Filed Under:Annuities, Variable

SEC Presses for Better Disclosure on VA Living Benefits

WASHINGTON—The Securities and Exchange Commission is paying close attention to the disclosures related to variable annuities that contain living benefit features.

These concerns include the disclosures related to VAs with a living benefit feature that use derivatives to enhance yields, about the “guarantees” included in these products, and about living benefit products that limit the investment options offered to purchasers.

Similarly, the contract prospectus should make clear to investors the circumstances under which account allocations may be changed and the effects of such changes, such as the possibility of missing a market uptick during a period of fixed income allocations, she said.

Regarding the tax-advantaged component of VAs, she said that “it is important that an investor purchasing a living benefit be fully informed of any aspect of the arrangement that could limit the market participation reasonably expected by the investor.”

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Nichole Morford

Nichole Morford
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