Legislation

AARP recently offered support for the health reform legislation that is currently circulating in Congress. As discussed by Grace Marie Turner in a recent Chicago Tribule piece, there is a case to be made that AARP's support of the legislation directly conflicts with the best interests of its 40 million members. AARP receives more than half of its $1.1 billion annual budget from fees related to endorsement and sale of health insurance and other retiree financial services products. So called "...

Target-date funds were given a huge boost by the Pension Protection Act of 2006. This legislation provides the basis for target-date funds to serve as default options in 401k plans. The result is that 43 percent of people in their 20s held target date funds at the end of 2008. Target-date funds attracted $41.8 billion in assets. This is despite the fact that certain target-date funds labelled 2010 (i.e. presumably for investors retiring in 2010) lost as much as 41 percent in 2008. Source:...

New guidelines allowing older borrowers to use a reverse mortgage to purchase a principal residence went into effect earlier this year. Previous guidelines had restricted the use of reverse mortgages to real estate transactions that involved refinancing. Until recently, lenders had been waiting on the sidelines in anticipation of further clarification from the federal government. However, lending activity does appear to be picking-up. A recent New York Times article provides specific examples...

A major player in the life settlement market has filed for Chapter 11 bankruptcy protection. On Monday, J.G. Wentworth and two of its affiliates filed for bankruptcy protection in a Delaware court. J.G. Wentworth had been very active in the life settlement market. The financial crisis has deeply impacted all securitization markets, and the life insurance market is no different. Life insurance policyholders who have already sold their life or annuity policies and received funds should be fine...

The state of Florida is considering legislation that would impose third degree felony charges and a maximum of five years in prison for insurance agents who provide misleading annuity representations ("twisting") and inappropriate policy surrenders or withdrawals (" churning "). "Under the bill, which would apply to sales in Florida to people over 65, the surrender periods — or the length of time an investor must keep an annuity — would be set at a maximum of five years. The surrender fee — or...