ANNUITY 8-HOUR TRAINING COURSE - california …

1 ANNUITY 8-HOUR TRAINING COURSE 201 History, 5 ANNUITY Classifications, 9 Parties to an ANNUITY , 14 Contract Provisions, 27 Taxation of Annuities, 59 Qualified Plans & Annuities, 66 Use of Annuities, 72 The Senior Market, 82 Selling california Annuities, 95 ANNUITY Reserves, 115 State Guaranty Funds, 119 Attachments, 121 iPad and Tablet Users See DEMO & Links Above Index Accumulation 59 Advantages of annuities 77 Advertising 17 Advertising defined 97 Advertising seminars 98 Advertising to seniors 17 Advertising to seniors 95 Advertising, direct mailers 98 Advertising, insurance required 97 Advertising, internet 97 Advertising, required info 97 Advertising, seminars 97 Age 60+, disadvantage of ANNUITY 80 Agent duties 23 Agent knowledge 105 Agents and ratings 23 Annual reset 53 Annual statements 20 Annuitant-driven contract 14 Annuities and Medi-Cal 88 Annuities in retirement 70 Annuities in retirement, downside 118 Annuities vs.

2 Other investments 80 Annuities, advantages 77 Annuities, disadvantages 78 Annuitization and taxes 77 Annuitization options 35 Annuitization options 76 ANNUITY basics 9 ANNUITY benefits distribution 63 ANNUITY distributions 74 ANNUITY gift 61 ANNUITY markets & buyers 66 ANNUITY owners, 60+ 80 ANNUITY owners, under 60 years 79 ANNUITY riders 55 ANNUITY sale 62 ANNUITY suitability 109 ANNUITY titling, importance of 15 ANNUITY types 9 ANNUITY units 44 ANNUITY , who buys them 67 Attachment I: Legislative Reference 121 Attachment II: Trust Mills 121 Attachment III: Agent Disclosures 121 Bait and switch 106 Banded or new money company 38 Beneficiary tax issues 64 Benton v. Paul Revere 23 california ANNUITY legislation 7 Cancellations and refunds 113 Cap rates 53 Cash value accrual 59 CD annuities 38 Charges and fees 29 Choosing annuities 49 Company ratings 21 Company-managed variable ANNUITY 40 Compound vs simple interest 72 Computing taxable and deferred income 73 Consumers & Annuities at retirement 117 Crediting of interest 37 Crisis waiver 56 Crisis waivers 28 Death benefit guarantees 46 Death benefit, non-qual ANNUITY owner 62 Death benefits 37 Death of annuitant 63 Death of ANNUITY owner 62 Death waiver 28 Death waiver 28 Deferred & immediate annuities.

3 Differ 9 Deferred annuities 10 Detrimental reliance 99 Difference between products 23 Direct mailers 98 Disability waiver 29 Disadvantage of annuities 78 Disadvantage of ANNUITY , age 60+ 80 Disclaimers 65 Disclosure 25 Disclosures 113 Distribution of ANNUITY , qual plan 62 Dollar cost averaging 46 Downside, ANNUITY in retirement 118 Equity ANNUITY options 49 Ethics 92 Evolution of annuities 5 Exchanges 60 Exclusion ratio 63 Fixed annuities, in brief 12 Fixed ANNUITY contracts 36 Fixed ANNUITY investments, risk 36 Flexible premium annuities 11 Free look, variable ANNUITY 113 Free-look provisions 18 Full disclosure 112 Gain, variable ANNUITY 12 Gift of ANNUITY 61 Guaranty funds dollar limits 120 Guaranty funds limitations 119 High-water mark 52 Historical motivation to buy annuities 6 Identifying needs 112 Illustrations 19 Immediate & deferred annuities, differ 9 Immediate annuities 10 Indexed annuities, in brief 12 Indexing 50 In-home solicitation 103 Insurer ratings 22 Interest rates & compensation 27 Investing retirement assets 85 Investment authority, fixed ANNUITY 36 Investment mix 42 Investor consideration, variable ANNUITY 48 Issue ages 27 Joint and last survivor 76 Justify replacement 104 Legal responsibility, products 23 Life vs.

4 ANNUITY reserves 115 Living benefit guarantee 55 Loan provisions 56 Long term care 89 Long term care rider 56 Long term investing 74 Market overview 8 Market value adjustment 33 Maximum age for benefits 27 Medi-Cal 87 Medi-Cal and annuities 100 Medi-Cal restrictions 102 Minimum interest guarantee 39 Minimum interest guarantees 54 Misleading advertising 17 Monthly averaging 51 NAIC disclosure, qualified plans 70 NAIC, annuities in qualf plan 70 Needs analysis 93 New money or banded company 38 Non-qualified plans 32 Nursing home waiver 28 Owner, non-qual ANNUITY death benefit 62 Owner-driven ANNUITY contracts 14 Partial withdrawals 59 Participation rates 53 Parties to an ANNUITY 14 Penalties 108 Period Certain 31 Period certain & Refund 31 Period certain ANNUITY option 31 Point to point 52 Policy charges and fees 34 Portfolio ANNUITY , renewals 38 Post-retirement planning 83 Premature surrender 55 Premium payments 29 Premium restrictions 11 Premiums and taxes 58 Pre-retirement planning 82 Products and practices 7 Qualified plan.

5 Distribution of ANNUITY 62 Qualified v Non-qualified annuities 21 Reasonable expectation 99 Record keeping 112 Refund option 32 Refund option 32 Replacement 19 Replacement 104 Replacement, justify 104 Reserves 115 Reserves and sales 116 Risk and return 6 Risk and seniors 82 Risk of variable ANNUITY 48 Role of agents 23 Role of annuitants 16 Role of ANNUITY owners 14 Role of beneficiaries 17 Role of insurers 17 Rule of 108 74 Rule of 72 73 Sales of ANNUITY 61 Sales practices 98 Self-directed variable ANNUITY 41 Selling california annuities 95 Selling seniors 90 Seminar advertising 98 Senior competence 91 Senior continuum 91 Senior health insurance 86 Senior insurance concerns 85 Seniors and risk 82 Seniors and surrender charges 33 Seniors judgment impaired.

6 Symptoms 92 Settlement options 30 Sharing commissions 104 Single premium annuities 10 Specimen policies 26 Split ANNUITY 75 Spreads 53 State Guaranty Funds 119 Stock market 67 Straight life settlement 31 Structuring annuities 15 Substantial financial benefit 105 Suitability 109 Suitability conduct 110 Surrender charges 20 Surrender charges 32 Suspension 107 Symptoms, impair senior judgment 92 Tax qualified plans 32 Taxation of Annuities 58 Tax-deferred compounding 72 Tax-deferred vs taxable income 72 Tax-free income 74 Terminal illness waiver 29 Trust mills 106 Two tied annuities 38 Unemployment waiver 29 Unlawful practices 107 Variable annuities, in brief 11 Variable ANNUITY contracts 39 Variable ANNUITY gain 12 Variable ANNUITY options 40 Variable ANNUITY risk 48 Variable ANNUITY , free look 113 Variable ANNUITY , investor consideration 48 Withdrawal options 34 5 PART I: Historical Development THE EVOLUTION OF ANNUITY PRODUCTS Impressive Beginnings English and European cultures have long embraced the ANNUITY .

7 You may have read English literature novels, for instance, where annuities were described as the favored investment vehicle of many mid-18th century upper class families. Stories were told of the comfortable, secure life led by ANNUITY holders in marked contrast to many volatile and speculative investments of the time. 1 Annuities in America appeared during the 18th century, however, not as investments for the general public. Actually, a group of Presbyterian ministers and their families were the first to be able to contribute to a special fund in exchange for lifetime payments. It wasn't until the early 1900's, however, that the first commercially sold annuities were offered through the Pennsylvania Company for Insurance.

8 2 In the late 1930's, concerns of our Nation's financial markets prompted a surge in individual ANNUITY purchases because, in the middle of the depression, insurance companies were thought to be stable institutions that good make good on their promises to pay. Americans were preoccupied with finding a safe place to save and annuities were viewed as such. Unfortunately, insurers sustained losses on most ANNUITY contracts with the "squeeze" of falling rates of return and the rising longevity of annuitants -- an assumption not made by most insurance underwritiers. By the end of WWII, annuities made a comeback on the heels of new group sales connected to defined benefit pension plans.

9 Keep in mind that annuities back then and for many years thereafter were quite different than the sophisticated choices of today. Contracts, for example, simply guaranteed a return of principal along with a fixed return from the insurance company. Withdrawals were usually limited to a choice between a fixed income for life or payments over a set number of years. ANNUITY investing was about as simple as it could be. Taxation and Interest Sensitive Attractions Annuities have also maintained an advantage over other forms of investing in that the interest earned is tax deferred. This was a special exemption built-in for insurance companies that has allowed ANNUITY buyers to accumulate savings without taxes.

10 In essence, they have been able to put the time value of money on their side. Everything was fine, as long as you were happy with a fixed return. Years later, a new wrinkle was added .. interest sensitive earnings. Believe or not, the variable ANNUITY was created way back in 1952. ANNUITY holders could now get interest credit based on the performance of a separate account within the ANNUITY . They could also choose what kind of account they wanted and often received modest guarantees in exchange for a greater risk. 1 , History of Annuities 2 , History of Annuities 6 Historical Motivation If you ask someone to react to the prospect of an investment that offers them a guaranteed annual income after they retire, no matter how long they live, you might expect, a lot of interest.