Code of Massachusetts Regulations
211 CMR - DIVISION OF INSURANCE
Title 211 CMR 96.00 - Consumer Protection And Suitability In Annuity Transactions
Section 96.04 - Definitions
Annuity means an annuity that is an insurance product that is individually solicited, whether the product is classified as an individual or group annuity.
Cash Compensation means any discount, concession, fee, service fee, commission, sales charge, loan, override, or cash benefit received by a producer in connection with the recommendation or sale of an annuity from an insurer, intermediary, or directly from the consumer.
Commissioner means the Commissioner of Insurance appointed pursuant to M.G.L. c. 26, § 6.
Consumer Profile Information means information that is reasonably appropriate to determine whether a recommendation addresses the consumer's financial situation, insurance needs and financial objectives, including, at a minimum, the following:
(a) Age;
(b) Annual income;
(c) Financial situation and needs, including debts and other obligations;
(d) Financial experience;
(e) Insurance needs;
(f) Financial objectives;
(g) Intended use of the annuity;
(h) Financial time horizon;
(i) Existing assets or financial products, including investment, annuity and insurance holdings;
(j) Liquidity needs;
(k) Liquid net worth;
(l) Risk tolerance, including but not limited to willingness to accept non-guaranteed elements in the annuity;
(m) Financial resources used to fund the annuity; and
(n) Tax status
Continuing Education Credit or CE Credit means a continuing education credit as required by M.G.L. c 175, §177E and 211 CMR 50.00: Continuing Education for Insurance Producers.
Continuing Education Provider or CE Provider means an individual or entity that is approved to offer continuing education courses pursuant to M.G.L. c 175, § 177E and 211 CMR 50.00: Continuing Education for Insurance Producers.
FINRA means the Financial Industry Regulatory Authority or a succeeding agency.
Insurer means a company required to be licensed under the laws of Massachusetts to provide insurance products, including annuities.
Intermediary means an entity contracted directly with an insurer or with another entity contracted with an insurer to facilitate the sale of the insurer's annuities by producers.
Material Conflict of Interest means a financial interest of the producer in the sale of an annuity that a reasonable person would expect to influence the impartiality of a recommendation. Material conflict of interest does not include cash compensation or non-cash compensation.
Non-cash Compensation means any form of compensation that is not cash compensation including, but not limited to, health insurance, office rent, office support and retirement benefits.
Non-guaranteed Elements means the premiums, credited interest rates (including any bonus), benefits, values, dividends, non-interest based credits, charges or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered non-guaranteed if any of the underlying non-guaranteed elements are used in its calculation.
Person means any individual, corporation, association, partnership, limited liability company, limited liability partnership or other legal entity.
Producer means a person or entity required to be licensed under the laws of Massachusetts to sell, solicit or negotiate insurance, including annuities. "Producer" includes an insurer where no producer is involved.
Recommendation means advice provided by a producer to an individual consumer that was intended to result or does result in a purchase, an exchange or a replacement of an annuity in accordance with that advice. Recommendation does not include general communication to the public, generalized customer services assistance or administrative support, general educational information and tools, prospectuses, or other product and sales materials.
Replacement means a transaction in which a new annuity is to be purchased, and it is known or should be known to the proposing producer, or to the proposing insurer whether or not a producer is involved, that by reason of the transaction, an existing annuity or other insurance policy has been or is to be any of the following:
(a) Lapsed, forfeited, surrendered, partially surrendered, assigned to the replacing insurer or otherwise terminated;
(b) Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;
(c) Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;
(d) Reissued with any reduction in cash value; or
(e) Used in a financed purchase.
SEC means the United States Securities and Exchange Commission.
