An official at the National Association of Insurance Financial Advisors (NAIFA) has a message for a team of state insurance regulators who are updating the standard life insurance policy summary rules.
Gary Sanders, a NAIFA vice president, says that live human agents are much better at explaining life insurance policies than any cookie-cutter summary can be, and that regulators should make sure live humans can agents can talk to consumers early on in the life insurance shopping and purchase process.
If live human agents have a chance to talk to clients first, the policy summary can be more specific, more detailed and more useful, Sanders says.
Many different types of documents can be important and useful to consumers, but “documents are passive materials that cannot have a conversation with a consumer, or discern what information might help resolve a consumer’s confusion or misunderstanding,” Sanders says.
“Without the involvement of an agent — if the consumer relies solely on the written materials provided — it is unlikely that he or she will have the information and guidance needed to make the right decision in light of the consumer’s unique circumstances, regardless of when the policy overview document is provided,” Sanders says.
Sanders made those comments in a letter sent to Richard Wicka, chairman of the Life Insurance Illustrations Issues Working Group at the National Association of Insurance Commissioners (NAIC).
The Life Insurance Illustrations Issues Working Group
The working group is revamping the NAIC’s model life insurance policy illustration guidelines. One component of a standard policy illustration is a section that describes what the policy is like.
The working group is trying to make the narrative summary section easier for consumers to understand.
The working group is holding a conference call to talk about the update project Sept. 3. The working group has posted a copy of Sanders’ letter under the meeting materials tab on the working group’s section of the NAIC website.
The NAIC cannot decide directly what each state’s life insurance policy illustrations will look like, but many states start with NAIC models when setting their own insurance document rules.
Sanders on the Role of the Professional Agent
Sanders told the working group in his letter that he wants to emphasize “the important role that the professional agent plays in the disclosure and consumer education regime that is at the heart of the working group’s efforts.”
Working group members have spent little time discussing the role of the agent and the contributions that agents can and do make in educating consumers, Sanders writes.
“Narrative summaries, policy summaries, buyer’s guides and policy overviews may all have their place in providing the consumer with needed information and helping the consumer decide which policy to purchase,” Sanders writes. “However, none of these tools can replace the kind of hands-on, individualized advice and guidance that knowledgeable, professional agents provide to their clients day in and day out.”
A link to the NAIFA comment letter is available here, under the Life Insurance Illustration Issues Working Group’s meeting materials tab.
— Read What the Heck Is a ‘Financial Instrument’: Annuity Model Commenter, on ThinkAdvisor.