58-33A-16. Reasonable grounds for recommendation.
In recommending to a consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or series of insurance transactions, the insurance producer, or the insurer if no producer is involved, shall have reasonable grounds for believing that the recommendation is suitable for the consumer on the basis of the facts disclosed by the consumer as to the consumer's investments and other insurance products and as to the consumer's financial situation and needs and that there is a reasonable basis to believe all of the following:
(1)The consumer has been reasonably informed of various features of the annuity, such as the potential surrender period and surrender charge, potential tax penalty if the consumer sells, exchanges, surrenders, or annuitizes the annuity, mortality and expense fees, investment advisory fees, potential charges for and features of riders, limitations on interest returns, insurance and investment components, and market risk;
(2)The consumer would benefit from certain features of the annuity, such as tax-deferred growth, annuitization, or death or living benefit;
(3)The particular annuity as a whole, the underlying subaccounts to which funds are allocated at the time of purchase or exchange of the annuity, and riders and similar product enhancements, if any, are suitable (and in the case of an exchange or replacement, the transaction as a whole is suitable) for the particular consumer based on the consumer's suitability information; and
(4)In the case of an exchange or replacement of an annuity, the exchange or replacement is suitable including taking into consideration whether:
(a)The consumer will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits (such as death, living, or other contractual benefits), or be subject to increased fees, investment advisory fees, or charges for riders and similar product enhancements;
(b)The consumer would benefit from product enhancements and improvements; and
(c)The consumer has had another annuity exchange or replacement and, in particular, an exchange or replacement within the preceding thirty-six months.
Source: SL 2008, ch 273, §4; SL 2012, ch 250, §1.