The National Association of Insurance Commissioners (NAIC) first adopted the Model Regulation 275, Suitability in Annuity Transactions in 2010. As individual states adopt regulations based on the Model Regulation, they generally contain the following components:
The Model Regulation states that when a producer recommends the purchase or exchange of an annuity to a consumer, a producer should have a reasonable basis for believing that the transaction is suitable for the consumer. The regulation also defines specific information to be considered in making a suitable recommendation. Some states may require additional information beyond the Model Regulation.
Compliance with the regulation is shared by both insurer and producer. The suitability questionnaire and instructions on how to use the questionnaire are available in the annuity application kits. The suitability questionnaire must accompany ALL annuity business that has not had been subject to a suitability review by a Columbus Life Insurance approved certified third party. For annuity applications resulting from a replacement, the Multi-State Annuity Suitability Replacement Addendum is required in all states except Florida. Without the suitability questionnaire or replacement addendum (when a replacement is occurring), the annuity application is not in good order.
As each state adopts the regulation, they may require all insurance producers soliciting annuities in that state to complete some form of training to include, but not limited to the following:
1. Annuity Suitability Continuing Education Course through a state-approved continuing education vendor. The course must be at least four credit hours. This one-time requirement is not a condition of license renewal.
Columbus Life offers producers this course free of charge on the Kaplan training portal. If the producer takes the annuity course somewhere other than our Kaplan portal, the producer should forward their certificate of completion to Columbus Life. Producers who obtain a life insurance line of authority on or after the effective date of this regulation may not engage in the sale of annuities until the required training has been completed.
2. Product-Specific Training provided to a producer by an Insurer. The training must provide the producer with adequate knowledge of the annuity product's material features to ensure that the producer has reasonable knowledge of the product before recommendation. Columbus Life offers producers this course free of charge on the Kaplan training portal. All currently licensed producers must complete this training by a date decided upon by the state. New producers will be required to complete the training as part of the appointment process. Applications for annuity contracts dated before the training date will be returned.
Columbus Life has an enacted monitoring of annuity suitability requirements as set forth by each state. Our Enterprise Licensing Department ensures that a producer has completed all applicable training prior to accepting an annuity application from a producer. Our Suitability Review Department reviews the suitability questionnaire and may contact the producer and/or the client if there are questions regarding the suitability of the annuity sale.