NAIC Seeking To Put Regulations into Place For Hybrid Annuities to Protect Consumers

Hybrid income annuities are annuities that are combined with another type of annuity within the same contract. A contingent deferred annuity is one that guarantees lifetime payments that are based on the value of the assets in the annuity account. Regulators with the National Association of Insurance Coommissioners Life Insurance and Annuities Committee (NAIC) are drawn to the guarantee aspect of these annuities and raise the question of whether providers are able to live up to their promises.

The NAIC’s investigation can help protect you as a consumer with reports on capital requirements and methods used to determine the correct reserve levels for these products. The regulations resulting from these studies will be aimed at ensuring that provider’s guarantees are effective.

So while it seems natural to be concerned about insurance companies amidst the recent market volatility, consumer protection regulations should give you some confidence in these hybrid annuities.

See William H. Byrnes, NAIC Reviews Hybrid Annuities to Ensure Meaningful Guaranteed Income Promises, AdvisorOne, Mar. 9, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.