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May 20, 2010

Suitability In Annuity Transactions Model Regulation

Recent revisions to the Suitability In Annuity Transactions Model Regulation, approved in late March 2010 by the National Association of Insurance Commissioners, will ring in changes for agents  and brokers who sell fixed annuities (in states that adopt the model regulation) and for the insurers who offer fixed annuities.

The new rule:

  1. Mandates completion, within six months of its effective date, of a four-hour training course on annuities.
  2. Insurers must verify agents’ completion of this course before permitting them to sell any annuity, except contracts used to fund individual retirement accounts, qualified plans, deferred compensation arrangements, or structured settlements.

In other words, it applies to nearly all “non-qualified” annuities. It requires that insurers review all annuity transactions, and it makes them responsible for compliance with the regulation, even if they hire a third party firm to monitor compliance.

The NAIC guidelines for factors to consider

  • Age
  • Annual Income
  • Financial Situation and needs: including the financial resources used for the funding of the annuity
  • Financial Experience
  • Financial Objectives
  • Intended Use of Annuity
  • Financial Time Horizon
  • Existing Assets, including investment and insurance holdings
  • Liquid Net Worth
  • Risk Tolerance
  • Tax Status

I personally would not mind being required to take a 4 hour training course if it meant that the requirement helped "raise the bar" for the entire industry. And while we are at it, how about licensing requirements and similar standards for those that operate in the structured settlement secondary market?

Read John L.  Olsen's article on the Annuity Suitability Model Regs from the April 29, 2010 edition of National Underwriter

Posted at 02:31 AM in Annuity News, Information About Annuity, National Association of Insurance Commissioners, Suitabilty |

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Guide to Structured Settlements 2022

  • What is a Structured Settlement? What You Need to Know
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  • How Do Structured Settlements Work? How Structured Settlements Work | Structured Settlement Diagram
    How structured settlements work, including 4structures.com LLC's super helpful structured settlement flow chart/diagram showing how structured settlements fit in with other settlement planning solutions.
  • Rated Ages and Structured Settlement Cost
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  • Structured Settlement Annuity Companies 2022
    Which life insurance companies issue structured settlement annuities going into 2022? A list of current structured annuity issuers, the location of their home offices and their financial ratings from A.M. Best, Moodys, Fitch, Standard & Poors and/or other Tier1 NAIC ratings, with links to their websites and other useful information.
  • Treasury Funded Structured Settlements
    Treasury Funded Structured Settlements are a settlement option for the most conservative using the OTHER permissible qualified funding asset under IRC 130(d), United States Treasury Bonds in addition to, or instead of, structured settlement annuities. Treasury Funded Structured Settlements can also be used to fund installment sales, also known as structured sales and other non qualified structured settlements.
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    Use the Taxable Equivalent Yield chart to help compare the Internal Rate of Return (IRR) of a structured settlement to other alternative or complementary investments. Need help with the chart? Call 4structures.com® LLC at 888-325-8640
  • Structured Settlement Payments | Types of Structured Settlements
    Ways You Can Structure Your Settlement Payments. With a structured settlement you can have more than one type of payment in a single contract. Different types of structured settlement payments can be customized and combined to meet your needs on a stand-alone basis, or in conjunction with other financial products. Diversify your structured settlement, if you wish, by funding with more than one annuity issuer, with treasury funded structured settlements, index linked structured settlement payments and market based structured .
  • Structured Attorney Fees for Tax Deferral for Contingency Fees
    Structured attorney fees is a financial strategy that offers a unique way to defer taxes for lawyers and law firms. Lawyers CAN structure their legal fees even if the plaintiff doesn't structure their settlement. There are multiple ways to structure your attorney fees, such as the an index linked structured settlement where payments are adjusted based on upside changes in the S&P 500 with no downside and a cap of 5%. Trial Lawyers may also use a special deferred pay/deferred compensation arrangement, if market based returns returns are desired with no cap. Plan NOW for year end! Put structured attorney fee expert John Darer® on your settlement planning team.
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    What does a Structured Settlement Lock-In Mean? How do plaintiffs, defendants and insurers benefit from a structured settlement quote lock in when finalizing a settlement? How does the defendant/insurer/court benefit from using a structured settlement lock-in? Where to be careful when using structured settlement lock ins.
  • What Are Structured Settlement Annuities?
    Structured settlement annuities are annuities that can provide one or more customized annuity payment streams in a single contract. Read about structured settlement annuities here.
  • History of Structured Settlements
    Tracing the roots of structured settlements history from 1918, when Congress exempted damages for personal injury or sickness from income tax, to the establishment of structured settlements as a core personal injury settlement planning tool to the present day.
  • What Are Market Based Structured Settlements?
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Structured Settlement Best Practices Corner

  • New York Insurance Advertising law requires the full name of the Insurer to be listed along with the city and state of the principal office. Stating that you represent these fine companies using Insurance company logos without the preceding information are also illegal
  • When it comes to settlement documents it is the ultimate responsibility of the lawyers or claims adjusters who receive input concerning the structured settlement aspects of the documents to actually read the entire document, exercise independent thought and advise their clients properly
  • Be aware that financial advisors use of testimonials is prohibited or restricted
  • Most states require that Testimonials represent the CURRENT opinion of the person who made the testimonial. Be prepared to back it up.
  • Number of States That Prohibit Payment of QSF expenses by licensed agents and brokers
    5 Survey not yet complete.

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