Key Takeaways
- Georgia adopted the NAIC Suitability in Annuity Transactions Model Regulation requiring a best interest standard
- Producers must gather complete financial information before recommending an annuity
- Documentation of the suitability analysis must be maintained for records retention periods
- Georgia requires enhanced disclosures for annuity transactions including fees and surrender charges
- Insurers must establish supervision systems to ensure producer compliance
Georgia Annuity Suitability Requirements
Georgia has adopted comprehensive annuity suitability regulations based on the NAIC Suitability in Annuity Transactions Model Regulation.
Best Interest Standard
Georgia requires annuity recommendations to meet a best interest standard:
Core Obligations
| Obligation | Requirement |
|---|---|
| Best Interest | Recommendation must be in consumer's best interest |
| Care Duty | Exercise reasonable diligence, care, and skill |
| Disclosure Duty | Disclose material conflicts of interest |
| Documentation Duty | Document basis for recommendation |
What "Best Interest" Means
The producer must:
- Have reasonable basis for the recommendation
- Believe recommendation is in consumer's best interest
- Consider the consumer's financial situation and needs
- Not prioritize compensation over consumer needs
Exam Tip: Georgia's best interest standard is higher than the older "suitability" standard. Recommendations must genuinely serve the consumer.
Required Consumer Information
Before recommending an annuity, gather:
Consumer Profile
| Category | Information Required |
|---|---|
| Age | Current age and retirement status |
| Annual Income | All sources of income |
| Financial Situation | Assets, savings, investments |
| Tax Status | Tax bracket, qualified/non-qualified |
| Financial Experience | Investment knowledge |
| Financial Objectives | Goals for the annuity |
| Intended Use | Purpose of the funds |
| Time Horizon | When funds will be needed |
| Liquidity Needs | Need for access to funds |
| Risk Tolerance | Willingness to accept risk |
| Existing Coverage | Current insurance/annuities |
Documentation Requirements
Georgia requires thorough documentation:
What Must Be Documented
- Consumer profile information gathered
- Products considered
- Why the recommendation was made
- How the product meets consumer's needs
- Any concerns addressed
Records Retention
| Record Type | Retention |
|---|---|
| Suitability analysis | Per Georgia requirements |
| Consumer disclosures | Maintain for examination |
| Transaction records | Keep available for review |
| Recommendation basis | Document and retain |
Consumer Refusal to Provide Information
If a consumer refuses to provide information:
Required Steps
- Document which information was refused
- Inform consumer recommendation may not be suitable
- Obtain signed acknowledgment
- May proceed if consumer signs
Acknowledgment Must State
- Consumer was advised of importance
- Consumer chose not to provide
- Recommendation may not be in best interest
- Consumer takes responsibility
Insurer Supervision Requirements
Georgia insurers must establish supervision systems:
Supervision Duties
| Duty | Requirement |
|---|---|
| Written Procedures | Policies for suitability |
| Training | Train producers |
| Review System | Review transactions |
| Corrective Action | Address violations |
| Record Keeping | Maintain records |
Transaction Review
Insurers must review for:
- Completeness of documentation
- Appropriateness of recommendation
- Red flags (churning, unsuitable)
- Producer compliance patterns
Georgia-Specific Annuity Rules
Georgia Free Look Period
Georgia provides a 10-day free look period for annuities:
| Product | Free Look Period |
|---|---|
| Annuities | 10 days |
| Life Insurance | 10 days |
| LTC Insurance | 30 days |
| Medicare Supplement | 30 days |
Variable Annuity Requirements
For variable annuities in Georgia:
- Life insurance license required
- FINRA Series 6 or 7 required
- Prospectus must be delivered
- Enhanced suitability analysis
Penalties for Violations
The Commissioner can impose penalties:
| Violation | Potential Penalty |
|---|---|
| First offense | Warning, fine |
| Repeat offense | Suspension or revocation |
| Pattern of violations | License revocation |
| Consumer harm | Required restitution |
| Per violation | Up to $10,000 |
Aggravating Factors
Commissioner considers:
- Whether violation was intentional
- Consumer harm caused
- Producer's disciplinary history
- Whether producer cooperated
Safe Harbor Provisions
Fiduciary Standards
Producers subject to fiduciary standards under SEC or DOL may satisfy Georgia requirements by meeting those standards if:
- Fiduciary standard meets or exceeds Georgia's
- Producer complies fully
- Documentation is maintained
Exam Tip: Insurance-only producers must fully comply with Georgia's suitability requirements.
What is the free look period for annuities in Georgia?
Under Georgia annuity suitability rules, what standard must producers meet?
What is the maximum fine per violation in Georgia?
Which is NOT required consumer information under Georgia suitability rules?
What must a producer do if a consumer refuses to provide required information?