Illinois Administrative Code › Title 50 - INSURANCE › Part 3120 - SUITABILITY IN ANNUITY TRANSACTIONS › Section 3120.40 - Definitions

Current through Register Vol. 48, No. 28, July 12, 2024
"Annuity" means an insurance product under Illinois law that is
				sold by insurance companies in which the insurer provides for either a single
				income payment or a series of income payments at regular intervals in exchange
				for a single premium (contribution) or multiple premiums (contributions) paid
				by the annuitant.
"Cash compensation" means any discount, concession, fee,
				service fee, commission, sales charge, loan, override, or cash benefit received
				by an insurance producer directly from the consumer or in connection with the
				recommendation or sale of an annuity from an insurer or intermediary.
"Code"
				means the Illinois Insurance Code [215 ILCS 5
				].
"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:
Age;
Annual income;
Financial situation and needs, including debts and other
				obligations;
Financial experience;
Insurance needs;
Financial objectives;
Intended use of the annuity;
Financial time horizon;
Existing assets or financial products, including investment,
				annuity, and life insurance holdings;
Liquidity needs;
Liquid net worth;
Risk tolerance, including but not limited to willingness to
				accept non-guaranteed elements in the annuity;
Financial resources used to fund the annuity; and
Tax status.
"Continuing education credit" or "CE credit" means one
				continuing education credit as defined in 50 Ill. Adm. Code 3119.
"Continuing Education Provider" or "CE Provider" means an
				individual or entity that is approved to offer continuing education courses
				pursuant to 50 Ill. Adm. Code 3119.
"Department" means the Illinois Department of Insurance.
"Director" means the Director of the Illinois Department of
				Insurance.
"FINRA" means the Financial Industry Regulatory Authority or a
				succeeding agency.
"General Agency" means an insurance agency that provides
				supervision on behalf of an insurer's sales force in a particular geographic
				region.
"Independent Agency" means an insurance agency comprised of
				independent contractors who sell insurance with one or more insurers.
"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 purposes of this Part, "Insurance Producer" includes
				an insurer where no person or entity is involved.
"Insurer" means an entity required to be licensed under the
				laws of this State to provide insurance products, including annuities.
"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 insurance producers.
"Material conflict of interest" means a financial interest of
				the insurance producer in the sale of an annuity that a reasonable person would
				expect to influence the impartiality of a recommendation. "Material conflict of
				interest" does not include cash compensation or non-cash compensation.
"Non-cash 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.
"Non-guaranteed elements" means the premiums, credited interest
				rates (including any bonus), benefits, values, dividends, non-interest-based
				credits, charges, or elements of formulas used to determine any of these
				elements, that are subject to insurance company discretion and are not
				guaranteed at issue. An element is considered non-guaranteed if any of the
				underlying non-guaranteed elements are used in its calculation.
"Recommendation" means advice provided by an insurance
				producer, or an insurer when no insurance producer is involved, to an
				individual consumer that was intended to result or does result in a purchase,
				exchange, or replacement of an annuity in accordance with that advice.
				"Recommendation" 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.
"Replacement" means any transaction in which a new annuity will
				be purchased, and it is known or should be known to the proposing insurance
				producer, or to the proposing insurer if there is no insurance producer
				involved, that because of the transaction an existing annuity or other
				insurance policy has been or is to be any of the following:
Lapsed, forfeited, surrendered or partially surrendered,
				assigned to the replacing insurer, or otherwise terminated;
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;
Amended 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;
Reissued with any reduction in cash value; or
Pledged as collateral or subjected to borrowing, whether in a
				single loan or under a schedule of borrowing over a period of time for amounts
				in the aggregate exceeding 25% of the loan value set forth in the
				policy.
"Replacing Insurer" means the insurance company that issues a
				new annuity which is a replacement of an existing policy or contract.
"SEC" means the United States Securities and Exchange
				Commission.