The national Annuities guide covers how annuities work: phases, product types, payout options, surrender charges, 1035 exchanges and taxes. Louisiana adds a best interest standard (Regulation 89), a training requirement (R.S. 22:1576), standard contract provisions (R.S. 22:951), and replacement rules shared with life insurance (Regulation 70).

Who may sell

• The life line covers annuities (R.S. 22:1547(A)(1)). Variable annuities need the separate variable life and variable annuity line, plus securities registration.
• Training (R.S. 22:1576(B)):
  • Before selling annuities, a life producer completes a one-time 4-credit-hour annuity training course approved by the Department.
  • The course may not include sales techniques or a particular insurer's product details.
  • The insurer must confirm the producer has completed the training before letting them sell its annuities.

Best interest (Regulation 89, LAC 37:XIII.11711 and .11715)

When recommending or selling an annuity, a producer must act in the consumer's best interest. The producer may not put their own or the insurer's financial interest ahead of the consumer's. The standard is met by four obligations:

1. Care. Know the consumer's profile and have a reasonable basis for the recommendation.
2. Disclosure. Disclose the relationship, the products offered and how the producer is paid.
3. Conflict of interest. Identify and avoid or disclose material conflicts.
4. Documentation. Record the recommendation and its basis.

When the consumer won't cooperate. If a consumer refuses to give profile information and buys an annuity the producer didn't recommend, the producer gets a signed acknowledgment documenting the refusal and stating that the purchase wasn't recommended.

Records. Insurers and producers keep the information behind a recommendation for five years after the transaction.

Standard provisions (R.S. 22:951)

• Grace period. 30 days or one month for payments after the first. The contract stays in full force during that time.
• Reinstatement. Within one year of default, during the annuitant's lifetime, by paying the overdue amounts with interest of no more than 6%. This doesn't apply to reversionary annuities.
• Free look. 10 days from actual receipt to examine the contract and return it for a refund.

Replacement

Regulation 70 covers annuity replacements the same way it covers life replacements:

• The producer reads the replacement notice no later than when the application is taken.
• The replacing insurer notifies the existing insurer within five business days.
• The owner has 30 days to return the new contract for a full refund. For variable or market value adjusted contracts, the refund is the cash value plus charges.

Creditors and the guaranty association

• Annuity proceeds payable to a beneficiary or payee are protected from the annuitant's creditors, saving the rights of forced heirs (R.S. 22:912(B)).
• The Louisiana Life and Health Insurance Guaranty Association protects annuity present value up to $250,000 (22:2083). Its existence may not be used to sell an annuity (22:2098).

Common exam traps

• Annuity training is 4 hours, one time, and the insurer confirms it.
• Best interest has four obligations. A consumer who refuses profile information signs an acknowledgment.
• Best-interest records are kept five years.
• The annuity free look is 10 days. A replacement gets 30 days.
• An annuity may be reinstated within one year. A life policy may be reinstated within three years.
• The guaranty limit is $250,000.