State RegulationsIL specificDifficulty 2/5
Before recommending an annuity to a consumer in Illinois, what does the suitability framework require of the producer?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under the Illinois suitability rule (50 Ill. Adm. Code 3120), a producer recommending life insurance or an annuity must make a reasonable effort to obtain and consider information about the customer — such as financial situation, insurance needs, and objectives — so that the recommendation rests on a reasonable basis rather than on the producer's or agency's own interests. The Illinois Department of Insurance enforces this duty, together with related requirements in 50 Ill. Adm. Code 3117, as a core consumer protection in life and annuity sales.
Why the other options are wrong
- A) Commission potential is the producer's interest, not the customer's, and cannot be the basis of a suitability recommendation.
- C) Accepting a customer's self-assessment without inquiry abandons the reasonable-basis requirement of the suitability rule.
- D) Sales targets are internal business goals and have no place in the suitability analysis the rule demands.
Memory hook
Know the customer before you pick the product.