The SEC proposed rules and form amendments to improve disclosures to investors in variable annuities and variable life insurance contracts ("variable contracts").
Specifically, the SEC proposed a rule that would allow an issuer to satisfy its prospectus delivery requirement for variable contracts by delivering a summary prospectus. According to the SEC, the new summary prospectus - using a "layered disclosure approach" - would be a reader-friendly overview of critical facts, with information about how to find a more in-depth discussion online or in paper format. The SEC said that the proposed rule is intended to aid investors in making informed decisions regarding variable contracts.
In addition, the SEC-proposed amendments would:
- improve the content, format and presentation of information to investors in variable contract registration forms;
- require that variable contract issuers use the Inline eXtensible Business Reporting Language format for the submission of certain required disclosures in the variable contract statutory prospectus;
- require that the statutory prospectus be available on a website specified on, or hyperlinked in, the cover of the summary prospectus;
- add "certain technical and conforming amendments to its rules that would reflect the new regime for variable contract summary prospectuses"; and
- revoke certain rules and forms "rendered moot by legislative actions" or that are no longer needed.
The SEC also published a Feedback Flier that it will use to solicit investor feedback about how to make summary prospectuses easier for investors to read and comprehend. Comments on the proposed rule changes and the hypothetical summary prospectus samples must be submitted before February 15, 2019.
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