Annuity concepts are covered in the national Annuities guide. California's life exam adds the best interest standard (SB 263), annuity training, the senior free look, and surrender-charge and replacement protections.

Best interest standard (CIC 10509.9200 and following)

• For recommendations made on or after January 1, 2025, a producer must act in the consumer's best interest by meeting care, disclosure, conflict-of-interest, and documentation obligations (CIC 10509.9204). Earlier recommendations fall under the older suitability article.
• Consumer profile information includes age, income, liquidity needs, risk tolerance, and tax status. It also includes whether the consumer has a reverse mortgage or plans to apply for means-tested benefits such as Medi-Cal (CIC 10509.9203).
• The article creates no private cause of action and no fiduciary standard (CIC 10509.9200).
• Records are kept five years after the transaction (CIC 10509.9207).
• Exempt: annuities funding ERISA plans and employer 401(a), 401(k), 403(b), and similar plans (CIC 10509.9202).

Training (CIC 1749.8)

• Before selling annuities, a producer completes an 8-hour initial course. After that, 4 hours of annuity training are needed every two-year renewal, and these hours count toward CE.
• Under SB 263, a person licensed on or after January 1, 2025 may not sell annuities until the 8-hour course is done (CIC 10509.9205).

Free look for seniors (CIC 10127.10)

• An annuity sold to a buyer 60 or older on the purchase date has a 30-day free look.
• For a fixed annuity, returning it voids the contract and refunds all premiums and fees, so there's no surrender charge.
• For a variable annuity, the premium stays in fixed-income and money-market funds during the free look unless the owner directs otherwise.
• Buyers under 60 get the general life and annuity free look of 10 to 30 days (CIC 10127.9).

Senior sales protections

• A life policy or annuity with surrender charges sold to a senior must carry a bold 12-point cover notice showing where the surrender charges are described (CIC 10127.13).
• Recommending to someone 65 or older a replacement that triggers a surrender charge without a substantial financial benefit is an unnecessary replacement and a violation (CIC 10509.8).
• A producer selling to someone 65+ must warn in writing about taxes and penalties from liquidating assets, and must give a statutory Medi-Cal disclosure when Medi-Cal treatment is part of the pitch (CIC 789.8).

Guaranty protection

CLHIGA covers annuity present value up to $250,000 per life, within the lesser of 80% of the contractual obligation and the dollar caps (CIC 1067.02).

Common exam traps

• Best interest applies to recommendations from January 1, 2025, and isn't a fiduciary standard.
• Annuity training: 8 hours initially, then 4 hours each renewal.
• The senior annuity free look starts at age 60 and lasts 30 days.
• A 65+ replacement with a surrender charge and no substantial benefit is an unnecessary replacement.