NAIC Model 275 by State: Best Interest Rules and the File

Last verified against sources: November 5, 2026 | Author: David Novak

State text read for 20 of 51 (15 read, 5 read in part; the other 31 show NAIC status only; matrix). NAIC map: status as of Aug 31, 2026.

Under NAIC Model #275 (the National Association of Insurance Commissioners' model regulation), a producer who recommends an annuity must act in the client's best interest. The producer does that by meeting four obligations: care, disclosure, conflict of interest and documentation (Model #275, Section 6A). NAIC's map (status as of Aug 31, 2026) shows 49 jurisdictions adopted, the District of Columbia pending and New York under its own regulation (NAIC map).

The model creates no fiduciary duty and no ongoing monitoring duty under the care obligation. It sets no percentage limit on how much of a client's money may go into an annuity. Its safe harbor treats a recommendation that complies with comparable standards as satisfying the regulation, but it is open only to a producer regulated and acting as a broker-dealer or registered representative, an investment adviser or investment adviser representative, or a plan fiduciary. A model binds no one until a state adopts it (Section 3 leaves the authority to the state); once adopted, the state's text controls.

Key takeaways

• No fiduciary duty, and the model creates no private cause of action; a state that adopted different language on that point uses its own (Section 1B).
• The safe harbor does not reach an insurance-only agent. Of 20 state texts read, 4 list federal registration only.
• The states differ on record retention (5 years in 12 of the 20 texts read; 10 years for Minnesota, New Jersey and North Dakota), on whether another state's course counts, and on whether a state-registered adviser gets the safe harbor.
• The carrier's review is the insurer's duty (Section 6C), separate from the producer's file.

Educational information, not legal or tax advice. Method: public documents from NAIC, the states and the federal government only, opened 2026-11-05; each hypothetical is labeled, with its math shown. "Client" stands for the model's "consumer"; "producer" is the model's word for the licensed agent.

The example in five lines (invented numbers, shown in full in the section "What should the annuity file show?"):

• Old contract: $200,000. A 4 percent surrender charge takes $8,000, so $192,000 moves.
• Rider base: $240,000 on the old contract, $192,000 on the new.
• Invented payout rates: 5.0 percent on the old base, 5.5 percent on the new.
• Yearly income: $12,000 on the old base against $10,560 on the new, $1,440 less.
• Model #275 asks whether the new contract "would substantially benefit the consumer in comparison to the replaced product over the life of the product" (Section 6A(1)(j)(ii)), and the file records the basis (6A(4)(a)).

How many states have adopted Model #275?

The Aug 31, 2026 map shows 49 states as adopted, DC as pending and New York under "other provisions regulating annuity transactions". The counts of 48 and "all 50" come from an older map or a different way of counting. NAIC's map says it does not decide whether a state's law contains every element of the model.

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New Jersey was pending on the Feb 1, 2025 map, and its rule took effect on April 21, 2025. New York has regulated best interest under Regulation 187 since 2019. NAIC's FAQ says states needed the 2020 version "by February 2025" to keep fixed and fixed indexed annuities outside the scope of federal securities regulation (Section 989J of the Dodd-Frank Act); it does not say what follows for a state that misses it.

Where the state texts differ

In the 20 state texts read, these differ: the effective date, record retention, whether another state's course counts, who the safe harbor reaches and the disclosure form. California and New York also differ in the standard itself. California adds a tangible net benefit finding to the care obligation: the producer needs a reasonable basis to believe the client would receive a tangible net benefit from the transaction over the life of the product (the bill text read does not define the phrase). New York has its own regulation (Regulation 187). The full matrix has all 51 rows. For the 31 states whose text was not read, it shows NAIC's status and citation only; open that citation and check the same five points.

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Quick card: the 20 state texts read (2026-11-05)

Source line: state texts as linked in the matrix. Maryland's date reads "not stated": none was found in the sources read.

Extras beyond the model in the texts read: California's tangible net benefit finding (explained above); New Jersey's 15th profile item; Minnesota's training topic on spotting impaired memory or judgment; Illinois's training for annuities with long-term care benefits.

Carrier and course charts sometimes print another date for the same state; the matrix settles four such cases at the state's own text.

Which state's rule applies when you hold licenses in several states?

The model does not say which state's rule governs a producer licensed in several states. Its scope is "any sale or recommendation of an annuity" (Section 2). New Mexico's rule is explicit: it applies to any sale or recommendation in New Mexico or to a resident of New Mexico, "regardless of an insurance producer's state of domicile" (13.9.20.2 NMAC). Where a text is silent, open the rule of the client's state of residence and the rule of the state where the sale is made. If they differ, ask the department.

Twelve of the 20 texts repeat the model's scope sentence. California, New Jersey, New Mexico, New York, North Dakota and Texas word it their own way (Texas's enrolled 2021 bill strikes "recommendation"), and Minnesota and Wisconsin have no scope sentence of that kind in what was read; the matrix notes quote each one.

What does Model #275 ask of a producer?

Section 6A requires a producer who recommends an annuity to act in the best interest of the client under the circumstances known when the recommendation is made. The producer must do this without placing the producer's or the insurer's financial interest ahead of the client's (Model #275). The producer meets that duty by satisfying four obligations. Section numbers are those of the Spring 2020 edition.

NAIC's FAQ says a producer is compared with producers of "similar authority and licensure", not with advisers (Q7). A completed Appendix A handed over at the first client meeting can satisfy the disclosure rule, and it should be updated if the information changes (Q8, Q9). Marketing, wholesaling, back-office support and general supervision alone are not material control (Q6).

How a conflict is managed. The FAQ gives a ladder (Q12). Sometimes telling the client about the conflict, answering questions and confirming the client wants to continue is enough. Where disclosure alone may not be enough, consult a manager, supervisor or agency principal. Where a conflict cannot be mitigated, avoid the activity that creates it or abstain from the recommendation. General production incentives with no emphasis on a particular product are not a material conflict (Q10).

What the model does not ask

Beyond the three points below, the model does not require analysis of products outside the producer's license or the lowest-compensation annuity (Model #275). Enforcement authority is vested exclusively in the commissioner (Section 8).

• No fiduciary duty. The care requirements "do not create a fiduciary obligation or relationship and only create a regulatory obligation". Section 1B says nothing in the regulation creates or implies a private cause of action, and its drafting note tells a state that adopted different language to use that instead. These sentences are about the model; they do not bar a claim under other law or action by the commissioner.
• No lifetime monitoring. The care obligation does not mean "the producer has ongoing monitoring obligations", although a separate fiduciary, consulting, advising or planning agreement may impose one.
• No percentage limit. The profile includes liquid net worth, liquidity needs and time horizon, but the model sets no percentage of a client's money that may go into an annuity. A limit a client hears about may be the carrier's own rule or something a state added to its version.

Section 6B relieves only the Section 6A(1) care duty, and only in four cases: no recommendation is made; a recommendation rested on materially inaccurate client information; the client refuses profile information and the transaction is not recommended; or the client decides without the producer's recommendation. Read the state's version before assuming the other obligations fall away.

Scope and exemptions

Section 2 sets the scope, and Section 4 lists what the regulation does not reach, "unless otherwise specifically included":

• direct response solicitations with no recommendation based on client information
• contracts that fund an ERISA plan or an employer-established plan under Section 401(a), 401(k), 403(b), 408(k) or 408(p)
• government plans, church plans and 457 plans
• nonqualified deferred compensation arrangements
• personal injury settlements
• formal prepaid funeral contracts

NAIC's FAQ says a direct-response solicitation is made through a sponsoring or endorsing entity, solely by mail, the Internet or other mass communication media, and is not directed to a specific individual (Q3). A state can change the list: Montana adds variable annuities regulated under Title 30, chapter 10 (MCA 33-20-803). The definition of "recommendation" (Section 5, item M) covers advice that results in a purchase, an exchange or a replacement. It does not name a surrender, an income start or a withdrawal election on a contract the client already owns, and state texts may differ.

Does the safe harbor apply to an insurance-only agent?

Under the model, no. The safe harbor in Section 6E reaches a "financial professional". The model defines that person as a producer regulated and acting in one of three roles: broker-dealer or its registered representative; investment adviser or its representative; or ERISA 3(21) or Internal Revenue Code 4975(e)(3) plan fiduciary. The drafting note says a producer not explicitly acting that way is not eligible and must comply with the regulation itself. Here, an insurance-only agent is a producer who is not regulated and acting in any of those roles on the sale. The 19 state texts read that carry a safe harbor use the same "regulated and acting as" wording. They name the person differently: most say "producer" or "insurance producer", four say "agent" (Florida, Ohio, Texas, Virginia), and Wisconsin says "insurance intermediary". New York has none.

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Section 6E(1) says recommendations made "in compliance with comparable standards" satisfy the regulation and leaves the commissioner free to investigate. The standards are SEC and FINRA rules including Regulation Best Interest, the Investment Advisers Act duties, and ERISA or Code duties. The model brackets "or state", so each state decides whether a state-registered adviser counts: four of the texts read list federal registration only, and Georgia and Rhode Island treat broker-dealers and advisers differently (the matrix notes give each wording).

NAIC's Life Insurance and Annuities (A) Committee adopted guidance on Dec. 9, 2025 that "clarifies supervisory obligations for insurers that issue annuities sold under the safe harbor". The insurer monitors the financial professional's conduct and gives the supervising entity data to oversee it, and Section 6D still applies. Fixed annuities can be reached when the broker-dealer applies its Regulation Best Interest rules and controls to them. In each situation the guidance describes, the producer must be subject to a comparable standard.

Regulation Best Interest binds broker-dealers and natural persons associated with them recommending securities to retail customers (Reg BI's term for the client). Variable annuities, and any other annuity registered with the SEC as a security, are outside this guide. Selling them takes a securities registration through a broker-dealer on top of the state insurance license (FINRA Rule 1210, Rule 1220(b)(7)), and the contract comes with a prospectus (Investor.gov). This is not securities advice.

Before relying on the safe harbor, confirm four things:

• your role on the sale
• how your state defines the registration
• whether you work under the supervising entity's comparable-standard controls (including for a fixed annuity)
• that Section 6D and the insurer's own review still apply

Your firm's compliance team and your state's text decide whether the safe harbor applies to a sale.

Carrier review versus the regulatory duty

A carrier's suitability review and the producer's best-interest duty come from different places. Section 6A puts the best-interest obligation on the producer. Section 6C puts a supervision system on the insurer, including procedures to review each recommendation before issuance. Passing the carrier's review is a separate check from the producer's file under 6A.

Source line: Model #275, Sections 6A and 6C plus Section 9.

Michigan told the working group that some insurers did not collect Appendix A (Michigan letter). Section 9 puts the duty to maintain or make available these records on insurers, general agents, independent agencies and producers alike. It lets an insurer keep a producer's documentation without requiring it. Do not count on the insurer's copy: NAIC's examiner handbook says "It may be necessary to obtain applicable customer profiles and related materials from the producer(s)" (Chapter 23).

For agencies and IMOs. Section 8 lets the commissioner order a general agency, independent agency or producer to take corrective action for a harmed client. Section 6C(2)(h) tells insurers to identify and eliminate any contest, quota, bonus or non-cash reward based on sales of specific annuities within a limited period. NAIC's FAQ (Q14) says general incentives with no emphasis on a particular annuity are not the target.

What should the annuity file show?

Model #275 asks for a written record of each recommendation and its basis, made when the recommendation or sale happens, plus signed statements when a client refuses profile information or buys without a recommendation. The one-page worksheet, also as a printable PDF, sets out eight blocks: six rest on the model's text (inside blocks 1 and 3, and inside blocks 4 and 7, some details are practice), and two (products considered, conflicts checked) are practice, which the model does not prescribe as a record. The basis is the block to get right: Michigan told NAIC that some systems accept any text in it.

Check what the file should show for one sale. Pick the state, your role, a purchase or a replacement and whether you recommended it; for a replacement the file builder also gives the date 60 months before the recommendation (36 months for New York).

Source: Annuities Genius, NAIC Model #275 file builder, state data last verified Nov 5, 2026.

A basis write-up: weak versus better (hypothetical)

Both write-ups are invented. The four-part pattern is a suggestion, not a model requirement.

A replacement version. A replacement adds the whole-transaction items of Section 6A(1)(j):

• surrender charges
• a new surrender period
• lost benefits
• higher fees
• whether the new product "would substantially benefit the consumer" over the life of the product
• any other exchange or replacement, "in particular" one within the preceding 60 months

The model gives no number for "substantially benefit". Hypothetical: the old contract is worth $200,000, and a 4 percent surrender charge is 4% x $200,000 = $8,000, so $192,000 moves. The old rider base is $240,000 and the new one starts at $192,000. A benefit base is a number that rider payments are figured from, not cash, so compare the income (how a base and a payout percentage become a yearly check is in the income rider guide). With invented payout rates of 5.0 percent on the old base and 5.5 percent on the new, $240,000 x 0.05 = $12,000 a year against $192,000 x 0.055 = $10,560 a year, which is $1,440 a year less. The file then records whether the replacement would substantially benefit the client compared with the old contract over the life of the product or, as practice rather than model text, that the replacement was not recommended.

For a replacement recommended on 2026-11-05, sixty months back is 2021-11-05, so a prior exchange on 2022-02-10, 56 months and 26 days earlier, falls inside the window. A file that looks back only 36 months, to 2023-11-05, misses it. Michigan's department reported that some companies collect only 36 months of history where the model says 60 (Michigan letter); New York's rule and FINRA Rule 2330 use 36 months. Your state may also have separate replacement rules and notices beyond Model #275; this guide does not cover them. The tax side of an exchange is in the replacement guide.

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Where the file usually lives (practice, not model text)

Section 9 names the records: information collected from the client, disclosures made including summaries of oral ones, and the other information used to make the recommendation. In practice they sit in several places: the carrier application and its attestations, the signed Appendix A, the fact-finder and the CRM notes. The worksheet's "Usually lives in" column names the usual place for each block.

Two public examples of file gaps

• No income comparison (New York insurers). On Apr. 9, 2020 New York's Department of Financial Services issued three consent orders over replacements of deferred annuities with immediate income annuities (consent orders). It found each insurer failed to obtain annuitization information, to disclose adequately and to train and supervise agents. The penalties were $70,000, $172,000 and $692,000 ($934,000 in all). The orders cite Regulations 60 and 187, not the 2020 model.
• System gaps (Michigan). The state's letter lists thin replacement data, a 36-month look-back, text boxes filled without a real basis, and an Appendix A that neither insurer nor producer could produce. It describes insurer systems, not a named party.

These two are examples, not a survey. Both concern insurers. They do not show how often a thin written basis is cited against an individual producer.

Edge cases

• A webinar or an educational tool for the public is not a recommendation by itself: the definition excludes general communication to the public and general educational information and tools. A quote or illustration built around one client's situation, followed by advice to buy, is different. The test is advice to an individual client that was intended to result, or does result, in a purchase, exchange or replacement (Section 5, item M; FAQ Q5).
• A client who decides without your recommendation. If you advised the client to buy, it was a recommendation, and a signed Appendix C does not change that.

Annuities Genius and the file. Annuities Genius gives you one place to keep the client's profile. The reports and analyses you ran for that client sit in the same record. The Qualify menu includes a Suitability Questionnaire, described in the help center as a tool to "assess and document client suitability" (help article 133). Any report, analysis or note you create while a client is selected saves to that client's profile (help article 25). The help center says requirements vary by the carrier, the product and the state (help article 131). Your state's rule and the carrier's forms set what the file must contain.

Training

Section 7 requires one course of at least four credits. The course covers annuity types, the parties, how features affect clients, income taxation of qualified and non-qualified annuities, primary uses, and the standard of conduct, sales practices and the replacement and disclosure requirements. Insurers confirm completion before a producer sells their product. NAIC's FAQ says a producer who has not completed the training may not recommend or sell annuities and may face enforcement action (Q19). Registered representatives are not exempt (Q17). Which other-state courses count differs by state; see the quick card. The licensing side is in Can Medicare agents sell annuities?

FAQ

What is NAIC Model #275? NAIC's Suitability in Annuity Transactions Model Regulation. Its 2020 revisions ask producers to act in the client's best interest and insurers to supervise recommendations. Until a state adopts it, the model binds no one; after that, the state's text controls.

How many states have adopted it? On NAIC's Aug 31, 2026 map: 49 adopted, one pending (DC), New York under other provisions. The count of 48 is from an older map; "all 50" counts New York's own regulation.

Does best interest make an agent a fiduciary, or require monitoring after the sale? Not under the model. The care requirements create a regulatory obligation only and do not by themselves require ongoing monitoring. A separate advising, consulting, planning or fiduciary agreement can add it, and states may word this differently.

Does the safe harbor cover an insurance-only agent? No, under the model. An agent who is not regulated and acting as a registered representative, investment adviser representative or plan fiduciary on the sale must meet the regulation directly.

Is the carrier's suitability review the same as the producer's duty? No. Section 6A is the producer's duty; Section 6C is the insurer's supervision system, including review before issuance. A case-size or net-worth limit comes from the carrier or the state, not the model. Passing one review does not settle the other.

How long must the file be kept? The model leaves the number to each state. In the 18 state texts that give one, it runs from 5 years in 12 states up to 10 years in three states: Minnesota, New Jersey and North Dakota.

What if the client refuses to give financial information, or buys without a recommendation? The model asks for Appendix B signed by the client after a refusal, and Appendix C signed after a purchase made without a recommendation.

Is the training one-time, and does another state's course count? One-time, at least four credits, and under the model similar training from another state counts. Eleven of the 20 texts read say so; Ohio limits it to non-residents, Michigan leaves it to the director, Montana accepts matching course components only, and California requires its own 8-hour course.

Sources

All opened on 2026-11-05 unless a different date is shown. Where a state site refused the connection from the research machine, the Internet Archive copy of the state's own page was read and is named in the matrix.

NAIC and federal

• NAIC, Suitability in Annuity Transactions Model Regulation (#275), Spring 2020 edition.
• NAIC, Implementation of 2020 Revisions to Model #275, status as of Aug 31, 2026 and as of Feb 1, 2025.
• NAIC, Annuity Suitability and Best Interest Standard (page last updated 2/10/2025).
• NAIC, Model Laws state page ST-275, Summer 2025 (the state-chart edition used in the matrix); Government Affairs Brief, Aug 2025 (49 states named, New York not among them).
• NAIC, Annuity Best Interest Regulatory Guidance and Considerations, adopted Dec. 9, 2025.
• NAIC, #275 Best Interest Standard of Conduct Revisions, Frequently Asked Questions, adopted July 19, 2021.
• NAIC, Market Regulation Handbook, Chapter 23, revised 10/4/24 and 2025 Market Regulation Handbook What's New.
• Michigan Department of Insurance and Financial Services, comments to the NAIC working group (undated; file metadata May 2026).
• 17 CFR 240.15l-1, Regulation Best Interest; FINRA Rule 1210; FINRA Rule 1220; FINRA Rule 2330; Investor.gov, Variable Annuities.

State texts. The 20 jurisdictions read, with how each was opened: matrix, sources for the rows read. New Jersey is read from its adoption notice of 2025-04-21 and its readoption notice of 2026-03-16. Its scope sentence (11:4-59A.1), retention rule (11:4-59A.5) and other-state training clause (11:4-59A.4) come from the consolidated code as Cornell Law School's Legal Information Institute (LII) republishes it. The New York row rests on Cornell LII's copy of New York's compiled regulations (11 NYCRR 224.0 to 224.9). Cornell LII is a republisher, not the state's own site.

Cases and letters

• New York Department of Financial Services, consent orders on replacements of deferred annuities, Apr. 9, 2020.
• CFP Board and joint trade-association comment letters of May 11, 2026: see the watch list on the matrix page.

AG help pages linked in the text: help article 25, Working with the Current Client (last updated April 22, 2026); help article 131, What to Gather from a Client or Prospect (last updated August 27, 2026); help article 133, the tools overview (last updated October 13, 2026). The file builder's closing paragraph about the Income Rider Calculator also rests on help article 28, Income Rider Calculator (last updated April 7, 2026).

This guide is educational and is not legal or tax advice. See how Annuities Genius keeps a client's profile and your analyses together: annuitiesgenius.com.