(Reuters) - New York’s insurance regulator is investigating sales of one of the fastest growing products in the life insurance industry, know as indexed universal life, according to a letter reviewed by Reuters on Sunday.
Benjamin Lawsky, superintendent of the Department of Financial Services, sent a letter to 134 insurers earlier this month asking how they market life insurance policies tied to benchmark stock market indices such as the S&P 500. The watchdog is concerned that insurers are exaggerating potential gains to customers.
Officials are “deeply concerned” that the illustrations are “wildly inaccurate” and many people could be harmed, given how fast this sector of the market is growing, according to a person familiar with the matter.
Sales of these policies are one of the fastest growing areas in life insurance. They are appealing because they are tax efficient and can protect policy holders from market losses.
The Wall Street Journal first reported the news of the investigation on Sunday.
Reporting by Karen Freifeld and Liana B. Baker; Editing by Marguerita Choy