Virginia Administrative Code › Title 14 - INSURANCE › Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE › Chapter 45 - RULES GOVERNING SUTAIBILITY IN ANNUITY TRANSACTIONS › Section 14VAC5-45-20 - Definitions

Current through Register Vol. 40, No. 24, July 15, 2024
The following words and terms when used in this chapter shall
				  have the following meanings, unless the context clearly indicates
				  otherwise:
"Agent," "insurance agent," "producer," or "insurance
				  producer," when used without qualification, means an individual or business
				  entity that sells, solicits, or negotiates contracts of insurance or annuity in
				  this Commonwealth.
"Annuity" means a fixed, variable, or modified guaranteed
				  annuity that is individually solicited, whether the product is classified as an
				  individual or group annuity.
"Board" means the Virginia Insurance Continuing Education
				  Board established pursuant to §
									38.2-1867
				  of the Code of Virginia.
"Cash compensation" means any discount, concession, fee,
				  service fee, commission, sales charge, loan, override, or cash benefit received
				  by an agent in connection with the recommendation or sale of an annuity from an
				  insurer, intermediary, or directly from the consumer.
"Commission" means the State Corporation Commission.
"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:
1.  Age;
2.  Annual income;
3.  Financial situation and needs, including debts and other
				  obligations;
4.  Financial experience;
5.  Insurance needs;
6.  Financial objectives;
7.  Intended use of the annuity;
8.  Financial time horizon;
9.  Existing assets or financial products, including
				  investment, annuity, and insurance holdings;
10.  Liquidity needs;
11.  Liquid net worth;
12.  Risk tolerance, including willingness to accept
				  non-guaranteed elements in the annuity;
13.  Financial resources used to fund the annuity; and
14.  Tax status.
"Continuing education credit" or "CE credit" means one
				  continuing education credit as defined in §
									38.2-1867
				  of the Code of Virginia.
"Continuing education provider" or "CE provider" means an
				  individual or entity that is approved to offer continuing education courses
				  pursuant to §
									38.2-1867
				  of the Code of Virginia.
"FINRA" means the Financial Industry Regulatory Authority or
				  a succeeding agency.
"Insurer" means an insurance company required to be licensed
				  under the laws of this Commonwealth 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 agents.
"Material conflict of interest" means a financial interest of
				  the agent 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 health insurance, office rent, office
				  support, and retirement benefits.
"Nonguaranteed 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
				  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.
"Recommendation" means advice provided by an agent to an
				  individual consumer that was intended to result or does result in a purchase,
				  exchange, replacement, or surrender 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 a transaction in which a new annuity is
				  to be purchased, and it is known or should be known to the proposing agent, or
				  to the proposing insurer whether or not an agent is involved, that by reason of
				  the transaction, an existing annuity or other insurance policy has been or is
				  to be any of the following:
1.  Lapsed, forfeited, surrendered or partially surrendered,
				  assigned to the replacing insurer, or otherwise terminated;
2.  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;
3.  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;
4.  Reissued with any reduction in cash value; or
5.  Used in a financed purchase.
"SEC" means the U.S. Securities and Exchange
				  Commission.
"Virginia Securities Act" means §
									13.1-501 et seq. of
				  the Code of Virginia.
Statutory Authority: §§
											12.1-13
					 and
					 38.2-223
					 of the Code of Virginia.