Annuity types, phases, payout options, and how annuities are taxed are covered in the national Annuities guide. Montana adds statutory annuity contract provisions (Mont. Code Ann. 33-20-301 and following), an annuity best interest standard (33-20-801 and following), a one-time training requirement, and a disclosure rule (ARM 6.6.801 and following). All are fair game on the Montana Life exam.

Required annuity contract provisions

Life insurance's standard provisions in 33-20-103 don't apply to annuities. These part 3 provisions do.

Best interest standard (33-20-801 to 33-20-807)

• When recommending an annuity, a producer must act in the consumer's best interest at the time of the recommendation (33-20-805). The producer meets that standard by satisfying four obligations:
  • Care
  • Disclosure
  • Conflict of interest
  • Documentation
• Documentation means a written record of the recommendation and the basis for it.
• Each insurer must keep a supervision system reasonably designed to make its producers comply.
• Exclusions (33-20-803):
  • variable annuities regulated under Montana's securities law (Title 30, chapter 10)
  • ERISA and similar employer plans
  • structured settlements
  • formal prepaid funeral contracts

Training (33-20-807)

• Before selling annuities, a life producer completes a one-time 4-credit-hour annuity training course approved by the department.
• The insurer must verify that a producer has completed the training before letting the producer sell its annuities.

Disclosure and free look (ARM 6.6.805)

• Face-to-face sale: the applicant gets the disclosure document and Buyer's Guide at or before the time of application.
• Not face-to-face: they're sent within 5 business days after the completed application is received.
• If the documents weren't provided at or before application, the contract must give a free look of at least 15 days.

Replacement and guaranty protection

• Montana's life and annuity replacement rule (ARM 6.6.301 and following) also applies to annuities. The duties are covered in the Montana Life Policy Provisions guide.
• The Montana Life and Health Insurance Guaranty Association covers annuity benefits up to $250,000 in present value, including cash surrender and withdrawal values, per person (33-10-224). A producer may not use guaranty coverage as a sales tool (33-10-210).

Common exam traps

• Annuity incontestability: 2 years, except nonpayment.
• Annuity reinstatement: 1 year. Life policy reinstatement is 3 years.
• No surrender charges after 10 years.
• Best interest has four obligations: care, disclosure, conflict of interest and documentation. It doesn't cover variable annuities regulated as securities.
• Training: one-time 4 hours, checked by the insurer.
• Documents not delivered at application mean a free look of at least 15 days.