TO: All Agents Licensed in Puerto Rico, Guam, Virgin Islands, and

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TO: All Agents Licensed in Puerto Rico, Guam, Virgin Islands, and
NO. 04-14
DATE: August 1, 2014
TO:
All Agents Licensed in Puerto Rico, Guam, Virgin Islands, and American Samoa
FROM:
James P. Payne, Compliance Officer
SUBJECT:
Suitability in Annuity Transactions
The purpose of this Compliance Bulletin is to inform you of new annuity suitability requirements
and the resulting procedural changes that you must follow when selling any National Western
annuity product to consumers of all ages. Please take the time to read this bulletin carefully and to
familiarize yourself with all of the requirements.
In 2010, the National Association of Insurance Commissioners (NAIC) adopted a new version of
the Suitability in Annuity Transactions model regulation. The model regulation provides standards
and procedures for recommendations to consumers that result in transactions involving annuity
products so that the insurance needs and financial objectives of consumers at the time of the
transactions are appropriately addressed. National Western has modified its procedures to bring the
Company into accord with the new NAIC model regulation.
NEW ANNUITY SUITABILITY QUESTIONNAIRE – SEPTEMBER 10, 2014 COMPLIANCE DATE
As a result of the new model regulation, National Western has created a new Annuity Suitability
Questionnaire that must be used with all annuity applicants. Effective September 10, 2014,
National Western is requiring that Form DM-1174 (or any future revisions thereof) be used with
all annuity applicants. This form must accompany all annuity applications dated on or after
September 10, 2014, and you should keep a copy of the form for your records. National Western
will not issue an annuity unless it has received a properly completed, signed Annuity Suitability
Questionnaire. A copy of Form DM-1174 is attached to this bulletin and can be ordered from the
Company or downloaded from the Company website.
Again, please familiarize yourself with the new Annuity Suitability Questionnaire, Form DM-1174,
as there are substantial differences from the previous requirements. For example, please note the
following:
•
You are required to obtain more extensive, detailed information from the consumer—defined as
“suitability information” under the model regulation—such as liquidity needs, liquid net worth,
risk tolerance, source of funds, and financial time horizon, in addition to other information that
is now required under National Western’s procedures.
•
A consumer may not “opt out” of completing the new Annuity Suitability Questionnaire. This
form is required for every application and must be completed in its entirety.
(over)
SH-1006.Rev.5.06
•
In the case of an exchange or replacement of an annuity, the new questionnaire requires that
you obtain information regarding surrender charges, any loss of benefits, and previous
exchange/replacement activity.
•
National Western must now have procedures to review each of its insurance producer’s
recommendations prior to the issuance of an annuity that are designed to ensure that there is a
reasonable basis to determine that a recommendation is suitable.
National Western created its Annuity Suitability Questionnaire, and requires its use in all annuity
sales, in order to assist our insurance producers in obtaining information from the consumer that
would enable them to make suitable recommendations for the purchase or exchange of an
annuity. It is your responsibility to make suitable recommendations based on the facts disclosed
by the consumer.
Again, please remember that Form DM-1174 (or any future revisions thereof) must be completed
in its entirety (including the explanation section of the Agent Certification), all questions
answered, and properly initialed and signed where indicated on the form.
NEW INSURANCE PRODUCER TRAINING REQUIREMENTS
The model regulation includes the requirement that annuity producers must complete two
training components:
1) One-time, four credit general annuity training course approved by the Department of
Insurance and provided by a Department-approved education provider; and
2) Product-Specific Training with any and all annuity carriers for which you will solicit or
sell annuities.
More specific information about each program is provided below.
NWL Product-Specific Training
–
September 10, 2014 Compliance Date
Under the new model rule, an insurance producer may not solicit the sale of any annuity product
unless he or she has adequate knowledge of the product to recommend the annuity. In order to
ensure that its producers are complying with this requirement, National Western has designed a
Product-Specific Annuity Training program to provide the required training on its respective
annuity products.
This product-specific training program is designed to provide you with knowledge of the types of
annuity products offered by National Western as well as the specific features each product
provides. Information about this program is posted on National Western’s website.
Please remember that National Western will not be able to accept any annuity business
from you if you have not completed the Product-Specific Training prior to soliciting the sale
of an annuity on or after September 10, 2014.
General Annuity Training Course
–
“To Be Determined” Compliance Date
National Western will also post information on its website regarding a recommended course for
compliance with this component of the training requirements. If you have already completed
this training requirement with another authorized provider, you may email, fax, or mail your
Certificate of Completion to National Western via the following methods:
1. Email: [email protected]
2. Fax: (512)-719-8506
3. Mail: National Western Life Insurance Company
Attn: Robin Genz – Licensing Supervisor
850 East Anderson Lane
Austin, Texas 78752
National Western will only accept Certificates of Completion for courses that are approved by
your Department of Insurance for this training requirement.
Please note that once a compliance date is determined, National Western will not be able to
accept any annuity business from you if you have not completed this general annuity
training requirement prior to soliciting the sale of an annuity on or after that date.
If you have any problems using our website and/or accessing the training programs, our
Marketing Department is ready to assist you. Please direct any questions you may have
concerning this Compliance Bulletin to the Marketing Department (800-760-3434).
JPP/gbm
This Compliance Bulletin supersedes Compliance Bulletins 32-04, 02-05, and 02-08.

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