1994 0308 – NYT – Regulators Seek Limits on Insurer Sales Pitches, by Michael Quint

1994 0308 - NYT - Regulators Seek Limits on Insurer Sales Pitches, by Michael Quint --- [BonkNote] --- [link]
- NAIC, Illustrations, NALU

State insurance regulators are moving closer to sharply limiting how sales agents may describe the future benefits of life insurance policies, despite strong objections from insurance companies and agents.
The rule is intended to curb the widespread use by agents of computer printouts of insurance policy benefits that exaggerate how the policy's value grows as the company pays dividends to the holder. When interest rates declined in the last five years, many projections made in earlier years proved to be far too optimistic.
The insurance commissioners are not expected to recommend the proposal as a law that states should pass until June.
But for now, Mr. Lyons said, "the public's and the politicians' perceptions of sales abuses have been so raised that people are ready to accept more radical approaches."
Insurance companies have, however, persuaded regulators to change some parts of the proposed rules. One idea, to give consumers the right to sue insurance companies about misleading sales tactics, has been deleted.
[NALU - NAIFA] - William N. Albus, senior general counsel for the National Association of Life Underwriters, which represents life insurance sales agents, said illustrations of future benefits "are essential to explaining how a policy works."
- He suggested that agents should be allowed to project current dividends into the future and include an example of how a policy would look if its dividends were reduced by one percentage point.