Annuity Sales Rule Expected To Change
Annuity Sales Rule is expected to change and could be rolling out soon as NAIC Executive Committee and Plenary hold a joint meeting on Thursday, Feb. 13. The meeting between Plenary and Naic will hold a meeting open to the public for 45 minutes in order to discuss these potential changes. The National Association of Insurance Commissioners creates model laws for states to pass.
The Final step for Annuity Selling Changes
This meeting will be the last step before the Executive Committee and Plenary adoption is sent for consideration by the states. The model articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation. Each consumer will receive a profile established by the agent, according to the new regulations committing the agent to extra work. The work entails documenting a consumer’s financial situation, insurance needs, and financial objectives.
New Rules & Regulations
These new rules although centered around best interest, do not disable agents from making their compensation. With no established fiduciary duty, the rules do not stop agents from recommending products with a higher compensation structure. The rules being voted on only provide the consumer with more protection, though plans recommended must be in the consumer’s best interest.
Another update requires agents to disclose and describe compensation they will be receiving and if asked the amount. Insurers must also identify and eliminate any sales contests, sales quotas, bonuses and non-cash compensation that are based on the sales of specific annuities within a limited period of time.
What Are Your Thoughts?
If accepted, the NAIC annuity model will harmonize with the best interest regulation presented by the Securities and Exchange Commission.
Agents, what do you think about the new impending rules for annuity sales? Leave a comment below and tell us your thoughts. For more information on the topic check out the original article here. For more help understanding what this means give Empower Brokerage a call with your questions! 888-539-1633 or contact us directly!