Suitability and Regulatory Requirements for Variable Annuities

What this video covers

• What customer information a firm must gather before recommending a deferred variable annuity purchase or exchange, and why later subaccount reallocations are exempt
• Why mortality and expense (M&E) fees are charged and what they cover: the insurer's risk that the annuitant outlives life expectancy plus administrative costs
• How the 36-month lookback rule applies exclusively to exchanges (never initial purchases) and why it flags potential churning behavior
• What exchange suitability requires: surrender charges on the old contract, a new surrender period, lost benefits, increased fees, and the 36-month prior exchange check
• The strict principal review sequence: recommend, then review and approve or reject, then transmit, with 7 business days as the maximum review deadline
• Why the commission is clawed back if the customer surrenders within 7 business days of purchase
• The current $300 annual non-cash compensation limit per person and why gifts cannot be tied to sales targets