Model Reg #275 Disclosure FAQ
The National Association of Insurance Commissioners (NAIC) approved revisions to Model Regulation #275 (Suitability in Annuity Transactions) in February of 2020. The revised model annuity suitability regulation applies a best interest standard to all annuity recommendations and this standard creates new disclosure obligations for producers and insurers. The below are answers to frequently asked questions regarding the new producer disclosure form that is required to comply with these disclosure obligations and Nassau's new form requirements.
Why is this disclosure form required?
The new "Insurance Agent (Producer) Disclosure for Annuities" form (as described in "Appendix A" of the model regulation) is required to comply with regulations in states that have adopted the revised Model Reg #275 (Section 6A(2)(a)) or a version thereof.
Is this disclosure form required for sales of all Nassau annuity products?
Yes. This form is required for all Nassau annuity product sales (including MYGAs and FIAs) in those states that have adopted Model Reg #275 or a version thereof. It is required for all transactions, including but not limited to replacements, transfers, and for both qualified and non- qualified contracts.
Why is Nassau requiring this disclosure form to be submitted with new applications?
Nassau is requiring this form to be submitted with new apps to help ensure Nassau and producers appointed to sell Nassau products comply with new state annuity suitability regulations.
TIP: Using Nassau's eApp makes it easier for you to comply. Some information will be automatically populated to assist you with completing the new form. You should review all information for accuracy and make changes, if necessary.
What type of information is required to be included on this disclosure form?
The form is required to include information regarding the scope and terms of your relationship with the client, your role in the transaction, the types of products you are licensed to sell, the number of companies you are authorized to sell for, the sources and types of compensation you may receive in connection with the sale, and a notice of the right of the client to request additional information about cash compensation. Producers are required to ensure information on the form is accurate at the time it's being provided to the client.
When is the disclosure form required to be provided to my client(s)?
The form is required to be provided prior to the recommendation or sale of an annuity and is required regardless of whether a recommendation results in an actual sale.
Is this disclosure form required in all states?
No. Nassau only requires this form in those states which have adopted Model Reg #275 (or a version thereof).
TIP: Go to https://nfg.link/reg275 for a current state adoption map.
Is this disclosure form required to be signed?
Yes. The form is required to be signed by the producer and the client(s). A copy of the signed form should be left with the client(s) and retained in the producer's records.
Are there any state variations of this form?
Yes. As of June 2023, Minnesota and West Virginia did not adopt the NAIC Model Reg #275 disclosure form. In all other states, the generic NAIC form (as described in "Appendix A" of the model regulation) is approved for use. The appropriate form (generic or state-specific) is automatically included in Nassau's eApp tool and the Apps and Forms page on Salesnet.
What if I already provided a disclosure form to my client(s) before submitting an application?
If a disclosure form was already provided to your client(s) (e.g., at an initial client meeting) and you are using Nassau's eApp to submit an application, a new form will automatically be included as part of the application forms package and is required to be completed and signed as part of the electronic application process. This will help ensure that current information is included on the form at the time of sale and streamline the electronic application process. For paper applications, please include a copy of the completed and signed disclosure form with your other application forms.
TIP: If you're submitting a paper application and the information changes after the completed form is provided to your client(s) but prior to submitting an application, you are required to provide your client(s) and Nassau with an updated form.
If more than one producer is involved in making the recommendation or sale, is each producer required to provide a disclosure form?
Yes. Each producer making the annuity recommendation is required to complete a separate form and submit the completed form with the application. NOTE: Our eApp will automatically generate a separate form for each producer of record.
Are producers required to use Nassau's disclosure form?
For eApp submissions, the appropriate Nassau form will always be included in the application package and must be completed and signed along with any other required forms. For paper applications, in all states (except West Virginia), Nassau will accept another form in lieu of Nassau's prescribed form as long as the form meets the regulations of the state where the contract will be issued. In West Virginia, only forms approved by the West Virginia Insurance Commissioner may be used.
TIP: Using Nassau's form will help reduce processing times and ensure requirements related to this form are met, including state-specific requirements.
What should I do if a client requests additional information about my cash compensation?
Your client has the right to request additional information concerning cash compensation that will be paid to you for the sale of the annuity. If you receive such a request, you should respond to the client in writing with an estimate of the amount of cash compensation you expect to receive from the sale. If the amount of cash compensation you receive is a multiple-occurrence amount, the frequency and amount of the occurrence may be stated as a range of amounts or percentages. NOTE: You are NOT required to submit this information to Nassau with the application but are required to retain a copy of the correspondence in your records. Nassau reserves the right to request a copy of this information.
Does the Reg #275 disclosure form satisfy the disclosure requirements of a Prohibited Transaction Exemption (“PTE”) for qualified sales?
No. The Reg #275 disclosure form does not meet the requirements of PTE 84-24. For more information about PTE 84-24, go to Salesnet -> Start -> Suitability & Compliance -> DOL Fiduciary Rule.