NAIC Annuity Suitability Training Requirements

Before an annuity product is sold, the insurer or agent issuing the annuity needs to fulfill certain training requirements. The National Association of Insurance Commissioners (NAIC) and state insurance departments establish and enforce these regulations to protect the best interests of consumers.

Sheena Zimmermann, Financial Writer for Annuity.org
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APA Zimmermann, S. (2022, April 26). NAIC Annuity Suitability Training Requirements. Annuity.org. Retrieved June 22, 2022, from https://www.annuity.org/annuities/regulations/naic/training/

MLA Zimmermann, Sheena. "NAIC Annuity Suitability Training Requirements." Annuity.org, 26 Apr 2022, https://www.annuity.org/annuities/regulations/naic/training/.

Chicago Zimmermann, Sheena. "NAIC Annuity Suitability Training Requirements." Annuity.org. Last modified April 26, 2022. https://www.annuity.org/annuities/regulations/naic/training/.

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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.

What Are the NAIC’s Suitability Guidelines?

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, 11 states have adopted the 2020 revisions to the NAIC Model Regulation, including the following:

  • Arizona
  • Arkansas
  • Delaware
  • Idaho
  • Iowa
  • Michigan
  • Montana
  • Nebraska
  • North Dakota
  • Ohio
  • Rhode Island

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.

“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.”

What Training Requirements Are Mandated by the NAIC?

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:

  • Types and classifications of annuities
  • Identification of the parties to an annuity
  • How product-specific annuity contract features affect the consumer
  • Application of income taxation of qualified and non-qualified annuities
  • Primary uses of annuities
  • Appropriate standard of conduct, sales practices, replacement and disclosure requirements

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.

Are There Other Certifications Required to Sell Annuities?

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.

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What Are the Annuity Suitability Training Requirements by State?

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.

11 states that require the revised NAIC four-hour training:
  • Arizona
  • Arkansas
  • Delaware
  • Idaho
  • Iowa
  • Michigan
  • Montana
  • Nebraska
  • North Dakota
  • Ohio
  • Rhode Island
California:
Eight-hour initial training, plus a four-hour CE training course required every two years thereafter
Florida:
Three-hour initial training, plus a three-hour CE training course required every two years thereafter. The five-hour "Law and Ethics Update" course meets Florida’s senior suitability training requirement.
Nevada, New Mexico, North Carolina and Vermont:
Currently no annuity training requirement
New York and Utah:
Four-hour training course not required, but producers must complete a two-part product training
Texas:
Four-hour initial training, plus an eight-hour CE training course required every two years thereafter for resident producers only
All other states:
Producers must complete required carrier- and product-specific training

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.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: April 26, 2022
Sheena Zimmermann, Financial Writer for Annuity.org
Written By Sheena Zimmermann, M.Ed. Financial Writer
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