The national Annuities guide covers how annuities work: phases, product types, payout options, surrender charges, 1035 exchanges and taxes. Maryland adds a best interest standard and training requirement (COMAR 31.09.12), disclosure rules (COMAR 31.15.04), and standard contract provisions (Insurance Article §§ 16-402 to 16-407).

Who may sell

• The life line covers annuities. Variable annuities need the separate variable life and variable annuity line (§ 10-112), plus securities (FINRA) registration.
• Training (COMAR 31.09.12.08). Before selling annuities, a producer completes a one-time 4-credit-hour course approved by the MIA. Insurers confirm completion before allowing sales.

Best interest (COMAR 31.09.12.04)

A producer recommending an annuity must act in the consumer's best interest, without putting the producer's or insurer's financial interest first. The four obligations are:

1. Care. Know the consumer's profile and have a reasonable basis for the recommendation. For an exchange or replacement, weigh surrender charges, lost benefits and fees, whether the consumer substantially benefits, and any other exchange in the preceding 60 months.
2. Disclosure. Disclose:
   • the producer's role
   • the products the producer may sell
   • the insurers the producer represents
   • the sources and types of cash and non-cash compensation
3. Conflict of interest. Identify and avoid or disclose material conflicts.
4. Documentation. Record the recommendation and its basis. If the consumer refuses profile information, or buys without a recommendation, get a signed statement saying so.

What the standard isn't. It is not a fiduciary duty and doesn't require ongoing monitoring. The lowest-compensation product doesn't have to be recommended.

Records are kept 7 years after the transaction (COMAR 31.09.12.10).

Contract provisions

• Grace period. At least 30 days for payments after the first. Interest of up to 6% may be charged (§ 16-402).
• Misstatement of age or sex. Benefits are what the payments would have bought at the true age or sex (§ 16-405).
• Reinstatement. Within 1 year of default, unless the cash value was paid out (§ 16-407).
• Free look. 10 days after delivery, with a pro rata refund, or 30 days in a replacement (§ 16-105).
• Contract summary (COMAR 31.15.04.05). It is given before the initial consideration is accepted, unless the contract has an unconditional refund period of at least 10 days.

Guaranty corporation

The Maryland Life and Health Insurance Guaranty Corporation protects annuity present value up to $250,000 (§ 9-407).

Common exam traps

• Best interest has four obligations, and the replacement look-back is 60 months.
• Annuity training is 4 credits, and the insurer confirms it.
• Maryland annuity recommendation records are kept 7 years.
• An annuity may be reinstated within 1 year. A life policy may be reinstated within 3 years.
• The free look is 10 days, or 30 in a replacement.