Key Takeaways
- Ohio requires a 10-day free look period for annuity contracts (30 days for seniors 60+)
- Ohio follows the NAIC Suitability in Annuity Transactions Model Regulation
- Producers must make reasonable efforts to determine suitability before recommending annuities
- Annuity replacements require detailed comparison and disclosure forms
- Ohio requires specific disclosures about surrender charges and fees
Ohio Annuity Regulations
Ohio has adopted comprehensive annuity regulations to protect consumers from unsuitable sales and deceptive practices.
Free Look Period
Ohio provides free look periods for annuity contracts:
| Purchaser Age | Free Look Period |
|---|---|
| Under 60 | 10 days |
| 60 or older | 30 days |
Free look provisions:
- Buyer can return for full premium refund
- No penalty for exercising free look
- Period begins when policy is delivered
- Applies to all annuity types
Suitability Requirements
Ohio adopted the NAIC Suitability in Annuity Transactions Model Regulation:
Producer Duties
Before recommending an annuity, the producer must:
- Make reasonable efforts to obtain customer information
- Analyze whether the recommendation is suitable
- Document the basis for the recommendation
- Disclose all material information about the product
Required Information
| Category | Information Required |
|---|---|
| Financial Status | Income, liquid assets, financial needs |
| Tax Status | Tax bracket, qualified vs. non-qualified funds |
| Investment Objectives | Goals, time horizon, risk tolerance |
| Existing Coverage | Current annuities and life insurance |
| Liquidity Needs | Expected need for funds |
Best Interest Standard
Ohio requires:
- Recommendations in the best interest of the consumer
- Compensation cannot be primary motivator
- Material conflicts must be disclosed
- Documentation of suitability analysis
Senior-Specific Protections
Ohio provides additional protections for seniors purchasing annuities:
Extended Free Look
- 30-day free look for purchasers age 60 or older
- Allows time to consult with family or advisors
- Cannot pressure or rush the sale
Enhanced Suitability Review
For senior purchasers, producers should:
- Ensure liquidity needs are addressed
- Consider life expectancy relative to surrender period
- Verify understanding of product features
- Document rationale for recommendation
Surrender Charge Disclosures
Ohio requires clear disclosure of surrender charges:
| Disclosure | Requirement |
|---|---|
| Schedule | Full surrender charge schedule |
| Duration | How long charges apply |
| Free Withdrawal | Annual free withdrawal provisions |
| Market Value Adjustment | If applicable |
Replacement Requirements
When replacing an existing annuity, producers must:
Documentation Required
- Comparison statement - Side-by-side comparison of old and new contract
- Replacement form - Signed acknowledgment of replacement
- Suitability analysis - Why replacement is appropriate
- Notice to existing insurer - Notification of pending replacement
Red Flags
ODI scrutinizes replacements for:
- Short holding periods before replacement
- Surrender charges not fully explained
- New surrender charge period starting over
- Commission-motivated churning
Exam Tip: Annuity replacements require careful documentation. The producer must demonstrate the replacement is in the client's best interest.
How long is the free look period for an annuity purchased by a 62-year-old in Ohio?
What model regulation has Ohio adopted for annuity suitability?