State RegulationsNY specificDifficulty 1/5
Under New York Insurance Regulation 187, before an insurance producer recommends that a consumer purchase an annuity, the producer must:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under Reg 187 (11 NYCRR Part 224.4), in recommending a sales transaction involving an annuity, the insurance producer, or the insurer where no producer is involved, must act in the best interest of the consumer and have reasonable grounds to believe the recommendation is in the consumer's best interest, based on an evaluation of relevant suitability information made with the care, skill, prudence, and diligence that a prudent person would use in similar circumstances. The producer's own compensation may not drive the recommendation.
Why the other options are wrong
- A) The Superintendent of Financial Services does not pre-approve individual product recommendations; the best-interest duty belongs to the producer.
- B) No rule requires showing the consumer every annuity sold in New York; the producer must weigh the products available to the producer.
- C) There is no requirement that a consumer consult an attorney before purchasing an annuity.
Memory hook
Reg 187: recommend only with reasonable grounds that it serves the consumer's best interest.