Annuity Suitability and Uses

individual uses of annuities

1. individual retirement annuities 2. tax-deferred growth 3. retirement income--primary purpose 4. education funds 5. to fund life insurance 6. Structured Settlements

Guaranteed Minimum Withdrawal Benefit (GMWB)

A variable annuity rider that guarantees that the owner can withdraw a minimum amount annually without a surrender charge. Annual withdrawals are usually limited to a specified percentage, such as 5 to 10 percent, of total premiums paid.

Annuity

Can be used purely as a means to regularly distribute a given sum of money or can be used to accumulate funds on a tax deferred basis. Well suited when a person needs a guaranteed stream of income payments for life. Ideal solutions for people looking for assurance that they cannot outlive their income.

Guaranteed Minimum Income Benefit

Rider offered under a variable annuity contract promising a minimum life income regardless of contracts value. The deferred VA may be converted to an immediate annuity.

guaranteed min accumulation benefit rider

Special Variable Annuity Riders- guarantees the VA accumulated value will be at least equal to sum of premiums paid after a period of time.

Guaranteed Lifetime Withdrawal Benefit (GLWB)

Variable annuity rider that allows contract owner to receive a lifetime income without having to convert to an immediate annuity. Lets owner access undistributed contract values in addition to income payments already received.

2010 Suitability in Annuity Transactions Model Regulation

establishes a regulatory framework that makes insurers responsible for ensuring that annuity transactions are suitable. -makes state annuity suitability standards consistent with the standards imposed by FINRA -requires carrier-specific training and industry specific training

liquidity provision and riders

some provisions and riders allow distributions without surrender charges. -Charge free withdrawals (withdrawing a specified amount) -terminal illness (most cases death must be expected within 1 yr -disability (owner becomes disabled for a period of time 60days to 1 yr) -long term care (confined to nursing home)