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A team of state insurance regulators wants to rein in indexed annuity sellers who give consumers unrealistic performance forecasts.
The Life Insurance and Annuities Illustrations Working Group is asking for ideas from the public about how to do that.
The working group is part of the National Association of Insurance Commissioners, a group that helps states coordinate regulation of insurance.
"Regulators have observed indexed annuity disclosures that suggest annual returns can range from 10%-25% for several years," the group says in a post on its section of the NAIC's website. "This has brought up potential concerns around whether consumers are receiving reasonable expectations regarding future performance upon purchasing an annuity."
The working group is asking commenters to answer the following question: "What are both short-term and long-term approaches to ensure consumers receive reasonable expectations for index annuity returns at the point-of-sale?"
The working group is also asking for comments about performance materials for new investment indexes and any other elements related to indexed annuity performance forecasts.
Comments are due March 31.
What it means: Regulators believe that marketers are giving retirement savers unrealistic ideas about the kinds of returns that annuities typically earn.
Any advisors who are providing unrealistic forecasts may go through some things, and any clients who have seen and believed the unrealistic forecasts may need a reality check.
Credit: Santi/Adobe Stock
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