Insurance Department Consumer Liaison David Buono recently told Area Agency on Aging leaders they should educate seniors about the increased consumer protections around annuities established in Act 48.
Annuities, a contract between an individual and an insurance company for the payment of money while the individual is alive, are often included in retirement financial plans.
The law, which was signed in June by Gov. Tom Wolf, adds consumer protections to annuity sales and requires an agent or insurance company that sells directly to a consumer to gather more financial information to determine whether an annuity is suitable for the consumer.
Previously, all that was required was the consumer’s financial and tax status as well as investment objectives.
“Annuities can be an important part of an individual’s retirement financial plan, but it’s vital the annuity be right for the person buying it,” Buono said. “This law puts additional requirements on both agents and insurance companies to make sure an annuity is appropriate for the consumer and gives my department more authority to hold agents and insurers accountable.”
Anyone selling an annuity must base the annuity’s suitability on the consumer’s age and annual income, existing assets, risk tolerance, and tax status, financial situation, and time frame for using the money.