The national Annuities guide covers how annuities work: accumulation and payout phases, fixed, variable, and indexed products, immediate versus deferred, payout options, and taxation. Alaska adds its rules on disclosure, best interest, training, and a few required contract provisions. Most of them are in 3 AAC 26.750-.789 and AS 21.45.

Who may sell

• Fixed annuities fall under the life line of authority, which includes endowments and annuities (AS 21.27.115(1)).
• Variable annuities also require the variable line, plus SEC broker-dealer registration or a passed securities test (AS 21.27.115(5); AS 21.27.530).
• Before selling any annuity, a producer must complete a one-time annuity training course of at least 4 credit hours (3 AAC 26.778).
  • The course may count toward CE.
  • It may not include marketing, sales techniques, or insurer-specific product content.
  • The insurer must verify the producer completed it before letting the producer sell its annuities.

Best interest standard

When recommending an annuity, the producer must act in the consumer's best interest and may not put the producer's or insurer's financial interest ahead of the consumer's (3 AAC 26.775). The standard has four parts:

• Care. Know the consumer's financial situation, needs, and objectives, and have a reasonable basis for the recommendation.
• Disclosure. Before the recommendation, give the consumer the Insurance Agent (Producer) Disclosure for Annuities form. It describes the products the producer may sell, the insurers represented, and how the producer is paid.
• Conflict of interest. Identify and avoid or disclose material conflicts.
• Documentation. Record the basis for the recommendation in writing.

Two limits on the standard:

• The care obligation creates a regulatory duty, not a fiduciary relationship, and it does not require ongoing monitoring.
• For an exchange or replacement, the producer must weigh surrender charges, lost benefits, and new fees. The producer must also consider whether the consumer had another exchange or replacement in the preceding 60 months.

Who is responsible. The insurer is responsible for compliance. The Director may order the insurer, agency, or producer to take corrective action (3 AAC 26.785).

Exempt transactions (3 AAC 26.770) include annuities used to fund:

• ERISA plans and employer 401 and 403(b) plans
• government and church plans and 457 plans
• structured settlements
• prepaid funeral contracts

Disclosure document and buyer's guide

• In a face-to-face sale, the disclosure document and the buyer's guide go to the applicant at or before application. Otherwise they go within five working days (3 AAC 26.755).
• If they are not delivered on time, the contract must give the applicant a 15-day right to return it without penalty.

Free look and replacement

• An individual annuity contract carries the same first-page notice as life policies: return within 10 days after delivery for a refund of all money paid (AS 21.45.020(c)).
• For a variable annuity, the refund is premiums not allocated to separate accounts plus the current value of the separate account amounts on the date of return (AS 21.45.020(d)).
• A replacing annuity must allow 30 days to return it (3 AAC 26.805).
• The replacing insurer notifies the existing insurer within five working days.
• Using values from an existing contract to buy a new one (a financed purchase) is treated as a replacement.

Required contract provisions

• Grace period: an individual annuity with periodic payments must allow one month, but not less than 30 days, for payments after the first. Interest on late payments may not exceed 6% (AS 21.45.180).
• Incontestability: if statements other than age, sex, and identity were required, the contract becomes incontestable after two years from issue, except for nonpayment (AS 21.45.190).

Guaranty protection

The Alaska Life and Health Insurance Guaranty Association covers the present value of annuity benefits, including net cash surrender and withdrawal values, up to $250,000 per individual (AS 21.79.025). Producers may not use the association to sell.

Common exam traps

• The annuity training course is 4 hours, one time. Long-term care training is 8 hours.
• Best interest is not a fiduciary duty under Alaska's rule.
• The exchange look-back is 60 months.
• A late buyer's guide triggers a 15-day return right. The regular annuity free look is 10 days. A replacement gets 30 days.
• The insurer is responsible for best-interest compliance.
• A structured settlement annuity is exempt from the best-interest rule.