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Annuity Facts: How Will the New NAIC Suitability Model Affect Education and Training in 2011?

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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:

  1. The types of annuities and various classifications of annuities
  2. Identification of the parties to an annuity
  3. How variable, fixed, and indexed annuity contract provisions affect consumers
  4. The application of income taxation of qualified and nonqualified annuities
  5. The primary uses of annuities
  6. 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

Product-specific training

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.”

This means that all producers must go through the PST course or program for each carrier you represent before you can sell an annuity for that carrier. If you represent four carriers, you must go through four carrier programs. There is no window of time during which you can sell an annuity before you take the model training – if you don’t take it, you can’t sell until you do.

NAFA member carriers are working on their PST standards, and most have had training programs in place for some time. NAFA and SuccessCE have developed an online classroom with carrier-specific training rooms to help maximize the learning process and provide agents with a classroom environment in which they can learn and retain information about the products they sell.

NAFA members will work together to create uniform classroom and online experiences to facilitate the learning process. This will help agents to learn a variety of product-specific information and differentiators to ensure that consumers are offered products that are suitable for their retirement planning and needs.

As of this writing, three states have passed the 2010 Suitability Model – Iowa, Oklahoma, and Wisconsin – effective Jan. 1, 2011; stay tuned to NAFA to find out when your state is effective and what you need to do to maintain your ability to sell fixed annuities.

In this monthly column, the National Association for Fixed Annuities (NAFA) will provide essential information about fixed annuity product features, regulation, tax issues, and industry news. We invite you, the reader, to send us any questions that you often hear — or that you may have yourself. Submit your questions to [email protected] with the subject line “Fixed Annuity FAQ” to have your problems answered here.

The National Association for Fixed Annuities (NAFA) is a national trade association exclusively dedicated to promoting the awareness and understanding of fixed annuities — including income, declared rate, market value adjusted, and indexed. You can follow NAFA on Twitter at


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