NAIC Annuity Suitability Training Requirements

The National Association of Insurance Commissioners, or NAIC, governs the insurance industry and supports state insurance commissioners. The insurance industry in the United States is regulated by the individual states, but the NAIC provides the overarching laws for standardization.

Since annuities are insurance products, annuity providers must adhere to NAIC standards and state regulations. Insurers must satisfy training requirements and fully grasp these regulations before they can be licensed to sell annuities.

The NAIC has suitability guidelines in place to ensure that an annuity meets your needs. The Suitability in Annuity Transactions Model Regulation, commonly referred to as the NAIC Model Regulation, provided the framework when it was adopted in 2003, then was revised with enhanced standards in 2020.

To date, 26 states states have adopted — or are implementing — the 2020 revisions to the NAIC Model Regulation, including the following:

Before an agent or insurer can recommend an annuity product to you, they must gather certain information to determine your suitability, including your age, annual income, time horizon, risk tolerance, financial goals and more. This information helps keep the insurer in compliance, as they can only recommend and sell products that align with your needs.

The NAIC outlines training requirements in Section 7 of its revised Model Regulation. According to the NAIC, “a producer shall not solicit the sale of an annuity product unless the producer has adequate knowledge of the product to recommend the annuity and the producer is in compliance with the insurer’s standards for product training.”

The Model Regulation states that annuity-specific training involves the following competencies:

Producers or agents in states that have adopted the NAIC Model Regulation must complete a general four-hour annuity continuing education, or CE, course. The course must be administered by an educational vendor approved by the department of insurance.

Existing agents in states that have formally adopted the revised 2020 NAIC Model Regulation will be subject to an additional one-hour supplemental course. New agents can complete a revised four-hour course that already has the updated information included in the curriculum.

The state commissioner is responsible for enforcing compliance of these rules.

Agents should be licensed in the state in which they are selling the annuities. The licensing process can vary by state, but most agents engage in product-specific and carrier-specific training to be knowledgeable about their business lines.

The states that have adopted NAIC’s Model Regulation mandate the completion of the four-hour annuity suitability training, while other states have different rules in place — or no statewide requirements at all.
As a consumer, you may want to verify the level of training your insurer has completed before making your purchase.

States that align with the 2020 NAIC Revised Model also designate a grace period and a deadline for existing agents to complete the one-hour supplemental training.

The following continuing education organizations provide courses that fulfill the annuity training requirements:

State requirements may change as new regulations are adopted. Verify all requirements with your state or governing board.