The Securities and Exchange Commission (SEC) unveiled a sensible proposal last year that would:
This proposal, the Summary Disclosure Initiative for Variable Annuities and Variable Life Insurance, almost sounds too good to be true.
Actually, it’s all true. And it’s very good: for consumers, life insurers and our planet.
Let’s take a closer look. Currently, SEC rules require companies offering variable life insurance or variable annuities to provide a summary prospectus to consumers via voluminous hardcopy paper documents.
The SEC’s proposal would allow companies to interact with consumers more in line with 21st-century communication norms. Companies would provide investors with the key information relating to a contract’s terms, benefits, and risks in a concise and more user-friendly format.
Earlier this year, ACLI noted its strong support for the proposal in its official comment letter to the SEC. The SEC’s proposal mirrors ACLI’s longstanding approach to summary disclosure: simplified, plain-English information through a layered process that provides consumers with access to more detailed info via the Internet or by paper on request.
By providing these summary disclosure documents in a simple-to-understand format and through a consumer’s preferred distribution channel, life insurers will help consumers better understand the importance of these vital financial security products. The proposal’s layered disclosure approach will improve financial literacy and enhance American families’ retirement and financial security.
The SEC and its staff should be commended for offering this common-sense approach. The SEC has developed a significant, clearly written initiative that reflects skillful and commendable hard work in the public interest. The proposal is an example of good government regulation at its best.
ACLI hopes that the SEC fully adopts the proposal without delay. It truly is a win-win-win: for consumers, life insurers and the environment.
Carl B. Wilkerson was Vice President and Chief Counsel, Securities at the American Council of Life Insurers until March 2020. He principally addressed financial service institution regulation that had an impact on life insurance companies. Prior to joining ACLI in 1981, he was a staff attorney at the Securities and Exchange Commission.
