Plains state aims for plain English

Iowa will be the first state to join an initiative to provide customers with plain-English disclosure on fixed and indexed annuities. In an initiative backed by the state's insurance division, the American Council of Life Insurers in Washington and NAVA Inc. of Reston, Va., Iowa consumers will start seeing disclosure materials that detail the way these products work. Topics 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 behind owning such a product. Templates for the disclosures are based on requirements in the Kansas City, Mo.-based 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. of New York and Washington, to ensure that the templates meet federal disclosure and sales practice standards. "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," Frank Keating, the ACLI's president and chief executive, said in a statement.