Massachusetts Annuity Suitability
The New Best Interest Requirement
Massachusetts Division of Insurance recently adopted 211 CMR 96.00 Suitability in Annuity Transactions. Licensed insurance producers who hold a life insurance line of authority in Massachusetts and want to sell annuities on or after June 1, 2023, must take an Annuity Best Interest (Annuity BI) certification course offered by an approved continuing education provider. The updated training courses will include adopted NAIC’s 2020 Model Law #275 best-interest standards, which among other changes, outline the requirement for producers to act in the best interest of the consumer at the time the annuity recommendation is made.
The topics that must be covered by the training course are set out in the regulation and shall include information on:
- The types of annuities and various classifications of annuities
- Identification of the parties to an annuity
- How product specific annuity contract provisions affect consumers
- The application of income taxation of qualified and non-qualified annuities
- The primary uses of annuities
- Appropriate standards of conduct, sales practices, replacement and disclosure requirements
New Massachusetts Training Requirement
A producer shall not solicit the sale of an annuity product unless the producer has adequate knowledge of the product to recommend the annuity and the producer is in compliance with the insurer’s standards for product training. A producer may rely on insurer-provided product-specific training standards and materials to comply with 211 CMR 96.06.
A producer who engages in the sale of annuity products shall complete a one-time training course for 4 CE credits, approved by the Commissioner and provided by a continuing education provider.
Producers who obtain a new life insurance line of authority may not engage in the sale of annuities until the annuity training course required under 211 CMR 96.06 has been completed.
Frequently Asked Questions
Who needs to complete the new training?
All producers who engage in the sale of annuities in the state of Massachusetts, including those registered with FINRA, must complete the training required by the revised model.
When is the training due?
Producers who already took an Annuity Suitability program and who are currently certified to sell annuities in Massachusetts need to complete either:
1-Hour Annuity Best Interest course by June 1, 2023
4-Hour Annuity Best Interest course after June 1, 2023 and before the sale, solicitation or negotiation of an annuity product in Massachusetts.
A producer who has NOT completed the Annuity Suitability training requirements under the prior version of the model must complete the required training by June 1, 2023 or before the sale, solicitation or negotiation of an annuity product in Massachusetts.
What if a producer does not complete the required training?
A producer who fails to satisfy the training requirements is not permitted to recommend or sell annuities. A producer who recommends or sells annuities without completing the required training may face enforcement action by the Massachusetts Division of Insurance.
Will a producer get CE credit for taking the new annuity best interest training?
Yes, courses must be taken through an approved continuing educatino provider. The course approval should indicate a course category of “Annuity”. These courses are approved for insurance continuing education towards your license renewal and it is the education providers responsibility to post these credits to your transcript. InsuranceStudy will have both courses available in our catalog at https://www.insurancestudy.com/courses/massachusetts-insurance-continuing-education. Courses will be available upon approval by the Massachusetts Division of Insurance.
How does a producer show that they have met the new annuity best interest training requirement?
The producer may be asked by the insurer to provide a certificate of completion of the training course in order to satisfy the insurer’s responsibility under the Regulation. Certificates of Completion are provided by InsuranceStudy at the completion of your course and can be downloaded at any time from your course dashboard. Additionally, InsuranceStudy is an approved ClearCert provider and all course completions will be reported to ClearCert so that carriers may verify a producer’s certification status at any time. It is the insurer’s responsibility to verify that the producer has completed the training.