In the past, there were certain requirements that people over the age of 65 had to meet before they could qualify for annuities, but now, those mandates have been extended to consumers of all ages.
The Florida State Senate recently passed a law unanimously that extends annuity suitability requirements to all consumers, and also amends current law related to these investment vehicles so that it better encompasses refund periods and puts into place more stringent measures for agents recommending certain transactions related to them, according to a report from Life Health Pro. Now, an agent or insurer selling these products must have to prove they have a reason for recommending annuities based on their clients' personal information.
The bill was previously approved, with similarly unanimous support, by the Florida State House of Representatives, the report said. If signed into law by the governor, the law would go into effect on October 1, 2013. A similar bill was proposed last year but could not gain traction in the Senate, despite the recommendations that it be passed by the state's insurance commissioner.
As it pertains to suitability reviews, the law requires that insurers or agents must consider whether the consumer will incur surrender charges, pay more fees, or lose existing benefits if they recommend an exchange or replacement, the report said. Further, they must determine whether the consumer will benefit from product enhancements, as well as whether they have gone through a similar transaction in the previous three years.
Among the other new requirements is that the period for which a consumer can receive an unconditional refund on a fixed or variable annuity purchase be extended to 21 days from the current 14. The cover pages of annuity policies must state this unconditional refund period, as well as a number of warnings about the ways in which the accounts might impact consumers in 12-point, bold type, the report said. These warnings include that consumers may not have full access to the funds in the account, that they should strive to understand bonus features of the contract, how interest rates on the account may change, and that a buyer's guide must be provided to them.
Insurance issuers will likely have to keep up with all the regulatory changes being made both at the state and federal levels as a means of staying within the various restrictions placed upon them.