The Department of Labor (DOL) recently announced that the more onerous provisions of the Fiduciary Rule, originally scheduled to take effect January 1, 2018, have been delayed until June 30, 2019. The delay does not “roll back” any elements of the existing regulation. As a result, policies and procedures that were instituted in June of this year remain necessary, and in effect. Over the coming months, we expect that the DOL will continue to study whether the rule will have a negative impact on the retirement security of main street Americans, and whether the rule should undergo further changes. Until then, please continue to use PTE 84-24 disclosure paperwork for your life and annuity transactions involving qualified money.
Sample PTE 84-24 Disclosure
The Office of Management and Budget (OMB) recently approved an 18-month delay for the more onerous provisions of the Department of Labor (DOL) Fiduciary Rule. The DOL proposed amendments to three exemptions, which were all approved by OMB. The delay covers the best-interest contract exemption, Prohibited Transaction Exemption 84-24 (PTE 84-24) and class exemption for principal transactions in certain assets between investment advice fiduciaries and employee benefit plans and IRAs. While we are still waiting for guidance as how to best proceed, nothing happens until the DOL finalizes the delay. We are expecting this in the coming weeks. Until then, please continue to use PTE 84-24 disclosure paperwork for your life and annuity transactions involving qualified money.
Sample PTE 84-24 Disclosure
The Department of Labor Fiduciary Rule (the Rule) went into effect on June 9, 2017. The Rule, by law, requires a higher standard of care for advice given on qualified retirement assets. The full requirements will go into effect on January 1, 2018, barring further regulatory or legislative changes.
As of June 9th, those who give advice and/or make a recommendation regarding assets in retirement accounts and expect to be compensated based on the advice/recommendation will be held to the Impartial Conduct Standards, which has three requirements:
- Advice is in the best interest of the customer
- Compensation is reasonable
- Statements about investment transactions, compensation & conflicts of interest are not misleading
During this initial phase-in through the end of the year, the Prohibited Transaction Exemption (PTE) 84-24 can be used to sell traditional fixed annuities, fixed indexed annuities and life insurance involving qualified retirement assets. Under current law, transactions on or after January 1, 2018, will require additional scrutiny and only traditional fixed annuities and life insurance can be sold using PTE 84-24. Fixed indexed annuities will need to be sold through a Financial Institution as defined by the Rule using the Best Interest Contract Exemption (BICE)
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Moody’s Investors Service has downgraded the insurance financial strength (IFS) ratings of Genworth Financial’s long-term care (LTC) subsidiaries, Genworth Life Insurance Company and Genworth Life Insurance Company of New York to Ba3 from Ba2. The rating downgrade and continued review for downgrade reflects Genworth’s uncertainty related to future LTC margins, as reported in its year-end 2016 results, and the continued execution risk of the company’s plan to restructure and isolate its LTC operations from its remaining businesses. In addition, the profitability and margins of the LTC business are heavily supported by Genworth’s assumption of significant future rate increases. Despite the significant rate increases that the company has submitted and received, they remain concerned about the tail risk associated with the LTC business in GLIC.
On March 1, 2017, the Department of Labor released a proposed rule to extend for sixty days the applicability date of the Fiduciary Rule. It was widely expected that the delay would be six months so the sixty-day delay is somewhat of a surprise. This proposal, which includes a 15-day comment period, would extend the effective date from April 10th to June 9th. We will keep you updated as the more details become available.
On March 6, 2017, MetLife new business and post-issue forms transitioned to Brighthouse Life and Brighthouse Life of NY for all applicable products. Brighthouse will continue to accept MetLife new business and post-issue forms through April 4, 2017, for all states but New York. In New York, the new forms must be used immediately. To prevent a paperwork error, we suggest that you destroy all existing MetLife paperwork you have on hand and only use Brighthouse paperwork going forward.
Allianz Life Insurance Company of North America (Allianz) will discontinue the sale of the MasterDex X and Allianz Endurance Plus fixed indexed annuities effective March 31, 2017. These products were designed and launched on what is now a platform that limits Allianz’s ability to change them quickly. Going forward, Allianz will continue their focus on products that were built and launched on a much more flexible platform. We will update you soon with applicable business rules.
Effective April 10, 2017, North American Company will be closing the North American Charter and North American Precision series of fixed indexed annuities to new sales. In order to preserve one of these products for your clients, applications must be received in the North American Company home office by 5 pm (CST) on April 9, 2017.
As previously communicated, sales of new MetLife individual disability insurance (IDI) policies will be suspended as of September 1, 2016. The last date to place issued policies is October 31, 2016. As we continue toward this suspension of new MetLife IDI sales, we want to confirm some key dates. MetLife will continue to accept New Business Applications and continue to license, appoint and contract new brokers until August 31, 2016. Please keep in mind, all IDI New Business Applications must be received (in good order) in MetLife’s Tampa service office by September 1, 2016. Any IDI New Business Application received after that date will be returned. All issued IDI policies must be placed on or before October 31, 2016. Any applications still pending as of October 31, 2016, will be closed out.