Teacher's 403(b) Insurance on Path to Repair

Previously I reported on the 403b issue regarding changes made last year teacher’s insurance that had the effect of forcing them to leave their personal financial advisors to go with advisors mandated by the state.

On Wednesday Senate Study Bill 1257 was filled with the intent of correcting this error. After review with our NAIFA (National Association of Insurance and Financial Advisors) members, we are not satisfied with the changes this bill proposed. CSG plans to file a strike-all amendment preserving only the title of the bill and replace it with language that fixes some of the errors in last year's changes.

Last year’s changes in the 403b law requires the Department of Administrative Services (DAS) to handle all the administrative aspects of 403b insurance, including the selection of a small group of insurance carriers who are allowed sell the 403b insurance to teachers. The main problem arose when teachers were forced to leave their trusted financial advisors, who were no longer eligible to sell 403b insurance, to seek advice from strangers mandated by the state. The other problem arises when DAS decides to change their select group of carriers and teachers are bounced from one agent to the next. No one else is forced to buy their insurance from someone they don’t know or trust – nor would they want to be.

One possible solution is to put a procedure in place to require any licensed insurance agent in good standing to have access to the DAS-selected carriers’ 403b products. This would allow teachers to remain with their preferred financial advisors.