On February 13, 2020, the NAIC Executive Committee and the Plenary voted to approve an update to the NAICs Suitability in Annuity Transactions Model Regulation (Model # 275). The revisions, specifically Section 1A defines the purpose of this regulation to require producers, as defined in this regulation, to act in the best interest of the consumer when making a recommendation of an annuity and to require insurers to establish and maintain a system to supervise recommendations so that the insurance needs and financial objectives of consumers at the time of the transaction are effectively addressed. The minimum length of the training required under this subsection shall be sufficient to qualify for at least four (4) CE credits but may be longer. Producers who hold a life insurance line of authority on the effective date of this regulation and who desire to sell annuities shall complete the requirements of this subsection within six (6) months after the effective date of this regulation. Newly granted licenses with this authority must complete the requirement prior to the sale of annuities.
On February 13, 2020, the NAIC Executive Committee and the Plenary voted to approve an update to the NAICs Suitability in Annuity Transactions Model Regulation (Model # 275). The revisions, specifically Section 1A defines the purpose of this regulation to require producers, as defined in this regulation, to act in the best interest of the consumer when making a recommendation of an annuity and to require insurers to establish and maintain a system to supervise recommendations so that the insurance needs and financial objectives of consumers at the time of the transaction are effectively addressed. Specifically, Section 7B of the Model Regulation, requires a one-time, minimum four credit hour general annuity training course offered by an insurance-department approved education provider and approved by an insurance department in accordance with applicable insurance education training laws or regulations. Additionally, under Section 7A of the Model Regulation, insurance producers will also need to complete product-specific training through the insurance carriers whose products they sell. (Note that Oklahoma has not mandated product specific training). Section 7A states a producer shall not solicit the sale of an annuity product unless the producer has adequate knowledge of the product to recommend the annuity, and that the producer is in compliance with the insurer’s standards for product training. A producer may rely on insurer-provided product-specific training standards and materials to comply with this subsection. The minimum length of the training required under this subsection shall be sufficient to qualify for at least four (4) CE credits but may be longer. Producers who hold a life insurance line of authority on the effective date of this regulation and who desire to sell annuities shall complete the requirements of this subsection within six (6) months after the effective date of this regulation. Newly granted licenses with this authority must complete the requirement prior to the sale of annuities.
Learning Objectives
Upon conclusion of this course, students will be able to:
- Define an annuity; and reasons to purchase an annuity
- Describe the outlook for the future of annuities
- Identify the various classifications of annuity contracts
- Demonstrate an understanding of the differences, advantages, and disadvantage of the various annuity products including available riders
- Recognize the regulation of the sale of VAs with the state in which licenses are held, NAIC Model Regulation, FINRA rules and the SEC Best Interest Standards
- Identify the roles and rights of the parties to an annuity contract
- Identify the role and the responsibilities of the State Guaranty Associations
- Demonstrate an understanding of the Unfair Trade and Marketing Practices
- Describe the benefits of maintaining suitability protections
Credit Hours: 4