The national Annuities guide covers how annuities work: phases, fixed, indexed and variable products, payout options, surrender charges, 1035 exchanges and taxes. This guide covers the West Virginia rules:

• the best interest standard in CSR 114-11B, based on NAIC Model 275 (2020)
• required annuity training
• the annuity contract provisions in Article 13
• replacement

Who may sell

• Fixed and indexed annuities are sold under the life line.
• Variable annuities need the separate variable life and variable annuity line, earned with FINRA Series 6 or 7 (33-12-9(a)(5)).
• A producer who got the life line after the rule took effect must complete a one-time 4-credit annuity training course from a CE provider before selling annuities. The hours count toward the 24-hour CE requirement (114-11B-6.2).

Best interest (CSR 114-11B)

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

1. Care. Know the consumer's profile and have a reasonable basis for the recommendation. The profile includes:
   • age, income and financial situation
   • experience, objectives and intended use
   • time horizon
   • existing assets, liquidity needs and liquid net worth
   • risk tolerance
   • source of funds
   • tax status
2. Disclosure. Before the recommendation, describe:
   • the producer's role
   • whether the producer can sell fixed, indexed and variable annuities, life insurance and securities
   • which insurers the producer represents
   • the sources and types of compensation
3. Conflict of interest. Identify material conflicts and avoid or disclose them.
4. Documentation. Record the basis for the recommendation. A consumer who refuses to give profile information signs a statement (Appendix B) acknowledging the consequences.

Exchanges and replacements: the producer weighs surrender charges, lost benefits, fees, whether the new product substantially benefits the consumer, and any exchange in the past 60 months.

What the standard doesn't require:

• recommending the lowest-compensation product
• a fiduciary relationship
• ongoing monitoring

The care obligation doesn't apply when no recommendation is made.

Exempt transactions include:

• direct-response sales with no recommendation
• contracts funding ERISA and qualified employer plans
• structured settlements
• prepaid funeral contracts

Records are kept 10 years after the transaction (114-11B-8.1). The insurer is responsible for compliance, including its producers'.

Contract provisions (Article 13)

• Grace period: annuity and pure endowment contracts allow at least 31 days. The contract stays in force, and the insurer may charge interest of up to 6% (33-13-18).
• Incontestability: an annuity is incontestable after it has been in force two years during the lifetime of the person (33-13-19).

Replacement (CSR 114-8)

The replacement rule covers annuities as well as life insurance:

• The producer reads the replacement notice (Appendix A) no later than when the application is taken and submits it with the sales material.
• The existing insurer is notified within five business days.
• The buyer has a 30-day right to return the replacement for a full refund.

Guaranty protection

The West Virginia Life and Health Insurance Guaranty Association covers up to $250,000 in present value of annuity benefits, including cash surrender and withdrawal values (33-26A-3). The association can't be used in sales.

Common exam traps

• Best interest has four obligations, isn't fiduciary, and requires no ongoing monitoring.
• The profile includes source of funds and tax status.
• Records are kept 10 years in West Virginia.
• Annuity training is a one-time 4 credits, before selling.
• Annuity grace is 31 days, with interest up to 6%.
• A replacement gets 30 days to return.
• Annuity guaranty coverage is $250,000.