RAA Sales Process & Suitability Analysis Flashcards
6 cards from real RAA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 RAA Sales Process & Suitability Analysis flashcards as text
When replacing an existing annuity, which regulatory requirement must typically be fulfilled?
Answer: Filing a replacement notice with the insurer and providing a comparison to the client
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.
Which sales practice is considered 'twisting' in the annuity industry?
Answer: Inducing a client to replace a contract through misrepresentation
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.
In the RAA sales process, what is the role of the benefit illustration?
Answer: To show hypothetical projections of annuity performance and help the client understand the product
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.
Which of the following actions by an advisor would constitute 'churning' in an annuity context?
Answer: Repeatedly replacing annuity contracts to generate commissions without client benefit
Churning involves repeatedly replacing contracts primarily to generate commissions for the advisor, with little or no benefit—and often harm—to the client.
What does a 'needs-based' approach to annuity sales require the advisor to establish first?
Answer: The client's specific financial goals, gaps, and retirement income needs
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.
Under the NAIC model regulation, which party bears the primary responsibility for ensuring annuity suitability?
Answer: The insurance producer (advisor)
The insurance producer who recommends and sells the annuity bears primary responsibility for ensuring the recommendation is suitable for the client.