The timing is right to consider introducing summary prospectuses for variable insurance products, according to Andrew Donohue, director of the Securities and Exchange Commission's Division of Investment Management.

Speaking at an American Law Institute/American Bar Association event in Washington, D.C., on Nov. 6, Donohue noted that summary prospectuses are now a part of the mutual funds industry. He added that the Insured Retirement Institute has petitioned the agency to adopt a layered summary prospectus model akin to that for funds. Boiling down the information into a standardized, plain English format promises to be difficult, but it is doable, Donahue said.

Meanwhile, firms selling variable annuities should make clear a contract owner's obligations in both the prospectus disclosure and in the marketing and sales of the product, Donohue said. It is vital that disclosures are written in plain English, particularly with respect to describing guaranteed lifetime benefit riders, he added. Marketing materials and sales presentations also must convey essential features of a variable product, such as costs, risks and benefits, whether it is sold through an in-house sales force or independent broker, Donohue said.

Cathy Weatherford, president and CEO of the IRI, formerly known as NAVA, in a statement applauded Donohue's remarks on the summary prospectus.