Annuity Stability Part 1

Should the agent review the appropriate Annuity Benefit Summary and Disclosure Form with the consumer?

Absolutely.

What should the agent provide the consumer?

An Annuity Buyer's Guide and other require disclosure statements.

What is one of the largest assets a consumer ever receives?

An inherited traditional (non-Roth) IRA

What is Bankers Life and Casualty Company responsible for?

Bankers Life is responsible for conducting a suitability review and establishing a a supervisory system to ensure agents are compliant with suitability requirements

What steps should the consumer take if they want to handle an annuity without a 1035 exchange?

It could create tax consequences. They should be advised to speak to their tax advisor.

When is it never appropriate to recommend an annuity?

It is NEVER appropriate if the consumer exhibits any signs of diminished mental capacity.

What is the maturity date?

It is the amount of time the interest accumulates and that they can request an earlier date if desired, if the annuity has that feature.

What should the agent do in the end?

Summarize the consumer's needs satisfied by the annuity.

If the premium source is a security that was cashed in within the last 60 days, is the premium source still considered a security?

Yes, even though the funds may currently be in a checking or savings account.

What is the requirement to make reasonable inquiries?

Documented fact finding, needs analysis, and completing any required suitability forms.

What are sine factors must be considered when determining suitability?

-Financial situation, needs, objectives, experience & risk tolerance. -Income, expenses & tax status. -Intended use of the annuity and financial time horizon. -The consumer's age in relation to the annuity's surrender charge period. -Surrender charges or penalties incurred when obtaining the money from the source of funds. -Existing assets, liquidity needs, and net worth. -Any other information or facts disclosed by the consumer and considered by the agent in making a recommendation.

What information must the Agent make certain the consumer is provided regarding their annuity?

-Their 30 day Right to Return Policy -Initial interest rate guarantee and limitations on interest returns -Settlement and Annuitization options -The Surrender Charge Schedule -IRS Penalty Tax -Partial Withdrawals -Death Values Riders

After considering what factors does the agent need to able to state why the annuity replacement is beneficial to the consumer?

-Withdrawal Charges/Surrender Fees -Minimum Interest Guarantees Liquidity Features -Product Features -Comparative Interest Crediting Rates -Bonus (if any) -Tax Consequences (if any) -Comparative Riders -Guaranteed Death Benefit -Monthly Payments (if any)

What are some draw backs to rolling over an inherited IRA?

A new contract may significantly extend the surrender period and tie up funds making them less accessible. A new contract may have a lower guaranteed interest rate than an older one.

What must the agent do to minimize complaints?

Ensure that the annuity owner understands the benefits. Provided by the annuity and how the annuity works. Review the disclosure statement.

What question must the Agent address regarding life insurance protection?

How will the need for life insurance protection will be met if a life insurance policy is replaced by an annuity? And what is the difference in death benefits for both products?

How does the premature distribution penalty tax apply for qualified annuities?

It may apply to the entire value withdrawn from the annuity.

For those under the age of 59 1/2, when does the premature distribution penalty tax apply?

It only applies for non-qualified annuities.

What factor does this question consider? Are the free withdrawal and annuitization provisions of the annuity adequate relative to the consumer's needs and other assets available? Does the consumer have additional assets available for emergency?

Liquidity Needs

Should the agent compare the safety of an annuity to a certificate of deposit?

No. Annuities are underwritten by insurance companies and are not FDIC insured

Should indexed annuities be characterized as having no risk or no risk of loss?

No. Indexed annuity risked include missing potential index gains due to interest crediting limits, only earning the Minimum Guaranteed Cash Surrender Value, withdrawal charges being deducted from the Account Value if the annuity is surrendered early, among others.

When wound the consumer owe taxes on an inherited IRA?

Once he or she begins to receive distributions.

Are the Fixed Annuity and Credited Interest protected from the market?

Yes, they are backed by the assets of the insurance company.

Can IRA's inherited by a spouse be treated as their own by the consumer?

Yes, they become the IRA owner and can make contributions, roll it over to another IRA, and designate their own beneficiaries.

What publications provide detailed information on the subjects of inherited IRAs?

Publications 590-A 590-B

What are recommendations to clients or prospective clients based on?

Recommendations regarding the purchase, sale, exchange or replacement of a policy or contract is to be supported by reasonable grounds for belief that the product is suitable. The agent should consider the consumer's: Financial status Health Investment objectives Need for insurance

What factor does this question consider? Does the consumer understand the rate risk and accept the volatility of future earnings?

Risk Factor Although fixed and indexed annuities both project principal and earnings from market risk, future growth could be higher or lower than current rates

When conducting an annuity sale, should the beneficiary be involved?

Sometimes. Beneficiaries may have different financial objectives and opinions than the consumer. The agen should ask the consumer if beneficiaries should be involved at the time of sale.

What is the premium source?

The Bank or an existing annuity

If the premium source is derived from another annuity that was previously surrendered and cashed in, what must the agent do?

The agent must take note of this and any required replacement forms must be completed.

Under what condition can an application be submitted if the applicant has any sign of diminished mental capacity?

The application must be authorized by the owner's Power of Attorney.

Are there certain circumstances when the premature distribution penalty will not apply?

Yes.

How are tax-qualified products treated?

The taxable gain may be on the whole amount paid out.

What should I explain about withdrawals?

There are free withdrawal provisions and consequences for early withdrawal or withdrawal in excess.

What are agents responsible for?

They are responsible for recommending annuities that are suitable and in the best interest of the consumer

What does a satisfied annuity owner understand?

They understand why buying the annuity solves his/her needs or problems.

What factor does this question consider? Is the annuity appropriate given the future needs of the consumer?

Time Horizon Annuities are designed to be long-term accumulation instruments.

Are annuities purchased in a retirement plan tax deferred?

Yes, if the annuity in a qualified retirement plan, it is tax deferred.

Does the discussion or sale of securities require an appropriate license?

Yes, it requires an appropriate securities license, affiliation with a broker/dealer, and may also require registration as an investment advisor, in addition to holding certain licenses.