Life Insurance Product SuitabilityPosted November 11th, 2010
Life insurance product suitability is taking on all new importance. Last year, the first breach of fiduciary duty lawsuit involving the suitability of a trust-owned life insurance (TOLI) policy was adjudicated. Over the past two years, FINRA arbitrations involving breach of fiduciary duty for product suitability have doubled, and litigation against agents and brokers involving product suitability under the common-law definition of breach of fiduciary duty is also on the rise.
Also, New York Producer Disclosure Regulations impose a higher standard of care on agents/brokers beginning in 2011, and the Dodd-Frank Wall Street Reform and Consumer Protection Act empowers the SEC to impose a fiduciary standard of care sometime thereafter, which it appears to be leaning towards. This column will, therefore, discuss life insurance product suitability and its growing relevance. Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
For previous coverage of the suitability and fiduciary standards in Advisor’s Journal, see Dodd-Frank Wall Street Reform and Consumer Protection Act (CC 10-35) & What You Don’t Know Yet Might Hurt You: A Broker’s Duties under the Financial Reform Act (CC 10 40).
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