Utah Admin. Code 590-230-3

Current through Bulletin 2024-19, October 1, 2024

Section R590-230-3 - Definitions

Terms used in this rule are defined in Section 31A-1-301 and Rule R590-93. Additional terms are defined as follows:

(1) "Annuity" means an insurance product under state law that is individually solicited, whether the product is classified as an individual or a group annuity.

(2) "Cash compensation" means a 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) "Comparable standards" means:

(a) with respect to a broker-dealer and a registered representative of a broker-dealer, applicable Securities and Exchange Commission and Financial Industry Regulatory Authority rules pertaining to best interest obligations and supervision of annuity recommendations and sales including, but not limited to, Regulation Best Interest and any amendments or successor regulations;

(b) with respect to an investment adviser registered under federal or state securities laws or an investment adviser representative, the fiduciary duties and all other requirements imposed on an investment adviser or an investment adviser representative by contract or under the Investment Advisers Act of 1940 or applicable state securities law including, but not limited to, the Form ADV and interpretations; and

(c) with respect to a plan fiduciary or a fiduciary, the duties, obligations, prohibitions, and all other requirements attendant to such status under the Employee Retirement Income Security Act or the Internal Revenue Code and any amendments or successor statutes thereto.

(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) existing assets or financial products, including investment, annuity, and insurance holdings;

(d) financial situation and needs, including debts and other obligations;

(e) financial experience;

(f) financial objectives;

(g) insurance needs;

(h) financial resources used to fund the annuity;

(i) financial time horizon;

(j) intended use of the annuity;

(k) liquidity needs;

(l) liquid net worth;

(m) risk tolerance, including willingness to accept non-guaranteed elements in the annuity; and

(n) tax status.

(5) "Financial professional" means a producer that is regulated and acting as:

(a) a broker-dealer registered under federal or state securities laws or a registered representative of a broker-dealer;

(b) an investment advisor registered under federal or state securities laws or an investment adviser representative associated with the federal or state registered investment adviser; or

(c) a plan fiduciary under Section 3(21), Employee Retirement Income Security Act, or fiduciary under Section 4975(e)(3), Internal Revenue Code, or any amendments or successor statutes thereto.

(6) "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.

(7)

(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) "Material conflict of interest" does not include cash compensation or non-cash compensation.

(8) "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.

(9)

(a) "Non-guaranteed element" means a premium, credited interest rate including any bonus, benefit, value, dividend, non-interest based credit, charge, or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue.

(b) An element is non-guaranteed if a non-guaranteed element is used in its calculation.

(10)

(a) "Producer" means a person licensed in this state to sell, solicit, or negotiate insurance, including annuities.

(b) "Producer" includes an insurer where no producer is involved.

(11)

(a) "Recommendation" means advice provided by a producer to an individual consumer that results, or is intended to result, in a purchase, an exchange, or a replacement of an annuity in accordance with that advice.

(b) "Recommendation" does not include general communication to the public, generalized customer service assistance or administrative support, general educational information and tools, prospectuses, or other product and sales material.

Utah Admin. Code R590-230-3

Amended by Utah State Bulletin Number 2023-24, effective 12/8/2023