A “non-resident sale” (a.k.a. “cross-border sale”) occurs whenever a customer buys a life insurance policy or an annuity contract outside his or her state of residence. There is increased focus among state insurance departments concerning transactions in which residents of their states are sold insurance products outside their jurisdiction. The insurance departments want to protect citizens from purchasing products that have not been approved in their respective states and to ensure that only properly licensed agents and companies are doing business with their residents. In fact, certain state insurance departments prohibit cross-border sales to residents of their states regardless of the circumstances or the connection to the non-resident state.

Effective April 11, 2022, Protective is not able to accept applications for cross-border sales to residents of the Minnesota, Mississippi and Utah.

Even in states that allow cross-border sales, there should be a rational connection between the applicant/owner and the non-resident state in which the sale occurs (such as place of employment, vacation home, etc.). The applicant/owner should not be in the non-resident state at the time of application solely for the purpose of purchasing a product.

Likewise, if you sell products in jurisdictions outside of your own state of residence, you must maintain the appropriate non-resident license(s) and only sell products approved in those non-resident states. In addition, you must be familiar and comply with all rules and regulations in each state for which a non-resident license is held.

General rules regarding non-resident sales:

• Do not represent yourself as an agent in any state in which you are not licensed.
• Verify product and forms involved are approved/available for sale in the applicant’s state of residence.
• Do not advise a prospect to travel to another state due to product availability or product/rate differences.
• Do not act as a proxy for another agent who is not properly licensed in the state of solicitation and sale.
• Maintain clear documentation as to why a sale occurred in a non-resident state.
• For trust owned policies, the contract state and application form must be based on the trust situs state.
• For corporate/business owned policies, contract and application must be based on the business address.
• All application forms should be signed in the applicant’s state of residence.
• The solicitation, application, premium collection and policy delivery must all occur in the same state.

For any non-resident sale, a cross-border sales certification (PLX-425) must be submitted with the application. For New York cross-border sales, this new form will replace the Non-Licensed Territory Declaration form.

If you have questions about the particular rules for your circumstance, or for additional support, contact us at 877-778-3500, option 1.