These documents are not legal documents but are placed here for reference purposes only. For a legal copy please contact the department.
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September 18, 1996
The filing of indexed annuities has caused concern in this Department. These contracts are fixed annuities where non-guaranteed additional credit interest is based upon a formula tied to some data or index outside the contract. There are equity indexed products which frequently use the Standard and Poor’s 500 index. There are also fixed income indexed products, which use a bond index, such as the Lehman Brothers’ index. The benefits in these contracts are tied directly to the index, so that contract values can vary based upon the performance of the investment markets. The application of the index or outside data to the contract values can vary greatly from contract to contract. These contracts need adequate disclosure to prevent the consumer from getting the impression that these contracts are similar to variable annuities and to promote consumer understanding.
All products should have the following distinguishing characteristics:
REQUIRED FOR APPROVAL IN VERMONT
The filing must contain a draft of the buyer’s guide. The insurer is free to insert other language in the buyer’s guide . The company is free to use its own format in the guide. The buyer’s guide must have language that can be easily understood by the buyer. The insurer must provide the Department with a Flesch score certificate for the buyers guide of 50 or greater. The buyer’s guide must be easy to read and understand and no longer than two 8 ½" x 11" pages.
As with all filings made in Vermont the insurer must supply:
Insurers may contact the following individual, if you have any questions concerning this bulletin of indexed annuities;
Thomas J. Crompton
Vermont Department of Banking, Insurance and Securities
89 Main Street Drawer 20
Montpelier, Vermont 05620-3101
Derick A. White