Conn. Agencies Regs. § 38a-432a-4

Current through October 16, 2024

Section 38a-432a-4 - Definitions

As used in sections 38a-432a-1 to 38a-432a-8, inclusive, of the Regulations of Connecticut State Agencies:

(1) "Agency" means a person that employs one (1) or more producers;

(2) "Annuity" means "annuities" as defined in section 38a-1 of the Connecticut General Statutes, that is or are individually solicited, whether the product is classified as an individual or group annuity;

(3) "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;

(4) "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 non-guaranteed elements in the annuity;

(M) Financial resources used to fund the annuity; and

(N) Tax status;

(5) "Commissioner" means the Insurance Commissioner;

(6) "Continuing education credit" or "CE credit" means a "credit hour" as defined in section 38a-782a-1 of the Regulations of Connecticut State Agencies;

(7) "Continuing education provider" or "CE provider" means a person that is approved to sponsor continuing education courses pursuant to section 38a-782a-4 of the Regulations of Connecticut State Agencies;

(8) "FINRA" means the federal Financial Industry Regulatory Authority or a succeeding agency;

(9) "Insurer" means "insurer" as defined in section 38a-1 of the Connecticut General Statutes;

(10) "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;

(11) "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 excluding cash compensation or non-cash compensation;

(12) "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;

(13) "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 such premiums, rates, benefits, values, dividends, credits or charges, that are subject to company discretion and are not guaranteed at issue. An element is considered non-guaranteed if any other non-guaranteed element is used in its calculation;

(14) "Person" means "person" as defined in section 38a-702a of the Connecticut General Statutes;

(15) "Producer" means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance, including annuities, or, where no such person is involved, and insurer;

(16) "Recommendation" means advice provided by a producer to an individual consumer that is intended to result or does result in a purchase, an exchange or a replacement of an annuity in accordance with that advice , excluding any general communication to the public, generalized customer services assistance and administrative support, general educational information and tools, prospectuses, and other product and sales material;

(17) "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 has been or is to be:

(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; and

(18) "SEC" means the United States Securities and Exchange Commission.

Conn. Agencies Regs. § 38a-432a-4

Adopted effective August 4, 2005; Amended November 10, 2008; Amended February 18, 2012; amended 3/1/2022