I. Overview of the Summary Prospectus Proposal -

In a long-awaited development, the Securities and Exchange Commission (SEC or Commission), on October 30, 2018, issued a proposal consisting of new rules and registration form amendments that would permit insurance companies to provide investors in variable annuity contracts and variable life insurance policies (together, variable contracts) with a more concise, user-friendly disclosure document in the form of a “summary prospectus.” The proposal reflects a lengthy but ultimately successful degree of coordination between the Commission, its staff and industry participants to address the unique disclosure challenges posed by variable contracts.

The proposal reflects certain attributes of the mutual fund summary prospectus that has been widely and successfully implemented over the past decade. The proposal also reflects generally what the SEC has come to understand as a strong preference by investors for “layered disclosure.” Despite the SEC’s success in adopting layered disclosure through a summary prospectus for mutual funds, in developing a variable contract summary prospectus the SEC has been challenged by the unique “volume, format and content of disclosures” regarding variable contracts. This has made it difficult for many investors to find and understand the key information they need to make an informed investment decision.