Rhode Island annuity questions focus on four topics:

• The best interest standard in the annuity transactions rule (230-RICR-20-25-1).
• The annuity disclosure rule (230-RICR-20-25-6).
• The 20-day free look.
• The deferred annuity nonforfeiture law (chapter 27-4.4).

How annuities work (types, phases, payout options, variable annuity separate accounts, taxation) is in the national Annuities guide.

Best interest standard (230-RICR-20-25-1)

The core duty

• A producer recommending an annuity must act in the consumer's best interest, without putting the producer's interest first (1.6(A)).
• The duty is met by satisfying four obligations: care, disclosure, conflict of interest and documentation.
• The rule creates a regulatory obligation. It does not make the producer a fiduciary.

Consumer profile and exchanges

• Consumer profile information the producer must try to obtain includes items such as the consumer's liquidity needs (1.5(D)).
• Exchanges: the producer considers whether the consumer has had another annuity exchange or replacement in the preceding 60 months.
• Refusals: if a consumer refuses to give profile information and no recommendation is made, the producer gets a signed statement documenting the refusal and its consequences.

Disclosure about the producer

• Before recommending, the producer discloses which products they are licensed and authorized to sell. Examples include fixed, indexed and variable annuities, life insurance, mutual funds, stocks, bonds and CDs.

Training and records

• Training: a one-time course of at least 4 credit hours before selling annuities (1.7(B)).
• Records: kept for 5 years after the transaction is completed (1.9).

Disclosure and free look

• Free look: individual annuities, like individual life policies, may be returned within 20 days of delivery for a refund (27-4-6.1).
• Face-to-face sales: the disclosure document and the annuity Buyer's Guide are given at or before application (230-RICR-20-25-6.5).
• Not face to face: they are sent within 5 business days after the insurer receives the application.
• Late documents: if they weren't given at or before application, the contract must allow a free look of at least 15 days.

Deferred annuity nonforfeiture (chapter 27-4.4)

• The insurer may defer paying a cash surrender benefit for up to 6 months, with the commissioner's written approval (27-4.4-3).
• A deferred annuity without cash surrender benefits must state that prominently (27-4.4-9).

Replacement

• Rhode Island's replacement rule (230-RICR-20-25-4) covers annuities as well as life policies. See the Rhode Island Life Policy Provisions guide.

Guaranty protection

• The Rhode Island Life and Health Insurance Guaranty Association covers the present value of annuity benefits, including cash surrender values, up to $250,000 per life (27-34.3-3).
• It doesn't cover the portion of a contract where the owner bears the investment risk.

Variable annuities

• Variable annuity values depend on separate account investments.
• Selling them requires the variable life and variable annuity line of authority plus securities registration (27-2.4-9(a)(5)).

Common exam traps

• Best interest is not fiduciary in Rhode Island.
• Records: 5 years. Exchange look-back: 60 months. Training: 4 hours.
• Free look: 20 days. 15 days minimum if the Buyer's Guide wasn't given at application.
• Guaranty limit: $250,000 for annuities.