SEC's New Variable Contract Disclosures Promote Readability

Law360 (April 8, 2020, 5:57 PM EDT) -- On March 11, the U.S. Securities and Exchange Commission adopted a new rule, and related rule and form amendments, to improve disclosure for investors about variable annuities and variable life insurance contracts.[1] The changes will permit a variable contract to use a summary prospectus, in accordance with new Rule 498A under the Securities Act of 1933.[2]

The new summary prospectus will satisfy prospectus delivery obligations for a variable contract, and is designed to provide investors with a concise, reader-friendly document designed to improve their understanding of the investment’s features, fees and risks.[3]

The document also draws on a layered disclosure concept,...

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