AB 2347 requires annuity policies to be accompanied by a ‘know your rights’ disclosure to properly inform consumers of their option to seek a timely refund
SACRAMENTO – (Tuesday, July 22, 2014) – California Governor Jerry Brown announced this week that he signed Assembly Bill 2347, authored by Assemblywoman Lorena Gonzalez (D-San Diego), to better protect seniors by improving disclosure rules for the purchase of annuities.
The bill's changes to current disclosure rules will take effect on January 1, 2015.
"After unanimous support in the Assembly and Senate, I'm proud that Governor Brown signed AB 2347, my bill to better protect seniors when purchasing annuities,” Gonzalez said. “Requiring a ‘know your rights’ disclosure on these policies represents important progress to make seniors more aware of their rights to a refund, safeguard their retirement security, and standardize the process for all parties for a smoother and more reliable system."
Currently, customers who purchase immediate annuities are often unaware of their right to revisit their decision to purchase an immediate annuity, according to the Department of Insurance. This scenario often arises once customers, who are typically senior citizens, discuss their purchase with their immediate family following the transaction and reconsider their decision.
Current law does not require disclosure language for immediate annuities free-look period. Additionally, the current disclosure language for life insurance and annuity products are inconsistent and confusing for senior citizens.
AB 2347 requires that immediate annuity disclosure language is made available on the cover page of these policies. Additionally, AB 2347 requires the policies correctly refer to modified guaranteed contracts as fixed annuities rather than variable, adding in brackets to allow the insurer to select only the applicable product type that was purchased, and adding other clean-up terminology. These changes would not only simplify and clarify the disclosure for customers, but would also provide clarification to insurers about their disclosure obligations.
This bill will ensure that senior citizens have proper disclosure to avoid possible future financial hardship.
AB 2347 was passed by the Senate on June 30, 2014 by a vote of 36-0, and passed by the Assembly on July 3, 2014 by a vote of 76-0. The bill was supported by the California Department of Insurance.
Assemblywoman Lorena Gonzalez represents the 80th Assembly District, which includes Chula Vista, National City and the San Diego neighborhoods of City Heights, Barrio Logan, Paradise Hills, San Ysidro and Otay Mesa, and serves as Chair of the Assembly Select Committee on Women and the Workplace. For more information, visit http://asmdc.org/members/a80/ .