How annuities work (accumulation and payout, fixed, indexed and variable products, payout options and taxation) is covered in the national Annuities guide. This guide covers New York's annuity rules: required contract provisions (Insurance Law 3219), the best interest standard in Regulation 187, disclosure, nonforfeiture and replacement.

Required provisions (Ins. Law 3219(a))

• Grace period: 31 days after each payment due date after the first.
• Incontestability: incontestable after two years, except as to statements about age, sex and identity.
• Misstatement of age or sex: amounts are adjusted to what the payments would have bought at the correct age or sex, with interest of up to 6% on over- or underpayments.
• Reinstatement: within three years of default, by paying overdue payments with interest of no more than 6%, plus any required evidence of insurability.
• Free look: not less than 10 nor more than 30 days after delivery, and 30 days for mail-order sales.

Nonforfeiture (Ins. Law 4223)

Annuities must guarantee minimum cash surrender and paid-up values. During the deferral period, minimum cash surrender and death benefits are based on the contract's actual accumulated value.

Best interest: Regulation 187 (11 NYCRR 224)

• Regulation 187 applies to sales and in-force transactions of both life insurance and annuities, including group certificates. It is broader than the NAIC annuity model, which covers annuities only.
• The producer must act in the consumer's best interest: only the consumer's interests may be considered, and compensation is allowed only if it doesn't influence the recommendation (224.4(b)(1)).
• Suitability information includes age, income, financial objectives, liquidity needs, liquid net worth, risk tolerance and tax status (224.3(g)).
• For a replacement, the producer considers whether the consumer had another replacement, especially within the past 36 months (224.4(b)(3)).
• The producer documents the basis for the recommendation, and any refusal to give information, at the time it's made (224.4(f)).
• Producers can't call themselves a financial planner or financial advisor unless properly licensed or certified and actually providing those services (224.4(j)).
• Insurers keep a supervision system and make sure producers are trained (224.6).

Disclosure and senior designations

• Disclosures must say that dividends aren't guaranteed and that initial income may be lower than under a fully guaranteed contract (Ins. Law 3209(b)(3)).
• Regulation 199 bars misleading senior-specific designations, including self-conferred ones and those from organizations focused on sales training (11 NYCRR 225).

Replacement

Regulation 60 applies to annuities as well as life insurance. A replacement annuity has a 60-day free look, and the replaced contract must be reinstated if it's returned (Ins. Law 2123(a)(3); 11 NYCRR 51.6(d)). The full replacement procedure is in the New York Life Policy Provisions guide.

Common exam traps

• Regulation 187 covers life insurance and annuities, not just annuities.
• Replacement look-back: 36 months under Regulation 187.
• Free look: 10 to 30 days, 30 for mail order, 60 for replacements.
• Annuity incontestability has exceptions for age, sex and identity.
• "Financial planner" titles are off limits unless properly credentialed and actually providing those services.