"Suitability" in the Sale of Fixed Insurance Products: A Look at Some of the Murkier Issues

The question of "suitability," as it relates to recommendations about insurance or investment products, has always been a difficult one. There are two "standards of care:" the suitability standard and the fiduciary standard. The former always applies to any insurance agent or fin...

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Bibliographic Details
Published in:Journal of financial service professionals 2013-07, Vol.67 (4), p.39
Main Author: Olsen, John L
Format: Article
Language:English
Subjects:
Advisors
Federal regulation
Insurance agents & brokers
Investment products
Studies
Online Access:Get full text
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Summary:The question of "suitability," as it relates to recommendations about insurance or investment products, has always been a difficult one. There are two "standards of care:" the suitability standard and the fiduciary standard. The former always applies to any insurance agent or financial advisor, and, depending upon the advisor's licensure, credentials, and behavior, the latter may also apply. One of the most troublesome and unclear issues is whether an insurance agent not registered to sell securities or provide investment advice may sell a fixed insurance product if the product recommended will be purchased with dollars taken from a securities account. This article examines existing regulations and some state regulatory actions dealing with that issue, and one state regulatory bulletin that offers useful guidelines for agents. [PUBLICATION ABSTRACT]
ISSN:1537-1816
2381-8875