State RegulationsVA specificDifficulty 2/5
A producer recommends an annuity to a retired consumer in Virginia without asking about her income, assets, needs, or objectives, choosing the product because it pays him the largest commission. Under Virginia's suitability rules (14VAC5-45), the producer has:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
14VAC5-45 of the Virginia Administrative Code conditions an annuity recommendation on a reasonable basis for believing it suits the consumer, and that basis can exist only after the producer gathers information about the consumer's financial situation, needs, and objectives. A recommendation driven by commission size and made without any consumer profile violates the suitability framework, exposing the producer to action by the Virginia Bureau of Insurance.
Why the other options are wrong
- A) Suitability is a duty the producer owes in the transaction, not something the insurer performs alone; 14VAC5-45 binds the recommending producer.
- B) The insurer's authorization status does not cure an unsuitable, uninformed recommendation; 14VAC5-45 examines how the recommendation was made.
- D) No presumption replaces the consumer-profile duty; 14VAC5-45 requires the information gathering regardless of the consumer's age.
Memory hook
No profile, no basis, no sale — commission-first recommending breaks suitability.