Chapter 6: Annuity Suitability & Disclosure

To help producers in their suitability determinations, the industry offers specific guidelines and directives. Pertinent to the recommendation and placement of annuities are:

1) NAIC Suitability in Annuity Transactions Model Regulation 2) FINRA Rule 2330

________ ______ ________ is the by-word for annuity recommendations and annuity placements.

Know your customer

The foundation upon which most states have based their annuity suitability requirements is the .

NAIC's Suitability in Annuity Transactions Model Regulation

the process of applying standard principles and business practices to determine whether a recommended product is appropriate for any given consumer.

Suitability

The NAIC model applies to the recommendation and placement of

all annuities in states that have enacted this regulation

FINRA Rule ________ requires that a member representative have a reasonable basis to believe that the variable annuity transaction is suitable for the customer before recommending the purchase or exchange of a variable annuity.

2330

_____________ means advice provided by an insurance producer, or an insurer where no producer is involved, to an individual consumer that results in a purchase, exchange, or replacement of an annuity in accordance with that advice."

Recommendation

This rule is titled Members' Responsibilities Regarding Deferred Variable Annuities and sets forth precise actions and activities that must be followed for the recommendation and sale of deferred variable annuities in order to enhance and tighten the standards for placement of these products

Rule 2330

__________ ___________ are to be signed by both consumer and producer, attesting to the producer's efforts to obtain the necessary suitability information and to use that information in recommending a product.

Suitability statements

The suitability standards of FINRA Rule 2330 apply to both the purchase of a variable annuity as well as the recommendations for subaccount investments. a. True b. False

a

A producer's recommendation is suitable if, at the time of the recommendation and sale, the buyer's insurance ________ and ________ _______ are "appropriately addressed."

needs financial objectives

The principal review and suitability determination must be done no later than ________ business days after a completed and accurate application is received by the principal's office

seven

FINRA Rule 2330 applies to the recommendation and placement of

variable annuities