Best Interest Resource Center

The NAIC amended the Suitability in Annuity Transactions Model Regulation (Model Regulation) to incorporate a best interest standard of care. Under the new standard, producers must act in the client's best interest without placing the producer’s or insurer’s financial interest ahead of the client’s interest.

What is the best interest standard of care?

To act in the client’s best interest, producers must satisfy four specific obligations:

1. Care obligation

The care obligation includes four specific duties:

• Identify client’s financial situation, insurance needs and financial objectives;
• Understand available annuity product options;
• Recommend annuity that effectively addresses financial situation, insurance needs and financial objectives; and
• Communicate basis for recommendation

2. Disclosure obligation

The disclosure obligation requires you to discuss your role in the transaction, the scope of the products you are authorized to sell and how you will be compensated for your services.

3. Conflict of interest obligation

The conflict of interest obligation requires that you identify and avoid material conflicts of interest, such as having ownership of stock of the life insurance company issuing the annuity product you are recommending.

4. Documentation obligation

The documentation obligation requires that you make a written record of any recommendation and the basis for such recommendation.

When does the revised regulation go into effect?

The amended Model Regulation is adopted on a state-by-state basis. Below are the states that have adopted the Model Regulation to date and the applicable effective date. States that have not yet adopted the amended regulation will continue to follow the current Suitability Model.

• Alabama: January 1, 2022
• Alaska: November 23, 2022
• Arizona: January 1, 2021
• Arkansas: January 1, 2021
• Colorado: November 1, 2022
• Connecticut: March 1, 2022
• Delaware: August 1, 2021
• Florida: January 1, 2024
• Georgia: August 1, 2023
• Hawaii: January 1, 2023
• Idaho: July 1, 2021
• Illinois: March 3, 2023
• Indiana: July 1, 2024
• Iowa: January 1, 2021
• Kansas: January 1, 2024
• Kentucky: January 4, 2022
• Louisiana: September 20, 2024
• Maine: January 1, 2022
• Maryland: October 8, 2022
• Massachusetts: June 1, 2023
• Michigan: June 29, 2021
• Minnesota: January 1, 2023
• Mississippi: January 1, 2022
• Missouri: August 30, 2024
• Montana: October 1, 2021
• Nebraska: April 6, 2021
• New Mexico: October 1, 2022
• North Carolina: January 1, 2023
• North Dakota: January 1, 2022
• Ohio: February 14, 2021
• Oklahoma: September 1, 2023
• Oregon: January 1, 2024
• Pennsylvania: June 20, 2022
• Rhode Island: April 1, 2021
• South Carolina: November 27, 2022
• South Dakota: January 1, 2023
• Tennessee: January 1, 2024
• Texas: September 1, 2021
• Utah: July 1, 2024
• Vermont: July 5, 2024
• Virginia: September 2, 2021
• Washington: January 1, 2024
• West Virginia: June 8, 2023
• Wisconsin: October 1, 2022
• Wyoming: July 5, 2023

What do you need to do?

To meet these obligations, we’ve updated our Client Financial Disclosure forms to help you capture all required client data, identify the annuity that best addresses the client’s unique needs and then document the basis for the recommendation.

We also have a new state-required disclosure form for you to complete with your clients to help describe the nature of your relationship. The form is required if you are licensed to sell MassMutual Ascend's commissionable and fee-based products.

Required Training

If you completed a four-credit training course before the effective date, then you must complete one of the following within six months of the effective date:

• A new four-credit training course; or
• A one-credit training that covers the new standards and requirements.

If you did not complete a four-credit training course before the effective date, then you must do so prior to your first sale.

For more information

Please see the Market Conduct & Compliance Guide for more information.