Tallahassee, FLIt is a given that investing can be a slippery slope that is made all the more treacherous if a product does not match an individual’s risk tolerance or age, and stage of life. An obvious example of this is when an investment broker or advisor attempts to enroll a senior into a product that is high-risk and requires a period of many years to average out the various highs and lows in order to realize a reasonable return. To that end, a variable annuity is not for everybody.
The National Association of Insurance Commissioners (NAIC) brought a regulation into effect in 2010. Known as the Suitability in Annuity Transaction Model Regulation, the guidelines were adopted in order to protect consumers from abusive marketing, with the impetus behind the regulation suggesting that it is far from okay to talk an elderly investor into a product that is not suitable for him or her.
With a high proportion of elderly residents who choose the Sunshine State in which to retire, the State of Florida recently adopted a new law that in effect mirrors the intent and thrust of the national guidelines, with Florida Governor Rick Scott signing the new bill into law on June 6 of this year, according to the official website of the State of Florida.
SB 166 took effect October 1 and imposes upon life insurers an express obligation to ensure that variable annuities are sold only to those for whom they are deemed suitable.
Such variable annuity laws as they pertain to the sale and management of the annuity are designed to protect the consumer. However, such laws will not exclusively prevent scammers and other agents of ill will in attempting to take advantage of seniors and the elderly. When that happens, a variable annuity lawsuit brought by the elderly person’s family will often serve as the viable response.
As of October 1, in the State of Florida, any insurer or agent recommending the purchase or exchange of an annuity resulting in an insurance transaction must have grounds for believing that the recommendation is suitable for the consumer.
It’s basically a change in language, according to BestWire (5/14/13). But the result can have lasting consequences, and is intended to prevent well-meaning and trusting consumers, and especially seniors, from being led down the garden path.
Originally, advisors and vendors could promote and sell products such as variable annuities to consumers based on “objectively reasonable grounds” pertaining to suitability.
The new variable annuities law dispenses with the word “objectively” and highlights the requirement for “reasonable” grounds. It’s stronger language. SB 166 also requires the use of specific forms and criteria when collecting information, furthering the correct determination of suitability.
The window allowing for an unconditional refund for fixed and variable annuities expands by a week, from 14 to 21 days, and prohibits any agent from attempting to dissuade a potential client from answering truthfully, questions pertaining to suitability, or filing a complaint in the event of a problem.
It is hoped that other states will adopt the language, intent and thrust of SB 166 in Florida.
While a lawsuit in the true pursuit of justice is never a bad thing, SB 166 may serve to protect the elderly from committing a grievous financial error at the hands of an opportunistic broker or advisor. And saving a senior from the turmoil, panic and embarrassment of an inappropriate decision surrounding a variable annuity, isn’t a bad thing either.
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