Key Takeaways
- Pennsylvania requires delivery of the NAIC Annuity Buyer's Guide before or at application
- All surrender charges, fees, and limitations must be disclosed in writing before purchase
- The free look period for annuities is 10 days (30 days for seniors age 65+)
- Guaranteed and non-guaranteed elements must be clearly distinguished in illustrations
- Replacement transactions require comparison disclosures of existing and new annuities
Pennsylvania Annuity Disclosure Requirements
Pennsylvania requires comprehensive disclosures to ensure consumers understand annuity products before purchase.
Buyer's Guide Requirement
Delivery Requirements
| Timing | Requirement |
|---|---|
| Standard Sale | At or before application |
| Replacement | Before application accepted |
| Direct Response | With policy delivery |
Contents
The NAIC Annuity Buyer's Guide includes:
- How annuities work
- Types of annuities
- Questions to ask before buying
- Understanding fees and charges
- Surrender charge information
Fee and Charge Disclosures
Required Written Disclosures
| Fee Type | Disclosure Required |
|---|---|
| Surrender Charges | Full schedule and duration |
| Administrative Fees | Annual charges |
| M&E Charges | For variable annuities |
| Investment Fees | Subaccount expenses |
| Rider Charges | Optional benefit costs |
Surrender Charge Information
Producers must explain:
- How surrender charges work
- Complete surrender schedule
- Duration of surrender period
- Free withdrawal provisions
- Waiver conditions (if any)
Exam Tip: Pennsylvania emphasizes complete surrender charge disclosure. Know that failure to disclose is a serious violation.
Free Look Period
Pennsylvania provides significant free look protections:
Standard Free Look
| Consumer Age | Free Look Period |
|---|---|
| Under 65 | 10 days |
| 65 and older | 30 days |
Free Look Rights
During the free look period:
- Consumer may return annuity for full refund
- No questions asked
- No surrender charges apply
- Period begins upon delivery
Guaranteed vs. Non-Guaranteed Elements
Illustration Requirements
All annuity illustrations must clearly identify:
| Element Type | Examples |
|---|---|
| Guaranteed | Minimum interest rate, minimum death benefit |
| Non-Guaranteed | Current crediting rate, projected values |
| Assumed | Hypothetical returns, projections |
Labeling Requirements
- Guaranteed elements clearly labeled
- Non-guaranteed elements identified as such
- Assumptions stated for projections
- Current vs. guaranteed rates distinguished
Replacement Disclosures
Additional Requirements for Replacements
| Disclosure Item | Requirement |
|---|---|
| Existing Policy Summary | Current values and benefits |
| New Policy Comparison | Side-by-side comparison |
| Surrender Charges | Charges on existing contract |
| Tax Consequences | Potential tax impact |
| New Surrender Period | Length and amounts |
Replacement Notice
The replacement notice must:
- Be signed by the consumer
- Acknowledge replacement is occurring
- Show comparison of key features
- Explain cost of replacement
Senior Consumer Protections
Enhanced Protections for Age 65+
| Protection | Requirement |
|---|---|
| Free Look | Extended to 30 days |
| Suitability | Enhanced scrutiny |
| Documentation | More detailed records |
| Time Horizon | Careful evaluation |
Special Considerations
When selling to seniors:
- Carefully assess liquidity needs
- Consider shorter remaining life expectancy
- Document why surrender period is appropriate
- Ensure senior understands product
When must the NAIC Annuity Buyer's Guide be provided in Pennsylvania?
How long is the free look period for an annuity purchased by a 70-year-old in Pennsylvania?
In a Pennsylvania annuity illustration, which element must be labeled as non-guaranteed?
What additional disclosure is required for annuity replacements in Pennsylvania?
If a Pennsylvania consumer returns an annuity during the free look period, they receive: