Speed Up 1035 Exchanges…

Happy New Year and welcome back in the office!
We’ll visit soon about 2011 plans & how I can best empower you. But very quickly, I came across an article from Investment News that’s important to share.

Here’s an excerpt:

A recent court decision against Pacific Life Insurance Co. may give advisers and broker-dealers legal leverage against insurers that take too long to perform Section 1035 exchanges…

The judge ruled that the transfer of funds was effective as of the date the surrender request was received. “When you have policy language that says that surrender is effective upon receipt, if the insurance company delays because it thinks its internal procedures allow it to seek further assurances that the insured really wants to surrender — then they’re on the hook for losses that occur due to market changes,” said David A. Calhoun, an attorney with Wyatt Tarrant & Combs LLP who represents BB&T in the case.

“Where we really see it is in the indexed annuity space,” said Zachary Parker, senior annuities and insurance consultant at Securities America Inc.
He used as an example his own experience trying to move a contract for his parents. The policy was already out of its surrender period and he wanted to use another insurer with a better crediting method. During the lengthy processing period, the new insurer announced a decrease in its crediting rates and bonus. After Mr. Parker threatened to call insurance regulators, the heel-dragging insurer rushed the transaction through to the new carrier. “It was like pulling teeth; they sit on the paperwork as long as they can,” Mr. Parker said. “My opinion is that if advisers aren’t following up and checking the status of the application, they’re probably in the same situation.”

To read the full article: CLICK HERE.

I’d recommend your staff reading this as well and potentially referencing it, when following up on 1035 exchange cases this year!
Take care and we’ll visit soon!


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