Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable Life Insurance Contracts
The SEC adopted rule and form amendments intended to help investors make informed investment decisions regarding variable annuity and variable life insurance contracts. The amendments modernize disclosures by using a layered disclosure approach designed to provide investors with key information relating to the contract’s terms, benefits, and risks in a concise and more reader-friendly presentation, with access to more detailed information available online and electronically or in paper format on request. Rule 498A under the Securities Act of 1933 permits a person to satisfy its prospectus delivery obligations under the Securities Act for a variable annuity or variable life insurance contract by sending or giving a summary prospectus to investors and making the statutory prospectus available online. The rule also considers a person to have met its prospectus delivery obligations for any portfolio companies associated with a variable annuity or variable life insurance contract if the portfolio company prospectuses are posted online. To implement the disclosure framework, the SEC also amended the registration forms for variable annuity and variable life insurance contracts to update and enhance the disclosures to investors in these contracts, and to implement the proposed summary prospectus framework, and adopting amendments to our rules that will require variable contracts to use the Inline eXtensible Business Reporting Language (“Inline XBRL”) format for the submission of certain required disclosures in the variable contract statutory prospectus.
• SEC Release No. 33-10765 (March 11, 2020) 85 FR 25964 (May 1, 2020): Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable Life Insurance Contracts (Final Rule; Corrected by Documents Published on May 13, 2020 and May 18, 2020)
Pension Income Stream Products
Pension income stream products typically involve an up-front lump sum payment to a pensioner in exchange for the rights to the pensioner’s future pension income payments. Regulatory Notice 16-12 discusses the characteristics of and investor protection issues presented by pension income stream products, as well as the legal status of these products. In addition, the Notice addresses the responsibilities of firms in supervising the sale of pension income stream products.
• FINRA Regulatory Notice 16-12 (April 2016): FINRA Provides Guidance on Firm Responsibilities for Sales of Pension Income Stream Products