Free Annuities Study Guide
Virginia Life, Accident & Health exam — Annuities.
Annuity types, phases and taxation are covered in the national Annuities guide. Virginia regulates annuity sales under its best-interest rule, 14VAC5-45, and adds licensing, advertising and disclosure rules for special annuities. This guide covers those.
Best interest (14VAC5-45-40)
An agent recommending an annuity must act in the consumer's best interest without putting the agent's or insurer's interest first. The agent meets that standard by satisfying four obligations:
| Obligation | Virginia rule |
|---|---|
| Care | Know the consumer's profile and the product's features. For an exchange or replacement, consider surrender charges, lost benefits, fees, the substantial benefit to the consumer, and any exchange in the past 60 months. |
| Disclosure | Before the recommendation, use the Commission's Insurance Agent (Producer) Disclosure for Annuities form. The agent must reasonably believe the consumer understands the surrender period and charges, possible tax penalties, fees and market risk. |
| Conflict of interest | Identify and avoid or disclose material conflicts. |
| Documentation | Record the basis for the recommendation. If the consumer refuses to give information, use the signed Consumer Refusal to Provide Information form. |
- The standard creates no fiduciary duty and no duty to monitor the annuity afterward.
- There's no care obligation when:
- no recommendation is made
- the consumer refuses information and no annuity is recommended
- the consumer buys an annuity the agent didn't recommend
- Insurer duties:
- eliminate sales contests, quotas and bonuses based on selling specific annuities in a short period
- confirm agents have finished the required training
- Records: kept 5 years after the transaction (14VAC5-45-47).
- Exemptions include contracts funding employer plans such as ERISA, 401(a), 401(k) and 403(b) plans (14VAC5-45-30).
Training (14VAC5-45-45)
- A one-time 4-credit-hour annuity course covering the best-interest standard is required.
- Agents licensed on or after September 1, 2021 can't sell annuities until it's done.
Variable annuities
- Selling variable contracts requires a variable contract agent license. That license requires a life and annuities license and the FINRA exam the Commission prescribes (38.2-1815; 14VAC5-20-80).
- The variable license ends immediately if the life and annuities license ends.
Special annuities and advertising
- A charitable gift annuity isn't insurance. The agreement must say it isn't regulated by the Commission or protected by the guaranty association (38.2-3113.2).
- A market value adjusted annuity must state on page one that its values may rise or fall under the adjustment formula (38.2-3113.1).
- Ads that illustrate nonguaranteed rates must show equally prominent illustrations at the guaranteed rate (14VAC5-41-130).
Free look and guaranty protection
- A replacement annuity carries at least a 10-day right to return (14VAC5-30-51).
- The Virginia Life, Accident and Sickness Insurance Guaranty Association covers up to $250,000 in annuity present value (38.2-1700).
Common exam traps
- Best interest has four obligations, uses the Commission's forms and creates no fiduciary duty.
- The replacement review looks back 60 months.
- Training is a one-time 4 hours. Records are kept 5 years.
- A charitable gift annuity isn't guaranty-protected.
Practice Annuities questions All Life, Accident & Health topics
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
