7.9 Annuity Investments by Seniors
In 2004, the Florida legislature addressed the special needs of senior consumers with regard to annuity investments. (For purposes of this lesson with regard to annuity investments by seniors, "senior consumers" are defined as those individuals who are age 65 or older.)
An agent is required to have reasonable grounds for believing that the recommendation is suitable for the senior based upon the facts disclosed by the senior regarding his/her investments, other insurance products, and his/her financial situation.
An agent is required to maintain records relating to such transactions for five years (the insurer may maintain these records on behalf of the agent).
If a senior consumer is harmed by an insurance company or agent who violates the laws relating to the sale of annuity products, the Office may order an insurer to take reasonably appropriate corrective action, including rescission of the policy or contract and a full refund of the premiums paid or the accumulation value, whichever is greater.
The Department may order an insurance agent, MGA, or insurance agency that employs or contracts with an insurance agent to sell or solicit the sale of annuities to senior consumers to take reasonably appropriate corrective action.
Replacement or Exchange of an Annuity Contract
In transactions involving the replacement or exchange of an annuity contract, the agent must provide, on a form, information concerning differences between the existing annuity contract and the one being recommended, including:
1. a comparison of the benefits, terms, and limitations;
2. a comparison of any fees and charges;
3. a written basis for the recommended exchange, including the overall advantages and disadvantages to the consumer;
4. such other information considered relevant by the agent or insurer in making recommendations to the consumer.
Before the purchase or exchange of an annuity contract, an agent must also disclose that there may be tax consequences as a result of the purchase or exchange and that the applicant should consult a tax advisor for more information.
Continuing Education
There are specific continuing education requirements that must be fulfilled in order for an agent to continue selling annuities. An agent holding a license to solicit or sell life insurance in this state must complete a minimum of three (3) hours of continuing education on the subject of suitability in annuity and life insurance transactions. [Sec. 626.2815(3)(k), F.S.]
