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States adopt NAIC Suitability in Annuity Transactions Model Reg. #275

As you may already know, the NAIC updated its suitability model to include a Best Interest standard that applies to any sale or recommendation of an annuity. Producers now have a care, conflict of interest, disclosure, and documentation obligation that will apply to all annuity carriers with which they do business.

States adopting the updated model will have new state-required NAIC training for the sale or recommendation of any annuity as well as different forms required related to the new business process for the sale or recommendation of a fixed index annuity (FIA).

New NAIC training course

There will be a new state-required training module that must be taken in order to comply with the regulation. This training will be supplied by industry vendors such as RegEd and Kaplan.

  • For producers who have completed the current Annuity 4-hour training, there will be a new 1-hour supplemental training required. Please note, there is a grace period of 6 months for producers who have previously taken the 4-hour training and are currently licensed in the state adopting the regulation.
  • Producers who have not taken the current Annuity 4-hour training will be required to take a new 4-hour training that includes the new, best interest information before they can submit business.

Updated new business process for FIAs

  • A new Consumer Profile Form will be used in place of the existing suitability form in states that are adopting the new rule. The Consumer Profile Form will be made available on the day that the state launches the new regulation. States that have not approved the new regulation will still use the existing suitability form.
  • The existing Replacement Comparison form will be required for each replacement, and the lookback time period has increased from 36 months to 60 months.
  • New point-of-sale documentation that must be completed and retained as outlined in the state regulation.

State adoption

As of March 1, 2023, below are the states that have adopted the Best Interest regulations and their effective dates. AIPMA will update this section as more states adopt these regulations.

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • Colorado
  • Connecticut
  • Delaware
  • Georgia
  • Hawaii
  • Idaho
  • Illinois
  • Iowa
  • Kentucky
  • Maryland
  • Maine
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Montana
  • Nebraska
  • New Mexico
  • North Carolina
  • North Dakota
  • Ohio
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Virginia
  • Wisconsin

Business rules

Applications signed prior to a state’s adoption date will likely be treated according to that state’s current requirements. Applications signed after a state’s adoption date must meet new state requirements prior to issue.

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