State insurance regulators should put bad years into the performance illustration charts that show how life insurance policies and annuities might work.
Richard Weber, the principal at The Ethical Edge, a life insurance advisory firm in Pleasant Hill, California, is making that case to the National Association of Insurance Commissioners this week.
Weber is giving the group's Consumer Liaison Committee a primer on how bad illustrations can lead clients to doom.
Marketers already include warnings stating that the illustrations are not performance promises, but "with all illustrations — no matter the warning — customers will focus on the most favorable illustrated ('current') outcomes," Weber says in a slide deck included in an NAIC/Consumer Liaison Committee meeting packet.
What it means: Weber's talk could increase the odds that regulators will update illustration rules.
For now, his primer may give advisors tools they can use to keep illustration confusion from trapping their clients.
The history: Regulators, marketers and consumer advocates have been clashing over product illustration rules for decades.
