Life Insurance Advice Under New CFP Practice Standards

CFP® Professionals are responsible for complying with the new Code of Ethics and Standards of Conduct as of October 1, 2019, with enforcement beginning June 30, 2020. These new Standards re-define the meaning of “clients’ best interests” for life insurance product recommendations to be consistent with other fiduciary rules, requiring CFP® professionals to “act with care, skill, prudence, and diligence” based on evaluation of “costs that the Client may incur” (among other things). Previously, due diligence for life insurance product recommendations was governed by the National Association of Insurance Commissions (NAIC) Life Insurance Illustrations Model Regulation #582, which doesn’t require disclosure of any costs, and is now considered “misleading”, “fundamentally inappropriate” and unreliable by financial, insurance and banking industry authorities. This presentation will contrast decision support for life insurance product recommendations under CFP® Standards versus NAIC Regulations, and provide practical guidance for life insurance advice under new CFP®s Practice Standards.