaving the money to your estate or trust.”

A Group for State Insurance Regulators

The NAIC is a Kansas City, Missouri-based group for state insurance regulators. It has no direct ability to decide what buyer’s guides a state uses, but many states require insurers to provide the guide for consumers around the time the consumers are making life insurance purchasing decisions.

A state that does not require an insurer to provide the guide may encourage residents to look at the guide, or a similar document, when shopping for life insurance.

The current version of the NAIC guide was completed in 2007.

The Life Insurance Buyer’s Guide Working Group, an arm of the NAIC’s Life Insurance and Annuities Committee, began working on an update more than a year ago, in connection with NAIC efforts to update its model life insurance disclosure requirements.


The buyer’s guide working group posts information about its activities, including drafts of the proposed revision, and copies of commenters’ comments, here.

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