Confusion

In my experience very smart people don't really know what all the components mean. 

  • I mean I feel like it does lead to confusion. 
  • So, I think if you can refer to the eventual illustration and just show the cash value.

-- Teresa Winer (GA)

2019 0917, NAIC - LIIIWG - Life Insurance Illustrations Working Group, [Bonk]

  • He (Michael Lovendusky - ACLI) said consumers are mostly confused about options, guarantees and riders.
    • The ACLI work group was considering asking the Life Insurance and Annuities (A) Committee to narrow the charge to look at only products with options, guarantees and riders, but Ms. Cude said she thinks that it is important to consider how the disclosures for all products could be improved.
  • (Mr. Lovendusky - ACLI) said the ACLI work group thinks that most confusion for consumers involves complex products like Universal Life, and not Simple products like term life.

2016 0403, NAIC Proceedings - LIIIWG - Life Insurance Illustrations Working Group 

Gary Sanders (NAIFA):

  • And that leads to my second concern which is that consumer confusion I think, and we fear, in large part is going to be translated into a lack of confidence or a lack of trust in their advisor.
  • And in some way or another, the consumer is going to end up with the feeling that the advisor did some form of misrepresentation initially to the consumer and now the truth is coming out.
  • And I think that is a very big concern and not only would it harm the consumer's confidence in the producer, but it could have a lot of reputational damage to producer's as well.

2019 1115, NAIC - IULISG - IUL Illustration Subgroup - Conference Call, [Bonk]

Focus Groups / Consumer Testing

  • A great deal of the confusion seems to stem from a lack of understanding of how cash value insurance products work and a lack of understanding of insurance terminology.
  • Also, because most people presume that if you pay your premium continuously, your policy will remain in effect, quite a few people had a hard time understanding how or why the policy would terminate in policy year 31.
    • This was simply foreign to their way of thinking.
  • One person was so confused that he said that the maturity age and endowment benefit were moot points, since the policy was going to end at year 31 anyway.

1990-1A, NAIC Proceedings - NAIC / LIMRA - Universal Life Disclosure Form Focus Group Summary, Consumer Issues Disclosure Working Group - NAIC  ---   [BonkNote]  ---  10p

  • After receiving these notices, John (Policyowner) contacted Glasgow (Agent) who had retired in 2000, to inquire why his policies would be terminating, even though he had timely paid the premiums on the policies for approximately 18 years. (p5)

2010 - LC - Maloof v John Hancock - 60 So. 3d 263 - Ala: Supreme Court - Alabama Supreme Court Opinion - 39p

  • Complaints and inquiries related to life insurance and annuity products ... generally concerned consumer dissatisfaction with, or confusion regarding, universal life insurance policies.  (p90)

2018 - Wisconsin OCI - Wisconsin Insurance Report - 219p

  • William Albus (National Association of Life Underwriters - NALU) commented that:
    • ...the requirement for disclosing sales commissions is unnecessary because it is superfluous and would only confuse consumers.
    • ...the purpose of disclosure is to provide information for making an informed decision and the disclosure of sales commissions has nothing to do with making this decision.

1988-2, NAIC Proc.