State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
California's annuity suitability rule does NOT apply to which of the following transactions?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under Section 10509.912, the suitability article does not apply to direct response solicitations where there is no recommendation based on suitability information collected from the consumer. Other exceptions include contracts funding ERISA plans, employer-established 401(k)/403(b)/457 plans, nonqualified deferred compensation arrangements, personal injury litigation settlements, and formal prepaid funeral contracts. Agent-recommended sales with collected suitability data remain covered.
Why the other options are wrong
- B) A face-to-face agent sale with a recommendation falls squarely within the suitability rule.
- C) Aggressive-growth objectives are one of the suitability factors to collect, not an exemption from the rule.
- D) An exchange or replacement recommended to a client triggers suitability review; it is not carved out of the rule.
Memory hook
Suitability rule takes a pass only when there is no recommendation — like a silent direct-response mailer.