2023 Montana Code Annotated › Title 33. Insurance and Insurance Companies › Chapter 20. Life Insurance › Part 8. Suitability in Annuity Transactions › 33-20-804. Definitions

33-20-804. Definitions.
As used in this part, the following definitions apply:
(1) "Annuity" means a fixed annuity that is individually solicited, regardless of whether the product is classified as an individual or group annuity.
(2) "Cash compensation" means any discount, concession, fee, service fee, commission, sales charge, loan, override, or cash benefit received by a producer in connection with the recommendation or sale of an annuity from an insurer, intermediary, or directly from the consumer.
(3) "Consumer profile information" means information that is reasonably appropriate to determine whether a recommendation addresses the consumer's financial situation, insurance needs, and financial objectives, including, at a minimum, the following:
(a) age;
(b) annual income;
(c) financial situation and needs, including debts and other obligations;
(d) financial experience;
(e) insurance needs;
(f) financial objectives;
(g) intended use of the annuity;
(h) financial time horizon;
(i) existing assets or financial products, including investment, annuity, and insurance holdings;
(j) liquidity needs;
(k) liquid net worth;
(l) risk tolerance, including but not limited to willingness to accept nonguaranteed elements in the annuity;
(m) financial resources used to fund the annuity; and
(n) tax status.
(4) "Continuing education credit" or "CE credit" means one continuing education credit as provided in Title 33, chapter 17.
(5) "Continuing education provider" or "CE provider" means an individual or entity that is approved to offer continuing education courses pursuant to Title 33, chapter 17.
(6) "Insurer" means a company required to be licensed under the laws of this state to provide insurance products, including annuities.
(7) "Intermediary" means an entity contracted directly with an insurer or with another entity contracted with an insurer to facilitate the sale of the insurer's annuities by producers.
(8) (a) "Material conflict of interest" means a financial interest of the producer in the sale of an annuity that a reasonable person would expect to influence the impartiality of a recommendation.
(b) The term does not include cash compensation or noncash compensation.
(9) "Noncash compensation" means any form of compensation that is not cash compensation, including but not limited to health insurance, office rent, office support, and retirement benefits.
(10) "Nonguaranteed elements" means the premiums, credited interest rates including any bonuses, benefits, values, dividends, noninterest-based credits, charges, or elements of formulas used to determine any of these that are subject to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in its calculation.
(11) "Producer" or "insurance producer" means a person or entity required to be licensed under the laws of this state to sell, solicit, or negotiate insurance, including annuities. For the purposes of this part, the term includes an insurer in which no producer is involved.
(12) (a) "Recommendation" means advice provided by a producer to an individual consumer that was intended to result or does result in a purchase, an exchange, or a replacement of an annuity in accordance with that advice.
(b) The term does not include general communication to the public, generalized customer services, assistance or administrative support, general educational information and tools, prospectuses, or other product and sales material.
(13) "Replacement" means a transaction in which a new annuity is to be purchased, and it is known or should be known to the proposing producer or to the proposing insurer, whether or not a producer is involved, that by reason of the transaction, an existing annuity or other insurance policy or contract has been or is to be any of the following:
(a) lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise terminated;
(b) converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;
(c) amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;
(d) reissued with any reduction in cash value; or
(e) used in a financed purchase.
History: En. Sec. 4, Ch. 476, L. 2007; amd. Sec. 4, Ch. 324, L. 2017; amd. Sec. 3, Ch. 432, L. 2021.