FAQs Regarding Suitability, Modified Recommendations, and Training Requirements (Reg 187)

Guidance Date: January 31, 2025 

1) Question: Does Regulation 187 require a producer to always obtain and consider all suitability information listed in section 224.3(g)(1) of the regulation when providing term life insurance with no cash value?

Answer:  No, for a policy solely providing term life insurance with no cash value, producers must consider suitability information that is "reasonably appropriate to determine the suitability of a recommendation commensurate with the materiality of the transaction to a consumer’s financial situation at the time of the recommendation and the complexity of the transaction". This includes some or all of the suitability information in section 224.3(g)(1), depending on the information’s relevance and materiality to a particular consumer’s situation and needs. 

Citation: 11 NYCRR 224.3(g)(1) 

2) Question:  After a consumer applies for a life insurance policy and pays the initial premium, as recommended by the producer, the insurer conducts underwriting to determine the premium class to which the consumer is assigned.  If the consumer is assigned to a premium class other than the class anticipated at the time of application, the producer’s recommendation may change from the initial recommendation at the time of application.  

Is it permissible for the producer to make the initial recommendation to purchase the policy without complying with the regulation (i.e. not collect suitability information, not provide any disclosure to the consumer, not act in the best interest of the consumer, etc.) and only comply with the regulation when the producer determines whether the consumer should take the policy as applied for or request a modification? 

Answer:  No, producers must act in the best interest of consumers both at the time of initial recommendation and at the time of any modified recommendation. Moving the best interest standard and disclosure requirements to the end of the sales process would frustrate the purpose of the regulation and would harm consumers. The producer needs to collect information about the consumer and provide disclosure about the product and the recommendation to the consumer before the consumer applies for and pays the initial premium for the life insurance policy.  This would include sharing with the consumer information about the potential cost of the policy. Later, when the premium rate class is confirmed, if the consumer is assigned to the premium rate class that was expected, there may be nothing further to consider.  If the consumer is assigned to a different premium rate class than expected, a second recommendation may occur, such as lowering the face amount to keep the premium within the range of what is affordable to the consumer. This second recommendation should be based on the suitability information initially collected and any new relevant information such as the premium rate class to which the consumer was assigned.   

Citation: 11 NYCRR 224.4 

3) Question: Where a producer sells products for more than one insurer, does Regulation 187 permit one training course to satisfy the training requirement for more than one insurer?  

Answer:  Yes, it is permissible under Regulation 187 for the same training course to satisfy the training requirements for more than one insurer, but it is the insurer who determines which course or courses are acceptable under the insurer’s system of supervision.  

Citation: 11 NYCRR 224.6 (b) and (e)