Life and health advertising must have the prior approval of the benefiting insurance company before being disseminated. Any advertisements approved by the insurer should be used exactly as approved. See Rule 69B-150.013(10), F.A.C.
When advertising for life, health or annuity products, if there is a reference in the advertisement to a specific policy feature, interest or bonus rate, premium amount, etc., the name of the insurer issuing the policy needs to be disclosed in the advertisement. Furthermore, that insurer needs to approve the advertisement prior to dissemination. Making any alterations to an advertisement that has already been approved by the insurer could cause it to no longer be compliant.
See 69B-150.114, F.A.C.
In recent years bonus annuities have become a popular product to sell, especially to individuals that have an existing annuity. Bonus annuities are touted as a way to offset the surrender charges an annuity owner faces when he or she moves an annuity from one company to another. Bonus annuities can be a viable product for certain individuals, especially those that keep the annuity in force. However, there are several things to think about when considering the purchase of a bonus annuity:
This annuity is actually a type of fixed annuity that earns interest or provides benefits determined by an external equity index, such as Standard & Poor’s 500 Composite Stock Price index. Because of the indexed participation with this type of annuity you should be sure your potential client has at least a moderate risk tolerance because gains are based upon the performance of the external index. For additional information regarding the complexity of an equity indexed annuity please see: A Primer On Equity Indexed Annuities.
With a fixed annuity, the insurance company must pay out a minimum guaranteed rate of interest regardless of what the company earns on their investments. Fixed annuities have a minimum guaranteed interest rate and a current credited interest rate. Even if the investment market earnings decrease below the minimum guarantee in the policy, the annuity owner is protected and cannot earn less than the guaranteed rate. This type of annuity is a lower risk product.
A variable annuity provides interest earnings based upon the performance of an underlying investment portfolio. These underlying investments are securities and bear the investment risk of the security. The investment is not guaranteed and may increase or decrease with the performance of the underlying security. Before recommending this type of annuity you should be sure your potential client has a high risk tolerance as gains are based directly on the performance of the fund. To sell this type of annuity in Florida you must have a life and variable annuity license issued by DFS, be registered with the Office of Financial Regulation and appointed by one Financial Industry Regulatory Authority (FINRA) registered investment advisor firm. It is important to remember that even if you have a variable annuity license you cannot sell a variable annuity without also being appointed with FINRA.
Section 626.797, F.S., gives the Department the authority to adopt a code of ethics to govern the conduct of life agents in their relations with the public, other agents and the insurers. All applicants for licensure as a life agent shall subscribe to the code of ethics. You can find details of the code in the following administrative rules:
69B-215.210, F.A.C. - Scope
69B-215.215, F.A.C. - Twisting
69B-215.220, F.A.C. - Rebating
69B-215.225, F.A.C. - Defamation
69B-215.230, F.A.C. - Misrepresentation
In your capacity as a life insurance agent, you cannot be named as a beneficiary on a life insurance policy you sell to person who is not a member of your family unless you can prove you have an insurable interest in the life of that person.
To declare an insurable interest, you would have to have an actual, lawful and substantial economic interest in the safety and preservation of the life of the insured or a reasonable expectation of benefit or advantage from the continued life of the insured.
In your capacity as a life agent, you cannot handle the placement of life insurance coverage with a life insurance company that covers the life of a person who is not a member of your family, wherein you or the family member is the named beneficiary on such policy unless you or the family member has an insurable interest in the life of such person.
To have an insurable interest means you would have an actual, lawful and substantial economic interest in the safety and preservation of the life of the insured or a reasonable expectation of benefit or advantage from the continued life of the insured.
“Not a family member," means an individual who is not related to you, the life agent, as father, mother, son, daughter, brother, sister, grandfather, grandmother, uncle, aunt, first cousin, nephew, niece, husband, wife, father-in-law, mother-in-law, brother-in-law, sister-in-law, stepfather, stepmother, stepson, stepdaughter, stepbrother, stepsister, half brother or half sister.
In addition to the prohibition against being a beneficiary, the agent or family member of the agent may not be designated as a trustee or guardian or be granted power of attorney unless he or she is a family member of the policy owner or insured, or is a bank or trust company duly authorized to act as a fiduciary. See section 626.798, F.S.
If an insurance agent recommends the surrender of an annuity or life insurance policy containing a cash value and does not recommend that the proceeds from the surrender be used to fund or purchase another annuity or life insurance policy, before execution of the surrender, the insurance agent shall provide on a form that satisfies the requirements of the rule adopted by the department, information relating to the annuity or policy to be surrendered. Such information shall include, but is not limited to, the amount of any surrender charge, the loss of any minimum interest rate guarantees, the amount of any tax consequences resulting from the transaction, the amount of any forfeited death benefit, and the value of any other investment performance guarantees being forfeited as a result of the transaction. This also applies to a person performing insurance agent activities pursuant to an exemption from licensure under Part III of Chapter 627, F.S. [See section 627.4553, F.S. (effective July 1, 2014)]
Note: The proposed rule applicable to this section is pending as of June 30, 2014.
If you make a recommendation to a consumer and it results in a transaction involving an annuity product, you have certain responsibilities mandated by law. Rule 69B-162.011, F.A.C., requires certain disclosures and an objective comparison of annuity contracts when you recommend the exchange or replacement of an annuity. As the agent, you will be required to complete several forms including an Annuity Suitability Questionnaire to assist in determining the suitability of your recommendation.
Disclosure and Comparison of Annuity Contracts (DFS-H1-1981, Effective 10/21/2014)
Annuity Suitability Questionnaire (DFS-H1-1980, Effective 10/21/2014)
Unless you are exempted by section 627.4554, F.S., and required by the Financial Industry Regulatory Authority (FINRA) to perform an alternative suitability analysis, you must use state required form.
"Unaffiliated insurance agent" means a licensed insurance agent, except a limited lines agent, who is self-appointed and who practices as an independent consultant in the business of analyzing or abstracting insurance policies, providing insurance advice or counseling, or making specific recommendations or comparisons of insurance products for a fee established in advance by written contract signed by the parties. An unaffiliated insurance agent may not be affiliated with an insurer, insurer-appointed insurance agent, or insurance agency contracted with or employing insurer-appointed insurance agents. [See subsection 626.015(18), F.S. (effective July 1, 2014)]
An agent who appoints his or her license as an unaffiliated insurance agent may not hold an appointment from an insurer for any license he or she holds; transact, solicit, or service an insurance contract on behalf of an insurer; interfere with commissions received or to be received by an insurer-appointed insurance agent or an insurance agency contracted with or employing insurer-appointed insurance agents; or receive compensation or any other thing of value from an insurer, an insurer-appointed insurance agent, or an insurance agency contracted with or employing insurer-appointed insurance agents for any transaction or referral occurring after the date of appointment as an unaffiliated insurance agent. An unaffiliated insurance agent may continue to receive commissions on sales that occurred before the date of appointment as an unaffiliated insurance agent if the receipt of such commissions is disclosed when making recommendations or evaluating products for a client that involve products of the entity from which the commissions are received. [See subsection 626.311(6), F.S. (effective July 1, 2014)]