The following words and phrases when used in this article shall have the meanings given to them in this section unless the context clearly indicates otherwise:

“Annuity.” An annuity that is an insurance product and is individually solicited, whether the insurance product is classified as an individual or group annuity.

“Cash compensation.” A discount, concession, fee, service fee, commission, sales charge, loan, override or cash benefit received by a producer in connection with the recommendation or sale of an annuity from an insurer, intermediary or directly from the consumer.

“Commissioner.” The Insurance Commissioner of the Commonwealth.

“Consumer profile information.” Information that is reasonably appropriate to determine whether a recommendation addresses the consumer's financial situation, insurance needs and financial objectives, including, at a minimum, the following:

“Continuing education credit.” One continuing education credit under section 608-A of the act of May 17, 1921 (P.L. 789, No. 285),¹ known as The Insurance Department Act of 1921.

“Continuing education provider.” An individual or entity approved to offer continuing education courses under section 608-A of The Insurance Department Act of 1921.

“Department.” The Insurance Department of the Commonwealth.

“Employee Retirement Income Security Act.” The Employee Retirement Income Security Act of 1974 (Public Law 93-406, 88 Stat. 829).

“FINRA.” The Financial Industry Regulatory Authority or a succeeding agency.

“General agent.” An insurance producer that provides supervision on behalf of an insurer to an insurer’s sales force in a particular geographic region or territory.

“Insurer.” A life insurance company licensed or required to be licensed under section 202² or a fraternal benefit society as defined in section 2403.³

“Intermediary.” An entity contracted directly with an insurer or with another entity contracted with an insurer to facilitate the sale of the insurer’s annuities by producers.

“Internal Revenue Code.” The Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

“Material conflict of interest.” A financial interest of the producer in the sale of an annuity that a reasonable person would expect to influence the impartiality of a recommendation. The term does not include cash compensation or non-cash compensation.

“Non-cash compensation.” A form of compensation that is not cash compensation, including health insurance, office rent, office support and retirement benefits.

“Non-guaranteed elements.” The premiums, credited interest rates, including any bonus, benefits, values, dividends, non-interest based credits, charges or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered non-guaranteed if any of the underlying non-guaranteed elements are used in its calculation.

“Producer.” A person or entity required to be licensed under the laws of this Commonwealth to sell, solicit or negotiate insurance, including annuities. For purposes of this article, “producer” includes an insurer where no producer is involved.

“Recommendation.” Advice provided by a producer to an individual that was intended to result or does result in a purchase, an exchange or a replacement of an annuity in accordance with that advice. The term does not include general communication to the public, generalized customer service assistance or administrative support, general educational information and tools, prospectuses or other product and sales material.

“Replace” or “replacement.” The purchase of a new annuity where it is known or should be known to the proposing producer, or to the proposing insurer whether or not a producer is involved, that by reason of the transaction, an existing annuity or other insurance policy has been or will be any of the following:

“SEC.” The United States Securities and Exchange Commission.