Life insurance Rule or Regulation Question

[AndrewRoche]

Is there a rule/regulation (NAIC?) stating that agents should not sell life insurance as an investment and/or a savings account?
or is it that consumers should not buy life insurance as an investment and or/a savings account?
Anybody know?

 

[DHK]

Life insurance is not an FDIC/NCUA/NCUSIF insured deposit account.

Life insurance (aside from variable contracts) are not securities.

Life insurance IS an investment, but not necessarily a security.
Just like real estate IS an investment, but not necessarily a security.


To state otherwise... would be a problem for state regulators to step in. Although I suppose one would have to assume that someone was harmed and/or misrepresented the product through such advertising.

 

[AndrewRoche]

Okay. I remember someone posting a state guideline that specifically stated my question in the original post. Not sure why you posted your above irrelevant observations. Why didn’t you also mention that water is wet?

 

[DHK]

Why are you complaining about someone else's advertising?

 

[Life Hawk]

Okay. I remember someone posting a state guideline that specifically stated my question in the original post. Not sure why you posted your above irrelevant observations. Why didn’t you also mention that water is wet?

Well, you are right... water is wet, that is unless it you come into contact with it in it's frozen state... and then it is what we would call hard but not wet... that is until it is thawed again...

Hoping this was relevant... if not you can just ignore it without comment...

 

[DHK]

Why am I thinking this is a continuation of the FB page discussion?

 

[adjusterjack]

I remember someone posting a state guideline that specifically stated my question in the original post.

While googling your questions I came across a remark in a guide from the Texas Department of Insurance:

Insurance companies sometimes market life insurance policies as retirement savings tools, estate plans, election funds, or mortgage protection. Not clearly identifying a policy as life insurance is a misrepresentation and a violation of the law.

https://tdi.texas.gov/pubs/consumer/cb018.html

Unfortunately, the TDI didn't cite any statutes.

I also didn't come across any state by state surveys of those laws so you'll probably have to check the insurance laws of each state with which you are concerned.

The answer to your first question is that such a prohibition would be state law.

The answer to your second question is that any Tom, Dick, or Harry can write an article admonishing consumers not to buy life insurance as an investment and or/a savings account.[/QUOTE]

 

[AndrewRoche]

Not sure why you are. It’s not. I know the NAIC changed some rules/regs this year and I wondered if it pertained to this reg that a someone posted. That’s it. No more. No less. Maybe NY had it. Can’t remember. Old age I guess.

 

[scagnt83]

NAIC publishes "model regulation" which is used as "best practices" by most organizations in the industry. States use the Model Regs as a guide to craft state laws around. Most state laws are similar or the same as the NAIC Model Regulations.

That being said, yes, most states have some type of wording in state laws about Life Insurance not being marketed just for investment purposes. Read your state insurance code if you want the wording.

Most carriers have some type of "code of conduct" or "marketing guidelines" etc. And they almost always say that selling Life just for investment purposes is prohibited.

 

[Newby]

When ForeThought first brought out their annuities I attended a 5-day crash course with them about annuities. One thing they definitely drummed into our heads was that the word investment did not mean what people assume it means.

People assume investment means: putting your money into something that can make you a profit.

What ForeThought taught drummed in our heads: investment requires putting your money at RISK in hopes of making a profit.

For that reason we were never, never, never allowed to use the word investment for ANY product that you can sell with only an insurance license. No fixed or indexed annuity and no life insurance (other than Variable Life which requires a securities license) can EVER be called an investment. Nothing is ever at risk.

If the principle is never at risk of loss (fees are not risk, they are a fixed cost) then it can not be called an investment.

I assume they were correct when they taught us that.