NASD members and associated persons who are required to use hypothetical illustrations under New York State's Regulation 60 with respect to internal and external replacements of life insurance and annuity contracts, would not be prevented under NASD Rule 2210 from using such illustrations. However, any use beyond what is required by Regulation 60 may require the illustrations to be filed with NASD Regulation as sales literature.


 

February 5, 1999

 

W. Thomas Conner
Vice President, Regulatory Affairs
National Association for Variable Annuities
12030 Sunrise Valley Drive, Suite 110
Reston, Virginia 20191

 

You have asked NASD Regulation, Inc. ("NASD Regulation") to provide you with its views regarding Part 51 of Title 11 of the Official Compilation of Codes, Rules and Regulations of the State of New York, more commonly known as "Regulation 60."

 

Regulation 60, which became effective on November 10, 1998, requires certain procedures to be followed with respect to internal and external replacements of life insurance and annuity contracts, including variable contracts. In particular, Regulation 60 requires insurers and their agents to provide certain hypothetical illustrations to prospective customers when a variable life insurance or annuity contract is to be replaced with another. You have asked for NASD Regulation’s view of Regulation 60 in light of applicable NASD regulations and administrative interpretations.

 

NASD Regulation would not object to the use by NASD members and their associated persons of hypothetical illustrations required under Regulation 60. However, members and their associated persons may use such illustrations only to the extent that they are required to do so by the laws of the state of New York, and any use beyond what is required by Regulation 60 may require the illustrations to be filed with NASD Regulation as sales literature.

 

I hope this letter is responsive to your inquiry. Please note that the opinions herein are staff opinions only and have not been reviewed or endorsed by the Board of Directors of NASD Regulation. This letter responds only to the issues that you have raised based on the facts as described, and does not address any other rule or interpretation of the Association, or all the possible regulatory and legal issues involved.

 

Sincerely,

 

Robert J. Smith
Office of General Counsel
NASD Regulation, Inc.