Colorado Life Producer License Practice Test

What must an insurance producer provide with an application for an annuity contract?

1. Summary of policies

2. Disclosure document and buyer's guide

3. Sample contract

4. High-level overview

The correct answer is: Disclosure document and buyer's guide

When an insurance producer submits an application for an annuity contract, it is required to include a disclosure document and buyer's guide. These materials serve important purposes in the context of selling annuities. The disclosure document provides detailed information about the terms, features, costs, and risks associated with the annuity product, ensuring that the prospective buyer has a clear understanding of what they are purchasing. The buyer's guide complements this by offering general information about annuities, helping consumers make informed decisions based on their personal financial situations and investment goals. Including these documents not only fulfills regulatory requirements but also promotes transparency and trust between the producer and the consumer. This practice aligns with consumer protection laws that aim to ensure that individuals are aware of the nuances and implications of the financial products they are considering. In contrast, options such as a summary of policies or a sample contract may not provide the comprehensive information necessary for informed decision-making. A high-level overview might be too vague to assist the consumer adequately in understanding the complexities of annuities. Thus, the requirement for a disclosure document and buyer's guide stands out as essential for fulfilling both legal obligations and ethical sales practices.