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Annuity Disclosure Model Regulation
Edition and licensing notes
Publisher. National Association of Insurance Commissioners (NAIC)
Status. NAIC model, © NAIC. Brief quotations under fair use; not the enacted law of any state until adopted.
What this document is
Annuity Disclosure Model Regulation is a naic model law published by National Association of Insurance Commissioners (NAIC). It is one of the documents that insurance license exam questions are written from, including life & health practice questions. This page summarizes it and points to the official version, which is the text to rely on.
Sections cited in practice questions
Each practice answer shows the exact passage it comes from. These are sections of this document that questions cite, with a short excerpt from the source text.
- NAIC Model #245: Section 5 (Disclosure Document Standards)
“(3) A description of the contract and its benefits, emphasizing its long-term nature, including examples where appropriate:”
- NAIC Model NAIC 245: Section 7 (Report to Contract Owners)
“the insurer shall provide each contract owner with a report, at least annually, on the status of the contract that contains at least the following information:”
- NAIC Model NAIC 245: Section 5.B(3)(a) (Disclosure Document Contract Description)
“The guaranteed and non-guaranteed elements of the contract, and their limitations, if any, including for fixed indexed annuities, the elements used to determine the index-based interest, such as the participation rates, caps or spread, and an explanation of how they operate;”
- NAIC Annuity Disclosure Model Regulation § 5A(1): delivery of the disclosure document and Buyer's Guide at a face-to-face application
“Where the application for an annuity contract is taken in a face-to-face meeting, the applicant shall at or before the time of application be given both the disclosure document described in Subsection B and the Buyer’s Guide, if any.”
- NAIC Annuity Disclosure Model Regulation § 5A(2)(d): return period when the Buyer's Guide and disclosure document are not provided at or before application
“Where the Buyer’s Guide and disclosure document are not provided at or before the time of application, a free look period of no less than fifteen (15) days shall be provided for the applicant to return the annuity contract without penalty. This free look shall run concurrently with any other free...”
- NAIC Annuity Disclosure Model Regulation § 5A(2)(c): Buyer's Guide notice required in a solicitation that is not face-to-face
“A solicitation for an annuity contract provided in other than a face-to-face meeting shall include a statement that the proposed applicant may contact the insurance department of the state for a free annuity Buyer’s Guide. In lieu of the foregoing statement, an insurer may include a statement that...”
- NAIC Annuity Disclosure Model Regulation § 6D: prohibited content when using an illustration
“When using an illustration, the illustration shall not: (1) Describe non-guaranteed elements in a manner that is misleading or has the capacity or tendency to mislead; (2) State or imply that the payment or amount of non-guaranteed elements is guaranteed; or (3) Be incomplete.”
- NAIC Annuity Disclosure Model Regulation § 6F(20), annuitization benefits in illustrations
“(20) Annuitization benefits shall be based on contract values that reflect surrender charges or any other adjustments, if applicable;”
- NAIC Annuity Disclosure Model Regulation, Appendix A sample illustration, Important Note on withdrawals
“Withdrawals will reduce both the annuity Account Value and the Cash Surrender Value. You may make partial withdrawals of up to 10% of your account value each contract year without paying surrender charges. Excess withdrawals (above 10%) and full withdrawals will be subject to surrender charges.”
- NAIC Annuity Disclosure Model Regulation § 6F(12), value available upon surrender
“The value available upon surrender shall be identified by the name this value is given in the contract being illustrated and shall be the amount available to the contract owner in a lump sum after deduction of surrender charges, bonus forfeitures, contract loans, contract loan interest and...”
- NAIC Annuity Disclosure Model Regulation (#245), Section 5.B(4) and (5): charges, fees and current rate information
“(4) Specific dollar amount or percentage charges and fees shall be listed with an explanation of how they apply; and (5) Information about the current guaranteed rate or indexed crediting rate formula, if applicable, for new contracts that contains a clear notice that the rate is subject to change.”
- NAIC Annuity Disclosure Model Regulation (#245), Section 5.B(3)(b): explanation of the initial crediting rate
“(b) An explanation of the initial crediting rate, or for fixed indexed annuities, an explanation of how the index-based interest is determined, specifying any bonus or introductory portion, the duration of the rate and the fact that rates may change from time to time and are not guaranteed;”
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