According to the Insured Retirement Institute, the majority of consumers don’t read the prospectus that accompanies a variable annuity purchase. IRI, which issued its report last week, also found that:
• 94% of consumers would like to get a prospectus summary that is shorter and is available either online or per their request. Most variable annuity prospectuses are 100 to 300 pages long.
• 59% of consumers said they would more likely discuss the product with their investment adviser if they were given a prospectus that was shorter and easier to understand.
• 78% of those surveyed say they rarely or never read their prospectuses.
• 5% said they always read their prospectuses.
• 87% of annuity contract owners hardly ever look at their prospectuses when they have questions about their purchase.
• Information about expenses and fees and the summary/highlights section are the parts of the prospectus that customers are most likely to read.
• 88% of respondents read the parts of the prospectuses that report on account deductions (commissions, sales loads).
• 59% of variable annuity owners look at the section on contract benefits.
• 6% read the death benefits section.
Following the release of the IRI’s report, FINRA CEO and Chairman Robert Ketchum spoke at the Insured Retirement Institute Government, Legal, and Regulatory Conference about the importance of moving away from account statements that are so packed with information that investors end up not reading the document.
Related Web Resources:
EXCLUSIVE IRI REPORT: CONSUMER DEMAND FOR VA SUMMARY PROSPECTUS CONTINUES TO GROW, Insured Retirement Institute, June 27, 2011
Read the IRI Report (PDF)
More Blog Posts:
Protect Yourself from Texas Securities Fraud by Making Sure that the Company or Agent that Sells You Annuities Has a Valid Insurance License, Stockbroker Fraud Blog, March 13, 2010
SEC Says Prime Capital Services, Inc. Defrauded Elderly Investors in Florida with “Free” Lunch Seminars and Unsuitable Variable Annuity Sales, Stockbroker Fraud Blog, August 10, 2009
“Living Benefits” Annuity May Be Riskiest Product Ever Sold by Insurance Industry, Stockbroker Fraud Blog, December 3, 2008