NAVA spearheads 'plain English' push

Iowa will be the first state to join an initiative to provide customers with plain-English disclosures on fixed and indexed annuities. In an initiative backed by the state’s insurance division, NAVA, and the American Council of Life Insurers, Iowa consumers will start seeing disclosure materials that detail the way these products work. Topics covered include how the surrender charges work, what is guaranteed in an annuity contract, how to get income from an annuity, as well as the fees involved in owning a product. Templates for the disclosures are based on requirements in the National Association of Insurance Commissioners’ annuity disclosure model law/regulation, which is in effect in 14 states, including Iowa. Additionally, the ACLI and NAVA hope to expand the simplification initiative into the variable annuities field, working through the Securities and Exchange Commission and the Financial Industry Regulatory Authority Inc. to ensure that the templates meet federal disclosure and sales practice standards. “We are aiming to raise the bar with this initiative,” Frank Keating, ACLI president and chief executive, said in a statement. “We want to not only provide information as required by law, but to establish a standard where the information is disclosed in plain English and in a user-friendly way.”