The national annuities guide covers annuity types, phases, payout options, surrender charges and taxation. On the Colorado Life exam, annuity questions turn on four state rules: the best-interest standard (Regulation 4-1-11), point-of-sale disclosure (Regulation 4-1-12), replacement (Regulation 4-1-4) and guaranty association limits.

Best interest (Regulation 4-1-11)

• Colorado's annuity rule follows the NAIC best-interest model. A producer making a recommendation must meet four obligations: care, disclosure, conflict of interest and documentation (Reg. 4-1-11, Sec. 5.A). The rule applies to consumers of all ages.
• Training: before selling annuities, a producer completes a one-time four-credit-hour annuity training course. It must be Division-approved and offered by an approved CE provider (Sec. 6.B).
• The insurer must verify that the producer completed the course before letting the producer sell its annuities.
• Records: kept five years after the insurer completes the transaction (Sec. 7.A).

Disclosure (Regulation 4-1-12)

• When an application is taken, the applicant receives a disclosure document and the applicable NAIC Buyer's Guide (Sec. 5.A).
• If those documents were not given at or before application, the insurer must send them no later than five business days after receiving the completed application. The contract must then include a free look of at least 15 days.

Replacement

• Replacing an existing life policy or annuity triggers the Notice Regarding Replacement. The producer reads it, both sign it, and the applicant keeps a copy (Reg. 4-1-4).
• The replacing insurer notifies the existing insurer within five business days. The new contract carries a 30-day right to return for an unconditional full refund.
• Federal tax treatment (for example a Section 1035 exchange) is covered in the national guide.

Licensing and guaranty

• Fixed annuities are sold under the Life line of authority, which includes annuity benefits (C.R.S. 10-2-407(1)(a)).
• Variable annuities also require the Variable Life and Variable Annuity authority. That authority requires an active Life license and FINRA registration.
• The Colorado Life and Health Insurance Protection Association covers up to $250,000 in present value of annuity benefits, including cash surrender and withdrawal values (10-20-104(3)(b)(I)(C)).
• Producers may not use the association's existence to sell (10-20-119).

Exam traps

• Four-hour training is one time, not every renewal cycle.
• Disclosure late = mail within 5 business days + 15-day free look; replacement = 30-day free look.
• Annuity guaranty limit is $250,000, not the $300,000 death-benefit limit or the $100,000 cash-value limit for life policies.