Now that the Labor Department's final fiduciary rule has been released, what does it mean for companies selling annuities and how will they comply?

Related: 5 plan providers on the DOL fiduciary rule's effects

Following are five questions and answers that shed light on some of the most pressings questions about how annuities sales will work under the rule, including how proprietary products will be affected and how to determine whether an annuity is in a client's best interest.

1. How does the Department of Labor fiduciary standard impact advisors who sell or provide advice with respect to fixed indexed or variable annuity products?

Under the final Department of Labor fiduciary rule, fixed indexed annuity products and variable annuity products will be subject to the best interest contract exemption. Many in the industry had expected that fixed indexed annuities would continue to be covered by prohibited transaction exemption PTE 84-24, which is an exemption that protects compliant advisors from IRS penalties that may apply if the advisor enters a prohibited transaction (simpler products, such as immediate annuities, will continue to be covered by PTE 84-24).

Generally, it is expected that the cost of compliance — and the risk of penalty for noncompliance — will be much steeper for advisors who must comply with the best interest contract exemption requirements. Therefore, many expect that the cost of selling fixed indexed or variable annuity products will increase.

Recognizing the potential compliance burdens that the new standard may generate, the final DOL rule provides for a delay in the time period when the contract required by the best interest contract exemption must be signed. The contract may be signed as a part of the transaction execution documents, rather than before the advice related to the product is provided — basically, this means that the contract can be executed at the same time the client completes the rest of the paperwork necessary to complete the purchase of the annuity. The fiduciary standard, however, will apply to all discussions, even those that occur before the contract is executed.

The final rule also contains a grandfathering provision which allows existing transactions to continue on their current commission basis.

The DOL has provided a one-year implementation period, so that advisors have until one year after publication of the final rule to comply, rather than the 8-month period that was widely expected. Implementation of the rule will take place in phases — full compliance with the requirements pertaining to the disclosures, development of policies and procedures and contract execution components of the best interest contract exemption will not be required until Jan. 1, 2018.

The final DOL rule also eliminates two disclosure requirements that many felt would be overly burdensome, especially with respect to index-linked annuity products: the requirement that advisors provide one-, five- and ten-year projections to clients and the annual disclosure requirement.