The SEC adopted final rules and form amendments that will revise the disclosure requirements for variable annuities and variable life insurance contracts ("variable contracts"). The SEC noted that it is adopting the final rule without change, but will still consider the feedback it received.
The SEC final rule will allow an issuer to satisfy its prospectus delivery requirement for variable contracts by delivering a summary prospectus using a "layered disclosure approach" - i.e., a reader-friendly overview of critical facts, with information about how to find a more in-depth discussion online or in paper format. In addition, the SEC final rule will:
- revise the content, format and presentation of information in disclosures;
- require that the variable contracts utilize the "Inline eXtensible Business Reporting Language" format when submitting certain required disclosures;
- make statutory prospectuses available on a free public website specified on, or hyperlinked in, the cover of the related summary prospectus; and
- revoke certain rules and forms that are "rendered moot by legislative actions" or are no longer needed.
This final rule will go into effect on July 1, 2020, with certain exceptions for amendatory instructions, which go into effect on January 1, 2022.
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