Now here is an early gift for the holidays: Michigan and Arkansas may soon join Iowa, Arizona and Rhode Island as states with new laws or regulations that protect consumers buying annuities.
The initiatives by Michigan and Arkansas follow the lead set by the National Association of Insurance Commissioners (NAIC), which updated its model regulation on annuity transactions earlier this year. The NAIC model enhances the standards financial professionals must follow while ensuring that individual savers preserve access to, and information about, annuities.
These actions by the states also closely align with the Securities and Exchange Commission’s Regulation Best Interest, which took effect this year.
Because of these consumer protections, retirement savers can be assured that financial professionals are acting in their best interest when offering recommendations about retirement savings products, including annuities. Crucially, middle- and working-class families will still be able to access sensible and understandable financial information.
This access is all the more important now, due to the economic downturn and market gyrations caused by COVID-19.
Many Americans are currently experiencing concerns about their retirement security. These concerns can be eased through financial security products offered by life insurers, including annuities. Annuities are the only financial product in the marketplace that can guarantee lifetime income.
Americans receive beneficial information and education about annuities from insurance agents and other financial professionals. Now more than ever, consumers must know that these financial professionals are acting in their best interest when recommending annuity products.
Thanks to the actions by officials in states across the country, more and more consumers are gaining that certainty.
National adoption of the NAIC model is more critical now than ever before. As additional states adopt department rules or pass legislation regarding annuity sales that mirror the NAIC model, more consumers will be better protected.
We look forward to more states following the lead of Iowa, Arizona and Rhode Island. In addition to Michigan and Arkansas, several other states, including Delaware and Maine, are considering similar actions. Soon, all consumers, regardless of where they live, will benefit from a national best interest standard of care.
Karen Melchert and Joann Waiters