The national Annuities guide covers how annuities work: phases, product types, payout options, surrender charges, 1035 exchanges and taxes. Massachusetts adds a best interest standard for annuity recommendations, 211 CMR 96.00, which applies to sales and recommendations on or after June 1, 2023. It also requires one-time annuity training.

Who may sell

• The life line covers annuities. Variable annuities need the separate variable life and variable annuity line (M.G.L. c.175 s.162M(a)) plus securities registration.
• Training (211 CMR 96.06(2)). A producer completes a one-time annuity training course worth four CE credits from an approved CE provider. A producer who has just received the life line can't sell annuities until the course is done.

Best interest (211 CMR 96.05)

A producer recommending an annuity must act in the consumer's best interest by meeting four obligations:

1. Care. Gather the consumer profile and have a reasonable basis for the recommendation. The profile includes:
   • age, income and financial situation
   • objectives and time horizon
   • liquidity needs
   • risk tolerance
2. Disclosure. Before recommending, use the Commissioner's form to disclose:
   • the producer's role
   • the products the producer may sell, such as fixed or variable annuities
   • the insurers represented
   • how the producer is paid
3. Conflict of interest. Identify material conflicts and avoid or disclose them.
4. Documentation. Record the recommendation and its basis. If the consumer refuses to give profile information, get a signed statement on the Commissioner's form documenting the refusal and the consequences.

Exchanges and replacements. The producer weighs surrender charges, lost benefits and new fees, and considers any other exchange or replacement in the past 60 months.

What the standard doesn't require:

• recommending the lowest-compensation annuity
• ongoing monitoring
• a fiduciary duty
• a private cause of action

Insurer duties:

• The insurer's supervision system must eliminate sales contests, quotas, bonuses and non-cash compensation tied to specific annuities within a limited period (96.05(3)).
• Records supporting the recommendation are kept five years after the transaction (96.08).

Guaranty association

The Massachusetts Life and Health Insurance Guaranty Association protects annuity present value up to $250,000. A structured settlement payee is also protected up to $250,000 (c.175 s.146B). The association may not be used in selling.

Common exam traps

• 211 CMR 96 applies from June 1, 2023.
• Best interest has four obligations. A consumer who refuses profile information signs the Commissioner's form.
• The standard isn't a fiduciary duty and doesn't require the cheapest product.
• The look-back for prior replacements is 60 months.
• Annuity training is four credits, and a new life licensee can't sell annuities until it is done.
• Records are kept five years.