The national guide explains how annuities work:

• phases: accumulation and payout;
• types: fixed, variable and indexed; immediate and deferred;
• payout options, surrender charges and 1035 exchanges.

Indiana's state questions on annuities focus on the best interest rule (760 IAC 1-72), which took effect July 1, 2024, and the annuity training requirement.

National concepts in brief

• The annuitant is the measuring life; the owner controls the contract.
• Fixed annuities guarantee a minimum rate. Variable annuities put investment risk on the owner and require a life qualification plus FINRA registration (IC 27-1-15.6-7(b)).

Best interest (760 IAC 1-72)

• The standard: a producer recommending an annuity must act in the consumer's best interest. The producer may not put their own or the insurer's financial interest first (760 IAC 1-72-4.1(a)).
• Nature of the duty: it is a regulatory obligation only. It creates no fiduciary duty and no private right to sue, and it applies to any annuity sale.

The four obligations:

1. Care. Know the consumer and have a reasonable basis for the recommendation.
   • The care obligation does not require recommending the annuity with the lowest compensation.
   • For an exchange or replacement, consider any other exchange in the past 60 months (4.1(f)).
2. Disclosure. Before recommending, disclose:
   • the scope of the relationship;
   • which product types the producer is licensed to sell;
   • which insurers the producer can sell for (4.1(h)).
3. Conflict of interest. Identify and avoid material conflicts, or reasonably manage and disclose them.
4. Documentation. Record the recommendation and its basis.

Records: consumer information and disclosures are kept for five years after the transaction (760 IAC 1-72-6).

Training: a one-time four-credit annuity training course approved by the Department, completed before selling annuities (IC 27-1-15.6-19.5; 760 IAC 1-72-4.5).

Related rules

• Replacement: the replacement rule (760 IAC 1-16.1) covers annuities. The new contract carries a 20-day unconditional refund right.
• Guaranty association: the Indiana Life and Health Insurance Guaranty Association protects annuity values up to $250,000 in present value (IC 27-8-8-2.3). Producers may not use it as a sales tool.
• Buyer's guide rule: the life solicitation rule (760 IAC 1-24) does not apply to annuities.

Common exam traps

• Indiana's best interest rule took effect July 1, 2024.
• It is not a fiduciary standard and creates no private right to sue.
• Annuity records are kept 5 years. The training course is 4 credits.
• The look-back for prior exchanges is 60 months.