|By Richard Burnett, Orlando Sentinel|
|McClatchy-Tribune Information Services|
But while the Safeguard Our Seniors Act has apparently discouraged the use of shady sales techniques and other abuses, the life-insurance industry -- which is already pushing to change the law -- is still at odds with the financial regulators and the financial planners over what it should cover.
According to state regulators, during the first 12 months after the law took effect in
"Annuity complaints are down, which also causes enforcement actions to go down," said
Some problems persist. A
"My impression is that this law is working," said
Earlier this year, insurers pressed for new legislation based on a model developed by the
But according to Fitzgerald, the industry proposal in its earliest drafts threatened many of the protections in Safeguard Our Seniors. The amended bill eventually failed to pass the state Legislature.
Industry officials dispute any notion that they are trying to undermine
"We believe Safeguard Our Seniors has been effective in
Miller said the industry plans to lobby for the national-model bill again next spring when state lawmakers convene in
"My view is that
Certified financial planners and insurance agents have been butting heads over annuities in
Planners argue that annuities are only one piece of a person's overall investment and financial plan, and they accuse some insurance agents of viewing them more as opportunities to generate hefty sales commissions. Insurers argue that they are just as concerned about the financial well-being of their customers as planners are, and they accuse some planners of exaggerating what they describe as isolated problems within the industry.
Miller said the model legislation, already used in 23 states, would apply its protections to all Floridians, not just people age 65 or older; the final version of the bill that failed to pass
State regulators, however, note that the industry's original proposal would have jettisoned key provisions of Safeguard Our Seniors. Those provisions were restored only after regulators intervened, according to Lambert, the
Among the measures rescued: a cap on the "surrender" fees an insurer can charge when an investor cashes in an annuity before the contract's expiration date. The cap is now set at no more than 10 percent of the annuity's principal -- compared with actual fees in the past that had ranged as high as 20 percent.
"The intent of the law was obvious: As financial planners, we were seeing a lot of agents out there selling annuities with 20-year penalties to people who were 80 years old," Auslander said. "That means they couldn't touch their money until they were 100 years old without being penalized. It was just ridiculous."
Safeguard Our Seniors now prohibits the sale of annuities with penalty periods of more than 10 years to anyone age 65 or older.
As a practical matter, the current law, while offering investors more protection, also generates added paperwork that can also confuse some consumers, said
"There are always unintended consequences with new laws like this," Chancey said. "It has made it more complicated for clients to be able to understand these products. There are more forms, more regulations that can make things cumbersome and complicated."
Even with Safeguard Our Seniors, older investors must still be extra cautious and do their homework if they consider buying an annuity, said
"If you don't really understand what you're being sold, that's a red flag right off the top," she said. "If you don't feel the person doing the selling is helping you understand it and is just selling you on some bells and whistles, it's probably time to step back."
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