The national annuities guide covers annuity types, phases, payout options, surrender charges and taxation. In Connecticut, annuity sales follow the best-interest regulation, Regs. 38a-432a, which is based on the NAIC model. The replacement rules (Regs. 38a-435) and the guaranty association also apply.

Best interest (Regs. 38a-432a)

• A producer acts in the consumer's best interest by meeting four obligations: care, disclosure, conflict of interest and documentation (Reg. 38a-432a-5(a)).
• Care: the producer considers the consumer's profile, including whether the consumer had another annuity exchange or replacement within the preceding 60 months (Reg. 38a-432a-5(a)(1)(J)).
• Not a fiduciary standard: the rule doesn't create a fiduciary relationship, and it doesn't require the product with the lowest compensation (Reg. 38a-432a-5(a)(1)(D), (H)).
• Disclosure: the producer explains the scope of the relationship, the products the producer may sell, and the sources and types of compensation (Reg. 38a-432a-5(a)(2)).
• Refusal to provide information: if the consumer won't provide profile information, or buys against the recommendation, the producer documents it in a statement the consumer signs (Reg. 38a-432a-5(a)(4)).
• Exempt: contracts that fund employer plans such as 401(k) and ERISA plans (Reg. 38a-432a-3).
• Training: a one-time four-credit annuity course approved by the Commissioner (Reg. 38a-432a-8(b)).
• Records: kept seven years after the insurer completes the transaction (Reg. 38a-432a-7).

Contract rules

• An insurer may defer paying a cash surrender benefit for up to six months, with the Commissioner's written approval (38a-440(b)(2)).
• Licensing:
  • Annuities are sold under the Life line, which by definition includes annuities (38a-702f(a)(1)).
  • Variable annuities need the variable authority plus securities registration.
  • An annuity with long-term care benefits requires both life and health licenses (38a-458(d)).
• Replacement: the Regs. 38a-435 notice and the 10-day unconditional right to return apply to replacement policies and contracts (Reg. 38a-435-5).

Exam traps

• Connecticut keeps annuity records seven years, not five.
• Annuity training is four hours, one time.
• Best interest is not a fiduciary duty, and it does not require the cheapest product.
• The 60-month look-back for prior exchanges is a care-obligation factor.