• There should be suitability rules in place, particularly for cash value life insurance policies to assure that sales of proper products are made.  (p14)

--  J. Robert Hunter

2003 0506 - GOV (House) - Increasing the Effectiveness of State Consumer Protection - [PDF-123p, VIDEO-?] 

  • 2000 - NAIC - Suitability of sales of life insurance and annuities - 33p
  • Suitability and Best Interest in Life Insurance and Annuity Transactions - Regulation 187 - New York State Department of Financial Services Insurance  (11 NYCRR 224)
  • Suitability Working Group - NAIC
    • 1999-4v2, Suitability Working Group
    • 2000-1
    • 2000 - NAIC - Suitability of Sales of Life Insurance and Annuities - 33p
    • The working group reviewed the white paper (Attachment Four-B)
  • Law Reviews
    • 2002 - LR - My Customer's Keeper: The Search for a Universal Suitability Standard in the Sale of Life Insurance,. Richard J. Wirth, Western New England Law Review - 51p
    • 2013 - LR - Suitability and Non-Maleficence: A Proposal for Insurance Producer Regulatory Reform, Mark Franke, Loyola - 35p
  • Legal Cases
    • 1958 - Knox v Anderson , Hawaii
    • 2010 - Pike v New York Life, New York
  • Mr. Adams asked if it was the intent of the working group to consider placing the burden of suitability on the company.
    • He said the draft language speaks of using a correct illustration, without emphasizing whether the illustration is of a policy that is right for the policyholder.

1994-3, NAIC Proc. 

FIND: NAIC notes, 1,2,3,

  • Universal Life might well be a more appropriate product than Adjustable Life for the very sophisticated, very high premium, as you mentioned, product or sale.
    • However, I think that there is a major segment out there where Universal Life Just would not fit.
  • Universal Life seems to be taking a giant step forward.
    • Adjustable Life may be a reasonable middle ground which our agents and our potential policyholders can understand a little bit better than the Universal Life concept at the present time.

--  Spencer Koppel

1979 - SOA - Future Trends and Current Developments in Individual Life Products (rsa79v5n44), Society of Actuaries - 24p 

  • John Montgomery (Calif.) said that complicated products are not understood by the typical applicant.
  • Commissioner Wilcox said that a "typical applicant" for a sophisticated policy should be a sophisticated applicant, and he acknowledged that the wording might need to be clarified in that instance.
  • [Bonk: complicated products ~ Universal Life, etc]

1994-3 - NAIC Proceedings

  • Issue: Should insurers be required to consider the suitability of the sale of a life insurance policy or annuity contract to a customer?
  • Background: During discussions about annuity disclosure, regulators expressed concern that in same cases annuities were being sold when the contract was not suitable. Research indicated only a few states had specific standards in their codes requiring insurers to evaluate the suitability of sales of insurance products. A working group drafted a white paper that concluded that rules should be developed requiring that suitability be determined by the producer and carrier in the sale of nonregistered life insurance and annuity products.
    • The working group noted that suitability standards have existed for over 40 years for registered products and they seem to have worked well. Nonregistered products are becoming increasingly complex and the investment components and the emphasis placed on these components in sales have become more prominent. Relying on disclosure alone no longer is enough, in the opinion of the Life Insurance and Annuities (A) Committee. During 2003 a model regulation was adopted that sets forth standards and procedures for recommendations to senior consumers age 65 and older to consider the insurance needs and financial objectives of the senior consumers. Although drafting began with a comprehensive model covering all sales of life insurance and annuties, the compromise document adopted in the fall of 2003 is limited to sales of fixed
      and variable annutites. Regulators had reported the most concern about unsuitable sales in this catagory. The adopted model makes both insurers and producers responsible for determining that a recommendation is suitable.
  • NAIC Position: Sales should consider adopting the model to provide protection to seniors purchasing annuity products. (p57)
  • Originated: 2001, Revised: 2002, 2003, 2004

2004 - NAIC - ISSUES 2004 - 118p