SEC to Let Insurers Register RILAs on a Simpler Form

An MVA contract is a fixed-rate deferred annuity with a feature that may cut the value of the annuity if the owner takes out much cash before the contract’s surrender penalty period ends.

The most recent available Beacon Annuity Solutions figures published by IRI show ithat insurers sold generated about $22 billion in MVA sales in 2021.

Regulation details: The SEC notes that it will require issuers to disclose information that’s important to the annuity holders.

On a RILA N-4, for example, the SEC is asking insurers to disclose any “material aspects of the index-linked option.

“This will include disclosure related to limitations on transfers to or from index-linked options, rate holds, ‘bail-out’ provisions, start dates, and holding accounts,” according to the preamble, or official introduction, to the final rule.

Exclusions: Some commenters asked the SEC to let issuers use Form N-4 or a similar simple form for indexed life insurance products and contingent deferred annuities.

CDAs are annuity-like features that can be attached to an ordinary investment portfolio.

The SEC declined to change the registration form rules for indexed life products and CDAs, saying they are too different from RILAs and MVA contracts and would require the registration forms to be changed too much.

Credit: Diego M. Radzsinchi/ALM