The NAIC Suitability Model includes two very important training requirements for all fixed annuity sellers. The first is a required four-hour course covering the material elements of annuities; NAFA calls this requirement “Annuity Boot Camp.”
Specifically, Section 7B (1) (a) of the model states that an insurance producer who sells fixed annuities must complete a one-time, four-hour credit training course approved by the department of insurance. The agent must complete the course six months from the date that the regulation is effective in the state in which you plan to sell the annuity.
The four-hour CE course must cover:
- The types of annuities and various classifications of annuities
- Identification of the parties to an annuity
- How variable, fixed, and indexed annuity contract provisions affect consumers
- The application of income taxation of qualified and nonqualified annuities
- The primary uses of annuities
- Appropriate sales practices, replacement, and disclosure requirements.
The new suitability model requires that the insurer verify that a producer has completed the annuity training course before allowing the producer to sell an annuity product. This verification may be done by obtaining the certification of course completion from the producer, or through reports provided by commissioner-sponsored database systems or vendors.
For its part, NAFA is partnering with SuccessCE, and a course has been submitted for approval in all 50 states. The NAFA education system will include immediate reporting to the carriers you specify when the course work is completed. The NAFA Fixed Annuity Training Course because available on Nov. 1 at www.successce.nafa.com.
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Perhaps the most labor and time-intensive part of the new model is the product-specific training (PST) requirements. The regulation states that “an insurance producer shall not solicit the sale of an annuity product unless the insurance producer has adequate knowledge of the product to recommend the annuity, and the insurance producer is in compliance with the insurer’s standards for product training.”