In September 2008, the New Jersey Legislature enacted Senate Bill 1165 (the “Act”) setting forth standards and procedures with respect to the direct solicitation of consumers regarding annuity products. The Act is designed to prevent the fraudulent and misleading marketing of annuity products by insurers, brokers and agents, and to provide standards for the disclosure of information about such products to consumers. The Act will become effective on April 1, 2009. In light of the approaching effective date, on March 10, 2009, the New Jersey Department of Banking and Insurance issued Bulletin No. 09-06 to provide compliance guidance with respect to the Act until implementing regulations are adopted.
According to the Bulletin, effective April 1, 2009, all individual fixed deferred and immediate annuity forms available in New Jersey must contain, or be accompanied by, the following:
- A buyers’ guide approved by the Commissioner of Banking and Insurance (note, however, that a guide based on the NAIC model buyer’s guide is not subject to approval by the Commissioner).
- An approved separate disclosure statement as required by the Act, which includes, but is not limited to, the following:
- the issuing insurer’s name and address;
- the generic name of the annuity, the insurer’s product name, if different, and annuity form number, and the same information for any rider or endorsement to the annuity;
- a statement that the product is an annuity, accompanied by a definition of annuity;
- mary describing each guaranteed, non-guaranteed, and determinable element of the annuity and any rider or endorsement;
- a summary of the federal tax status of the annuity, and any tax penalty applicable;
- summary of the 10-day cancellation period for consumers; and
- a statement that the annuity and the solicitation, negotiation, and sale of the annuity are subject to regulatory oversight by the department, accompanied by appropriate contact information for the department’s consumer assistance services.
3. A minimum 10-day free look provision (sample language for the provision is included in the Bulletin).
The Act also requires those selling these products make reasonable efforts to obtain and record information about the suitability of the product and to record the consumer’s acknowledgement of the information.