RAA RAA Sales Process & Suitability Analysis 2

Question 1

When replacing an existing annuity, which regulatory requirement must typically be fulfilled?

Accepted Answer

Filing a replacement notice with the insurer and providing a comparison to the client

Answer

State regulations require that a replacement notice be filed with the replacing insurer and that the client receive a comparison of the old and new contracts to make an informed decision.

Question 2

Which sales practice is considered 'twisting' in the annuity industry?

Accepted Answer

Inducing a client to replace a contract through misrepresentation

Answer

Twisting occurs when an advisor uses misrepresentation or incomplete comparison to persuade a client to replace an existing annuity, typically to generate a new commission.

Question 3

In the RAA sales process, what is the role of the benefit illustration?

Accepted Answer

To show hypothetical projections of annuity performance and help the client understand the product

Answer

Benefit illustrations provide hypothetical projections of how an annuity may perform under various scenarios to help clients understand the product, but they do not guarantee future values.

Question 4

Which of the following actions by an advisor would constitute 'churning' in an annuity context?

Accepted Answer

Repeatedly replacing annuity contracts to generate commissions without client benefit

Answer

Churning involves repeatedly replacing contracts primarily to generate commissions for the advisor, with little or no benefit—and often harm—to the client.

Question 5

What does a 'needs-based' approach to annuity sales require the advisor to establish first?

Accepted Answer

The client's specific financial goals, gaps, and retirement income needs

Answer

A needs-based approach starts with a thorough understanding of the client's goals, current financial position, and income gaps before any product is recommended.

(RAA) Registered Annuity Advisor Practice Test

(RAA) Registered Annuity Advisor Practice Test

RAA RAA Sales Process & Suitability Analysis 2