State RegulationsNY specificDifficulty 3/5
Which of the following statements about the scope of New York Insurance Regulation 187 is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Reg 187 (11 NYCRR Part 224), the suitability and best-interest standard applies to recommendations involving both life insurance and annuity contracts, and it reaches both sales transactions and in-force transactions, such as replacements or other elections under existing contracts that generate new compensation. Where no producer is involved, the insurer making the recommendation must itself satisfy the standard.
Why the other options are wrong
- A) The regulation originally covered only annuities, but it was amended to cover life insurance recommendations as well; limiting its scope to annuities misstates current New York law.
- B) The standard applies even when no producer is involved; in that case the duty falls on the insurer that makes the recommendation.
- D) Reg 187 protects consumers of all ages, not only those who have reached retirement age.
Memory hook
Reg 187 covers both products (life and annuities) and both deals (new sales and in-force transactions).