The Advertising Regulation Department (the Department) has seen an increase in member sales material that promotes variable life insurance products. Members are required to file variable life insurance sales material within 10 days of first use under NASD Rule 2210 (the rule). Frequently, this material includes performance information that can be an important factor for investors in determining whether to purchase variable life insurance. The increasing complexity and the significant differences among variable life insurance products raise regulatory issues with respect to the presentation of variable life insurance performance information.
The rule requires member communications to provide a sound basis for evaluating the facts regarding a particular security, and prohibits exaggerated, unwarranted, and misleading statements. The Department interprets these standards to require member communications that present variable life insurance performance to prominently disclose the significant impact that fees have on such performance.
The Department has determined that variable life insurance performance presentations, preceded or accompanied by a prospectus, comply with the rule if they meet the following standards:
The Department will also consider alternative methods of presenting variable life insurance performance on a case-by-case basis.
Members should contact the Advertising Regulation Department at (240) 386-4500 with any questions regarding variable life insurance performance presentations.