By JLP | July 30, 2008
From yesterday’s Wall Street Journal:
Imagine flipping through a jargon-free annuities-offering document.
The day is inching closer when that might be possible.
Industry groups are banding together to present prospective buyers of annuities with streamlined, plain-English descriptions of the basic features and costs of annuities, much like those now offered by some mutual-fund companies. Those shopping for an annuity also may be able to go online and compare the costs and features of one annuity to those of another.
As part of a pilot program, a simplified, 2½-page document is being tested in Iowa and West Virginia. The document was developed by the American Council of Life Insurers, or ACLI, in Washington, in conjunction with the National Association for Variable Annuities, or NAVA, in Reston, Va.; insurance-agent groups; and others in the industry.
How much information will be available?
“We want to provide useful information, not an overwhelming amount of information,” says Carl Wilkerson, vice president and chief counsel, securities and litigation at the ACLI [American Council of Life Insurers]. The idea is to help consumers be “better equipped to make apples-to-apples comparisons,” he says.
My question is: if people can actually understand them, will they buy them? LOL! Once they know how expensive they can be, will they still want them? Will brokers be able to sell them once there is no longer a scary prospectus to hide behind? Will the broker’s compensation from the product be readily available?
Let’s face it, the insurance industry loves the complexity of annuities. They are hard to compare to each other and very hard to fully understand. Heck, lots of insurance salesmen don’t even fully understand them.
I’m interested to see how this plays out. Oh, and if anyone has access to the new 2½ page document mentioned in the article, I’d love to see it.