Important Information about New Suitability Form Requirement for ALL States
RE: Applications signed by seniors on or after January 1, 2006 must be accompanied by a completed Needs Analysis Form.
The NAIC Senior Protection in Annuity Transactions Model Regulation has been adopted in 10 states so far and is currently pending in 25 more. This Regulation requires that a system be set up by each annuity carrier to help writing agents and their clients over the age of 65 determine if a fixed annuity purchase is suitable. The Regulation also requires the carrier to monitor these sales to help assure that they are suitable.
Those of you from states that have adopted this legislation are already having your senior clients complete the Fixed Annuity Needs Analysis Form (ET-2506) at the point of sale and are reviewing it with them to determine if the sale is appropriate given their financial and tax status as well as their risk tolerance and future cash flow needs. It is a short form that doesn’t require much time to complete and we believe has reduced post-issue complaints. This benefits everyone involved….the client, the agent and EquiTrust Life.
Given the speed at which this Regulation is being adopted, we believe this will soon be standard practice throughout the country. Because we believe this is a value-added process for both agent and client and because we would like to implement this uniformly rather than piecemeal, EquiTrust Life will make this a requirement for all new sales beginning January 1, 2006. A signed Fixed Annuity Needs Analysis Form (ET-2506) will have to accompany all applications from clients age 65 and over. A sample of the form is enclosed and is available for printing at the Forms/Materials link. To assist you, a Needs Analysis Training Guide (ET-3107) and a Needs Analysis Quick Reference Guide (ET-3108) are also available at the Forms/Materials link. Please review these guides before completing a Fixed Annuity Needs Analysis Form for your clients.
Kansas has recently adopted the Model Regulation but will require this needs analysis to be completed for all clients regardless of age. It is possible that some other states may also require this in the future. We will notify you if this happens.
No EquiTrust Life annuity applications signed on or after January 1, 2006 for clients age 65 and over (all clients in Kansas) will be processed without a properly completed Fixed Annuity Needs Analysis Form. An application received without the form will be returned to the agent and money will be returned to the client. No exceptions will be made.
This system is working well in those states that have already adopted the Model Regulation. We know, however, that questions and problems can sometimes arise during transitions such as this. If this happens, please call EquiTrust Life Sales Support toll-free at 866-598-3694.