Out of State

[Newby]

I have offices in Indiana and KY that are only 15 miles from each other. I had a guy two months ago that wanted to add an additional annuity and he was a KY resident but wanted to meet at my Indiana office because he had a doctor's appointment over here (KY doctors and hospitals are not good).

I had to fill out extra forms and talk to the compliance people before they issued it. And this is a product that is available in both states and I'm licensed in both states. There was no reason for the out of state forms other than convenience to the customer.

 

[moonlightandmargaritas]

You can easily find an application for a non resident license by going on that state's Department of insurance website. They should have an application you can fill out and send in.

What? It's easier to just go to the National Insurance Producer Registry. nipr.com. You can get licensed in ANY of the 50 states....

 

[Josh]

Again, it cant be done unless the client has a residence in the other state... its the law.

False.

A lot of this hinges around where it was advertised.

Every month agents get fined and penalized for selling out of state products and it's not worth it. If you really believe the product that is best for the client is in another state then have them go to an agent in that other state and do the paperwork. If a client came to you in your state and said I need this product that is only available in your state *most* carriers are going to be fine with it. If you live 10 minutes from the border and you stopped their to get coffee and sign an app while the presentation/explanation was done in your home state, no dice. I live in VA and I could go to Florida and buy an annuity, but if my local agent wanted me to meet them in Florida the carrier would ask a lot of questions and probably not let it fly.

 

[scagnt83]

False.

A lot of this hinges around where it was advertised.

Every month agents get fined and penalized for selling out of state products and it's not worth it. If you really believe the product that is best for the client is in another state then have them go to an agent in that other state and do the paperwork. If a client came to you in your state and said I need this product that is only available in your state *most* carriers are going to be fine with it. If you live 10 minutes from the border and you stopped their to get coffee and sign an app while the presentation/explanation was done in your home state, no dice. I live in VA and I could go to Florida and buy an annuity, but if my local agent wanted me to meet them in Florida the carrier would ask a lot of questions and probably not let it fly.

Not true at all.

You can not go to FL to buy an annuity just because you want to. You have to have a reason. And if it is to get around state law (like the OPs question was about) it is very much illegal to do, not to mention prohibited by the carriers.

Determination of contract state is called SITUS.

SITUS is determined by a combination of state laws and company regulations.

But almost EVERY state has a law that states it is illegal to purchase a policy in that state just to get around the state laws in a different state.

Go look it up.


Also,
Most insurers have this clause in their SITUS guidelines as well.

So not only is it state law in most states but it is company regs with most carriers.



SITUS is usually determined by where the contract was SOLICITED, SIGNED, & DELIVERED.
Many companies/states also take into account the primary address of the owner/payor.


But what is uniform across the country is that you can not go to another state just to get around your state's laws.
And most every carrier states that in their SITUS Guidelines or Market Conduct Manual.


Straight from LFG:

Under no circumstances should an application be signed in a different state from where the owner/applicant or insured/
annuitant resides or works for any of the following situations:

• You are not licensed where the applicant resides or works.

• The product being purchased is not available in the applicant’s state of residence or employment.

• The product being purchased has a different compensation structure in a state that is different from the applicant’s
state of residence or employment.
• You do not want to complete regulatory requirements in a particular state, e.g., New York Regulation 60.


The bolded part above is exactly what the OP is asking about. And is expressly prohibited by most all carriers and state DOIs.

 

[Josh]

Not true at all.

You can not go to FL to buy an annuity just because you want to. You have to have a reason. And if it is to get around state law (like the OPs question was about) it is very much illegal to do, not to mention prohibited by the carriers.

Determination of contract state is called SITUS.

SITUS is determined by a combination of state laws and company regulations.

But almost EVERY state has a law that states it is illegal to purchase a policy in that state just to get around the state laws in a different state.

Go look it up.


Also,
Most insurers have this clause in their SITUS guidelines as well.

So not only is it state law in most states but it is company regs with most carriers.



SITUS is usually determined by where the contract was SOLICITED, SIGNED, & DELIVERED.
Many companies/states also take into account the primary address of the owner/payor.


But what is uniform across the country is that you can not go to another state just to get around your state's laws.
And most every carrier states that in their SITUS Guidelines or Market Conduct Manual.


Straight from LFG:

Under no circumstances should an application be signed in a different state from where the owner/applicant or insured/
annuitant resides or works for any of the following situations:
• You are not licensed where the applicant resides or works.

• The product being purchased is not available in the applicant’s state of residence or employment.

• The product being purchased has a different compensation structure in a state that is different from the applicant’s
state of residence or employment.
• You do not want to complete regulatory requirements in a particular state, e.g., New York Regulation 60.


The bolded part above is exactly what the OP is asking about. And is expressly prohibited by most all carriers and state DOIs.

Let's be clear here, you're changing up your position a bit to make it more defensible. You're also citing what one carriers official position is. Earlier you said "it's the law", now you're not pointing to the law, you're pointing to a carriers position.

So you cant just cross state lines to sign the papers. The client would need an actual residence/business in the other state...

You can't cross the line just to sign the papers, but the client doesn't necessarily need a residence/business in the other state. For example, if I was out visiting my family in NY and saw an advertisement/seminar for a product I liked, there is no law saying I couldn't buy it there. Similar scenario, my broker tells me he's going to NY next weekend and that if I join him I can get an extra 1% on my annuity because NY has great products, that's illegal.


Do you have a citation on the law that says I can't visit another state to see what insurance products they have and buy something there? I think it remarkably unlikely anyone would do that and as a result of that I can see why carriers would have policies against what 90% of the time would probably be an agent (un)intentionally trying to skirt the law, but I have never seen or heard of a law that says if you're from one state you can't buy insurance in another state.

I'm also not aware of any products in NY worth visiting to get

 

[scagnt83]

Let's be clear here, you're changing up your position a bit to make it more defensible. You're also citing what one carriers official position is. Earlier you said "it's the law", now you're not pointing to the law, you're pointing to a carriers position.

Do you have a citation on the law that says I can't visit another state to see what insurance products they have and buy something there?

Im not changing position at all. I have posted in this thread in relation to the situation the OP described. Go back and read the 1st post. The intent of crossing state lines is to get around his residential state's laws.


And I used one carrier as an example... to help illustrate a point.

If you want me to post SITUS Guidelines from every carrier that I have access to I charge $100 per hour.


Also, SITUS guidelines are based on a cumulative overview of state laws that the carrier does business in.... (SITUS is a legal term....)


If you want me to go and look through all 97 chapters of Title 38 of the SC Code (or any other state), again I charge $100 per hour. Not trying to be an a##, but it is just not a realistic expectation.

How do I know it is law? Because I have been in the business for 9 years and have heard multiple stories about things like this. Plus SITUS Guidelines are based on the laws of the various states an insurer does biz in.
Also, I have sold a large amount of policies in the business market where the Insured and Owner were different parties and in different states. I would dare to say that I have a good deal more experience with SITUS laws than the average agent.


There was a large legal battle once in CA over this subject. I forget which company it was now. But basically they were accused of breaking CA law because they had found a loophole in association contracts that allowed them to sell CO policies in the state of CA (that did not conform to CA law).

Basically the verdict was that if the Contract Owner resides in the state of CA, then they are subject to CA Insurance Law. If they dont want to be subject to CA insurance law then they can move their residence/business to another state.


Yes, again that is just one example.... and no I do not have an example from all 50 states...

But it is fairly well known that you just cant cross state lines just to get a policy not offered in your home state.


Plus when the agent send in that contract, and compliance sees no address at all in the state it was written in; the first question they will ask is "what business does the Owner have in the Application State?". And if he has no permanent business/residence in that state it will be denied... and yes it is denied because of company policy.... but what do you think that policy is based on?????
(state laws that they must abide by)


Josh, do you not remember the big debate before Ocare about the Feds making it legal to buy HI policies out of state??? There was a debate about it because it is illegal to buy HI in a non-resident state... along with all other forms of insurance... you have to have a reason other than (I want an unapproved policy).

 

[Josh]

Im not changing position at all. I have posted in this thread in relation to the situation the OP described. Go back and read the 1st post. The intent of crossing state lines is to get around his residential state's laws.


And I used one carrier as an example... to help illustrate a point.

If you want me to post SITUS Guidelines from every carrier that I have access to I charge $100 per hour.

You said it was the law and then you pointed to carrier references, not the law. Obviously I'm not going to pay you to back up a claim you made on the internet when you changed your position. You said it was illegal. I'm not disputing it's a terrible idea, but in backing up your claim that it was illegal you've provided zero legal citations, just carrier references.

It also looks like you're assuming something that wasn't explicit in the 1st post. If you go back and read the 1st post the OP says the *client* wants a product in another state. He didn't say that he recommended a product in another state, he said that the client wants an annuity in another state. If the customer was savvy enough to do research and wanted to get a product in another state, while a carrier might not like it, the reason for the out of state product is because the client wants a better product they found, not because the agent is attempting to skirt the law.

Again, that being said, it's entirely possible that he's just saying it this way to cover his backside, but he isn't saying he wants to dodge his state laws to go through an easier/simpler/better paying process with another state.

 

[scagnt83]

You said it was the law and then you pointed to carrier references, not the law. Obviously I'm not going to pay you to back up a claim you made on the internet when you changed your position. You said it was illegal. I'm not disputing it's a terrible idea, but in backing up your claim that it was illegal you've provided zero legal citations, just carrier references.

First, I havent changed my position. It is illegal.

And again, SITUS Guidelines are based on the state laws that the carrier does business in. SITUS is a well known legal term in contract law. It means "where a contract is held or located under the law".

Carrier SITUS Guidelines are created by the Compliance Dept (Legal Dept).

Also, refer to the end of my post about the HI debate.

Its law. Its illegal to purchase insurance out of state just for the sake of getting around state insurance law. Like I said, big legal battle in CA over that back in early 2000s.

 

[Josh]

Here's what I think is going on. You're clearly a smart guy with a lot of experience in this and convinced you're right. With us both being keyboard jockeys we could debate this in length and detail for days if not weeks.

Carriers don't just make guidelines based on the law, they also do things to limit exposure based on perceived infractions. You have yet to point to any actual legal code stating it's illegal to purchase insurance from another state. A compliance department wants to stay as far away from the line as possible.

So to put it really simple, and I don't expect you to spend time researching this, but can you point to a single law in a specific state that actually says it's illegal to buy insurance in another state. The whole HI debate is more of a states rights issue (among others), one of the ways a state protects it's residents is by regulating insurance to make sure products are viable and safe. If VA wants to protect it's residents with certain requirements and VT believes in "do what you feel", a VA resident could buy a "do what you feel" policy. The constitution says insurance should be regulated at the state level.


The really short version is you claim it's illegal, I challenge that, we both agree it's a bad idea. I really have no interest in debating this with you for any length of time. Even if it is legal, it's asking for trouble. If you insist that you're right and would like to show state laws backing it up, not the result of compliance departments interpreting what they think the best practices are, then your claim it's illegal would certainly be substantiated.

 

[scagnt83]

It also looks like you're assuming something that wasn't explicit in the 1st post. If you go back and read the 1st post the OP says the *client* wants a product in another state. He didn't say that he recommended a product in another state, he said that the client wants an annuity in another state. If the customer was savvy enough to do research and wanted to get a product in another state, while a carrier might not like it, the reason for the out of state product is because the client wants a better product they found, not because the agent is attempting to skirt the law.

And if you bother to read the entire thread; you will find out that it is a competing agent who is wanting the client to do this, not the OP.


Again, this is a subject that I have a good deal of first hand experience with. You can choose not to believe me, I really could care less.

It is illegal to do. If you dont believe me look it up yourself. Why can you not buy an out of state HI policy but you think you can with Annuities??? It has nothing to do with the networks, it is about the LAW.

----------

The whole HI debate is more of a states rights issue (among others), one of the ways a state protects it's residents is by regulating insurance to make sure products are viable and safe. If VA wants to protect it's residents with certain requirements and VT believes in "do what you feel", a VA resident could buy a "do what you feel" policy. The constitution says insurance should be regulated at the state level.

No. the HI debate is about state insurance law... always has been.

People used to say "make it legal to buy insurance across state lines".