One of the biggest concerns that people have with annuities is the problem of unethical advisors selling investors products that aren’t right for them. The National Association of Insurance Commissioners (NAIC) approved regulations last year to protect investors from such practices. The Suitability in Annuity Transactions Model Regulations prevent advisors from selling senior citizens annuities that are not suitable for them. When the model was approved, the NAIC’s goal was for every state in the U.S. to adopt the practices and monitor their financial transactions. New York and California are coming on board now and adopting the suitability regulations in their states.
Annuities are excellent investments that provide a guaranteed lifetime stream of income to investors. They have become increasingly popular during these difficult economic times where many older investors have lost a lot of money in the stock market. It is important to compare annuities and figure out what is best in each individual situation though, especially for senior citizens and others close to retirement. The California Department of Insurance plans to set up a supervision system for insurers selling products to investors age 65 and up. In New York, the State Insurance Department will prohibit salespeople who are commission-based from using professional titles that market them as experts when they are not. Senior citizens tend to be more trusting of these titles and can be coerced into an investment that may not be suitable. That is why these suitability regulations are so important.