State RegulationsFL specificDifficulty 2/5
A Florida agent recommends a long-term annuity with heavy surrender charges to a retiree who says she needs access to her money soon for medical expenses. Why is this recommendation problematic?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Chapter 627, Florida Statutes, annuity suitability rules enforced by the DFS require reasonable grounds to believe a recommendation serves the consumer's best interest in light of her financial situation, needs, and objectives. A retiree who states she needs short-term access to funds for medical expenses has effectively told the agent the product is wrong for her; pressing a long surrender-charge annuity is unsuitable.
Why the other options are wrong
- A) Age alone never makes an annuity sale illegal; suitability turns on the consumer's needs and objectives.
- B) A signed disclosure form cannot cure a recommendation that is unsuitable on its face.
- D) The issuer being authorized says nothing about whether this product fits this consumer's liquidity needs.
Memory hook
Listen first, sell second: needs drive suitability.