NAIC Suitability in Annuity Transactions Model Regulations

7 FINRA Rules 2310, 2320, 2341, and 5110 each include provisions restricting the payment and receipt of non-cash compensation in connect with the sale and distribution of securities. In general, these rules limit non-cash compensation arrangements to gifts that do not exceed ________ in value.

$100

The SEC's Regulation Best Interest (Reg BI) is effective as of:

June 30, 2020

Contract Value

The cash value of an annuity.

Which of the following annuities do not fluctuate in value?

Fixed annuity

New Money Rate

The investments that the insurer is buying today

The enhanced Model Regulation includes a new best interest standard of care that producers and insurers can meet if they satisfy ALL of the following requirements:

a Care Obligation, a Disclosure Obligation, a Material Conflict of Interest Obligation, and a Documentation Obligation

As set forth in Reg BI's explanation, to satisfy the Care Obligation, the broker-dealer will have to satisfy, at a minimum:

all of the elements of FINRA's existing suitability rule (FINRA Rule 2111)

According to the NAIC Annuity Disclosure Model Regulation, where the Buyer's Guide and disclosure document are not provided at or before the time of application, a free look period of no less than ________ must be provided.

15 days

"The ethical requirement that people who care for others will do so in good faith, placing their assessment of that person's best interests above their own" refers to the:

Best Interest Standard

Account Value

The account value is the annuity death benefit

Renewal Rate

The investments the insurer bought when the annuity was originally purchased

14 _______ is the act of inducing or attempting to induce a policyowner to drop an existing insurance policy or contract to take another policy or contract that is substantially the same by using misrepresentations or incomplete comparisons of the two policies.

Twisting

The taxable portion of annuity distributions or withdrawals will be taxed as:

ordinary income only

FINRA Rule 2111 identifies which three main suitability obligations?

reasonable basis, customer specific and quantitative suitability

There are three basic phases in the life of an annuity:

1. Contribution 2. Accumulation 3. Distribution

Where a policy replacement is involved, the existing insurer is required to retain all replacement notifications received for at least:

5 years

A type of annuity in which the surrender charge period and the interest guarantee period are equal in length is called a "________" annuity.

CD-type

Firms are required to maintain a copy of each Form CRS on record for at least:

Six years

While life insurance provides protection against dying too soon, annuities provide protection against:

living too long

The revisions to NAIC Suitability in Annuity Transactions Model Regulation (#275) requires agents and carriers to act with "________" in making recommendations.

reasonable diligence, care and skill

Legal reserve

refers to the strict financial requirements that must be met by an insurance company to protect the money paid in by all policyholders.

Bailout Rate

the agreement between the insurer and the contract owner can allow for utilization of the bailout clause if the interest rate decreases below a certain level

The revisions to NAIC Suitability in Annuity Transactions Model Regulation (#275) include a new "________" Standard.

Best Interest

The SEC's Reg BI Compliance Obligation applies solely to:

the broker-dealer entity

The annuity's initial participation rate depends on

the contract's issue date

In determining whether a combination of words constitutes a professional designation implying that person has special certification in servicing seniors include the use of one or more words such as "senior," "advisor," "specialist," "elder," etc., are considered in addition to:

the manner in which those words are combined

According to the NAIC Annuity Disclosure Model Regulation, the uses of unearned certifications or professional designations are considered ________ in the business of insurance.

unfair and deceptive acts or practices