Chapter 5: Suitability & Marketing Practices Review Questions Copy

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Question 1 of 4

1. Question
All of the following statements about suitability are true EXCEPT which one?
- If you recommend that a consumer purchase or exchange an annuity, you must have reason to believe this recommendation is suitable.
- Before executing the transaction, you much attempt to acquire information about the consumer’s suitability.
- If you make a recommendation that turns out to be based on inaccurate information provided by the consumer, you are still obligated to the consumer in that regard.
- Suitability information includes age, income, financial situation, financial experience, time horizon, and risk tolerance.
Question 2 of 4

2. Question
When it comes to suitability, insurers have many duties. These include all of the following EXCEPT which one?
- Establish a system to supervise annuity recommendations.
- Review at least 50% of each producer’s recommendations prior to issuance of an annuity to check for suitability.
- Implement procedures to detect replacements that have not been reported as such by the applicant or producer.
- Inform producers of the requirements, including standards for product training and annuity suitability training.
Question 3 of 4

3. Question
Upon discovery of a violation of the suitability regulations, what can the Commissioner do?
- Order an insurer or producer to take appropriate corrective action for a consumer who was harmed by the violation.
- Order a general or independent agency that employs producers or sells annuities to take appropriate corrective action for a consumer who was harmed by the violation.
- Order a reduction or elimination of penalties if corrective action was taken promptly.
- Any of the above.
Question 4 of 4

4. Question
Why is it so important to determine client suitability for indexed products?
- It’s the law.
- Indexed products are more suitable for some clients than others.
- It can help reduce the chance that legal issues will arise from clients who feel they were not adequately informed about the features of the product.
- All of the above.

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