State RegulationsNY specificDifficulty 1/5
Before recommending an annuity to a New York consumer, an insurance producer complies with Reg 187 by...
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Reg 187 (11 NYCRR Part 224.4), an insurer and its producers must have reasonable grounds to believe that an annuity recommendation is in the consumer's best interest at the time of the recommendation, based on a diligent evaluation of the consumer's circumstances. The standard is prospective and substantive — a pre-sale duty enforced by the Department of Financial Services — and it cannot be waived by a consumer's signature.
Why the other options are wrong
- A) The best-interest obligation is a regulatory duty; a consumer's waiver does not excuse the producer from Reg 187.
- C) Reg 187 contains no pre-approval process; compliance is judged against the reasonable-grounds standard at the time of the recommendation.
- D) Best interest does not mean the highest rate or beating every alternative; it means suitability to the consumer's own situation.
Memory hook
Reg 187: 'reasonable grounds to believe — best interest' at the moment of recommendation.