The SEC has proposed allowing a summary prospectus for the sale of variable annuity and variable life insurance products. The summary prospectus would include an overview of the insurance contract, fees, and risks. An issuer could also deliver an updating summary prospectus for existing investors, which summary would disclose any material changes during the prior year. The summary prospectus regime would mirror the summary prospectus adopted in 2009 for open end funds. An issuer would make the full prospectus and information about underlying investments available online. The comment period runs until February 15, 2019.
FINRA has consistently prioritized the regulation and disclosure of variable products and has issued multiple rules and notices to members about sales practices. While we agree that the SEC should allow summary prospectuses, we are not sure whether this will materially improve investor knowledge or reduce sales practice abuses.