RAA RAA Sales Process & Suitability Analysis

Question 1

Under NAIC Suitability in Annuity Transactions Model Regulation, which factor must an advisor consider when recommending an annuity?

Accepted Answer

The client's financial situation, needs, and objectives

Answer

The NAIC model regulation requires advisors to consider the client's financial situation, needs, and objectives—not just income or product features—when recommending an annuity.

Question 2

Which document is used to collect the client information required for a suitability determination before recommending an annuity?

Accepted Answer

Needs analysis or suitability questionnaire

Answer

A needs analysis or suitability questionnaire collects financial and personal data needed to determine whether an annuity recommendation is appropriate for the client.

Question 3

What does the 'best interest' standard, as adopted in many states following the NAIC model, require of an advisor beyond traditional suitability?

Accepted Answer

Placing the client's interests above the advisor's own interests

Answer

The best interest standard requires the advisor to prioritize the client's interests over their own financial interests, including considering compensation when making recommendations.

Question 4

During the annuity sales process, when is the free-look period most relevant to a client?

Accepted Answer

After the policy is delivered, allowing the client to cancel for a full refund

Answer

The free-look period begins after contract delivery and gives the client a defined window (typically 10–30 days) to cancel the contract and receive a full refund.

Question 5

Which of the following is a red flag indicating an annuity recommendation may not be suitable for a client?

Accepted Answer

Client is 80 years old with 90% of liquid assets being recommended for the annuity

Answer

Recommending that a very elderly client place nearly all liquid assets into an annuity is a major suitability red flag due to limited access to funds and potential liquidity needs.

(RAA) Registered Annuity Advisor Practice Test

(RAA) Registered Annuity Advisor Practice Test

RAA RAA Sales Process & Suitability Analysis