Confusion

  • After receiving these notices, John (Policyowner) contacted Glasgow (Agent) who had retired in 2000, to inquire why his policies would be terminating, even though he had timely paid the premiums on the policies for approximately 18 years. (p5)

2010 - LC - Maloof v John Hancock - 60 So. 3d 263 - Ala: Supreme Court - Alabama Supreme Court Opinion - 39p

  • He (Michael Lovendusky - ACLI) said consumers are mostly confused about options, guarantees and riders.
    • The ACLI work group was considering asking the Life Insurance and Annuities (A) Committee to narrow the charge to look at only products with options, guarantees and riders, but Ms. Cude said she thinks that it is important to consider how the disclosures for all products could be improved.
  • (Mr. Lovendusky - ACLI) said the ACLI work group thinks that most confusion for consumers involves complex products like Universal Life, and not Simple products like term life.

2016 0403, NAIC Proceedings - LIIIWG - Life Insurance Illustrations Working Group 

  • In my experience very smart people don't really know what all the components mean. 
    • I mean I feel like it does lead to confusion. 
    • So, I think if you can refer to the eventual illustration and just show the cash value.

-- Teresa Winer (GA)

2019 0917, NAIC - LIIIWG - Life Insurance Illustrations Working Group, [Bonk]

  • Gary Sanders (NAIFA):
    • And that leads to my second concern which is that consumer confusion I think, and we fear, in large part is going to be translated into a lack of confidence or a lack of trust in their advisor.
    • And in some way or another, the consumer is going to end up with the feeling that the advisor did some form of misrepresentation initially to the consumer and now the truth is coming out.
    • And I think that is a very big concern and not only would it harm the consumer's confidence in the producer, but it could have a lot of reputational damage to producer's as well.

2019 1115, NAIC - IULISG - IUL Illustration Subgroup - Conference Call, [Bonk]

  • (p8) - LIIIWG Next Steps Summary Comment Chart
    • Question 1 - Do you support the development of a short policy overview document for the working group to achieve its charge? Yes or No.
    • ACLI - NO - The working group has fulfilled its charge.
      • The Working Group was created from concerns raised when the Indexed Universal Life (IUL) Illustrations (A) Subgroup under the Life Actuarial (A) Task Force was working on guidance for IUL policy illustrations that would result in consumers being better able to understand the product performance and interest variability of IUL products.
      • A review of sample disclosures for all types of life insurance policies revealed that additional disclosures to those now required are likely to confuse consumers, which would be the opposite of the Working Group’s goal.
      • Moreover, the additional disclosures could create liability traps for insurers regarding required versus supplementary disclosures and undermine well respected NAIC models enabling the availability of affordable insurance protection to millions of Americans.

2021 0811 - NAIC Proceedings - LIAC - Life Insurance (A) Committee - Summer National Meeting - 43p

  • Focus Groups / Consumer Testing
  • A great deal of the confusion seems to stem from a lack of understanding of how cash value insurance products work and a lack of understanding of insurance terminology.
  • Also, because most people presume that if you pay your premium continuously, your policy will remain in effect, quite a few people had a hard time understanding how or why the policy would terminate in policy year 31.
    • This was simply foreign to their way of thinking.
  • One person was so confused that he said that the maturity age and endowment benefit were moot points, since the policy was going to end at year 31 anyway.

1990-1A, NAIC Proceedings - NAIC / LIMRA - Universal Life Disclosure Form Focus Group Summary, Consumer Issues Disclosure Working Group - NAIC  ---   [BonkNote]  ---  10p

  • Complaints and inquiries related to life insurance and annuity products ... generally concerned consumer dissatisfaction with, or confusion regarding, universal life insurance policies.  (p90)

2018 - Wisconsin OCI - Wisconsin Insurance Report - 219p

  • William Albus (National Association of Life Underwriters - NALU) commented that:
    • ...the requirement for disclosing sales commissions is unnecessary because it is superfluous and would only confuse consumers.
    • ...the purpose of disclosure is to provide information for making an informed decision and the disclosure of sales commissions has nothing to do with making this decision.

1988-2, NAIC Proc.