Annuity Investing for Retirement, Part 2
Table of Contents
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Chapter 6: Annuity Riders |
227 |
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Riders and Annuities / Long-Term Care Benefits |
227 |
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A Long-Term Care Rider is not a Premium Waiver |
228 |
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Guaranteed Minimum Withdrawal Benefit Rider (GMWB) |
228 |
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Guaranteed Minimum Income Benefit Rider (GMIB) |
230 |
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Guaranteed Minimum Death Benefit Rider (GMDB) / Required Premium / How a GMDB Rider Works |
232 |
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Available Benefit Periods / Policy Loans |
233 |
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Life Insurance Riders / What is a Life Insurance Rider? |
233 |
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Guaranteed Insurability Rider (Renewal Provision) / Spouse Insurance Rider |
234 |
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Accidental Death or Double Indemnity Rider / Waiver of Premium Rider |
234 |
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Family Income Benefit Rider / Accelerated Death Benefit Rider / Child Term Rider / LTC Rider |
235 |
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Return of Premium Rider / Other Riders |
236 |
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Chapter 7: Annuitization Options |
237 |
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Withdrawal Privilege Options |
238 |
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Annuitization Ramifications |
239 |
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Qualified and Non-Qualified Annuity Annuitization |
239 |
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Annuitizing the Contract / Life-time Income, Lifetime and Period Certain, Period Certain |
241 |
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Lump Sum, and Joint-and-Survivorship |
242 |
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Example |
243 |
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Nonhuman Payees under a Settlement Option |
244 |
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Lifetime Income Payout Option |
245 |
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Life Annuity, Period Certain Payout Option |
245 |
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Joint-and-Last Survivor Payout Option / Specific Dollar Amount Annuitization |
246 |
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Required Distribution |
247 |
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Loan Provisions |
247 |
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Maturity Dates |
248 |
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Chapter 8: Life Insurance |
253 |
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Participating Whole Life |
253 |
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Interest Sensitive Whole Life / Universal Life / Term Life |
254 |
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Indexed Life / Variable Life Insurance Products |
255 |
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Variable Life / Variable Universal Life |
256 |
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Indexed Life and Indexed Annuities |
257 |
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Basic Interest Crediting Strategy / Five-Year Fixed-Term Interest Strategy |
258 |
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Five-Year Equity Indexed Strategy / Principal Protection / Annual Lock-In of Earnings |
258 |
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Interest Rate Guarantee |
258 |
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Guarantees Among Strategies |
259 |
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Basic Interest Strategy / Five-Year Fixed-Term Strategy / Five-Year Equity Indexed Strategy |
259 |
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Equity Indexed Life Insurance Loans/Withdrawals |
259 |
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Similarities / Differences |
260 |
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Paying for the Life Insurance Contract / Single Premium / Fixed Premium |
261 |
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Flexible Premium / Premium Load |
262 |
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Monthly Life Insurance Deductions |
263 |
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Bands in Life Insurance Policies |
264 |
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Similar to Break Points / Consumer Awareness |
265 |
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Policyholder Risk |
266 |
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Interest Rate Risk / No Lapse Guarantees or Death Benefit Guarantees Risk |
266 |
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Withdrawals / Collateral Assignments |
267 |
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Bucket Investing |
268 |
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“Laddering” or “Buckets of Income” |
268 |
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Strategy Development / Strategies for Buying EI Universal Life Insurance / Over-funding an EI Policy |
270 |
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The IRC and Over-funding Life Insurance |
270 |
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TAMRA / DEFRA |
271 |
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How to Over-fund Equity Indexed Universal Life Insurance |
271 |
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Monthly Deductions / Bonus Rate Annuity / Cash Surrender Values (Life Insurance) |
272 |
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Guaranteed Cash Value |
273 |
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Liquidity Transfer Provisions: Access to Cash Values / Surrenders / Loans |
273 |
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1035 Exchanges |
274 |
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Important 1035 Exchange Procedures |
274 |
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Withdrawal Tax Treatment / Income Tax-Free Death Benefit / Internal Buildup |
276 |
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Withdrawals of Cash Value / Estate Taxation / Annuities and Taxation |
277 |
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Tax Surprises / Withdrawal Impact on Death Benefits |
278 |
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Taking a Policy Loan to Avoid Surrender Charges |
279 |
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Understanding the Purchase |
280 |
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Life Insurance Illustrations Model Regulation |
281 |
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Section 1: Purpose / Section 2: Authority / Section 3: Applicability and Scope / Section 4: Definitions |
281 |
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Section 5: Policies to be Illustrated / Section 6: General Rules and Prohibitions |
284 |
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Section 7: Standards for Basic Illustrations / Format |
285 |
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Narrative Summary |
286 |
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Numeric Summary / Statements |
287 |
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Tabular Detail / Section 8: Standards for Supplemental Illustrations |
288 |
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Section 9: Delivery of Illustration and Record Retention |
289 |
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Section 10: Annual Report; Notice to Policyowners |
290 |
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Section 11: Annual Certifications |
291 |
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Section 12: Penalties / Section 13: Separability / Section 14: Effective Date |
293 |
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Compare Equity Indexed Insurance |
293 |
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What is the financial rating of the insurance company? |
293 |
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What is the illustrated index credited interest rate? |
293 |
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Is there a guaranteed minimum interest rate? |
294 |
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What is the current index cap rate? What is the guaranteed minimum cap rate? |
294 |
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What is the current participation rate? What is the guaranteed participation rate? |
294 |
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What is the index floor? |
294 |
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How many index account options are available? |
294 |
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How many index crediting methods are available? |
294 |
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How long are the index segment periods? |
295 |
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What are the transfer provisions among accounts? |
295 |
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What are the policy charges and fees associated with equity indexed life policies? |
295 |
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How long are the policy surrender charges? |
295 |
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How are loans treated? Do the companies offer fixed or variable loans or both? |
295 |
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How long is the death benefit guaranteed? |
296 |
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What policy riders are available? |
296 |
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Final Analysis |
296 |
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Annual Statements |
296 |
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Chapter 9: Product Suitability |
297 |
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What is Suitability? |
297 |
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Annuity Suitability or Best Interest |
297 |
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Suitability Standards/Best Interest Standards |
298 |
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Determining Suitability |
298 |
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Age of the Buyer / Annual Income / Financial Situation & Needs |
300 |
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Annuity Funding / Financial Experience |
301 |
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Financial Objectives (Do the Math) |
302 |
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Intended Use of the Annuity / Time Horizons |
303 |
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Existing Assets / Liquidity Needs or Requirements |
304 |
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Net Worth / Risk Tolerance |
305 |
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Tax Status |
306 |
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Entering Retirement |
306 |
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Assessing Suitability/ Best Interest |
307 |
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Sales Practices |
308 |
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Product Replacement / Deceptive Sales Practices Forbidden / Full Disclosure / Product Knowledge |
309 |
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Communication Skills / Identifying Suitability Issues/Best Interest Issues |
310 |
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It is Not a Liquidity Issue but Rather a Suitability Issue |
311 |
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Who is the Unsuitable Annuity Buyer? |
312 |
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Annuity Suitability Recommendations |
313 |
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Requesting Information to Obtain Suitability Status |
315 |
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The Legal Side of Suitability Standards |
318 |
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Self-Protection Through Errors and Omissions Insurance |
324 |
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Insurance Agents / Financial Planners |
329 |
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Public Harm / Triggers |
330 |
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Insurance Recommendations in the Real World |
331 |
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Degree of Risk |
333 |
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Risk Classifications |
334 |
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The Burden of Risk |
335 |
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What Type of Documentation? |
336 |
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Claiming Unearned Education or Experience |
337 |
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Full Disclosure |
337 |
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Release of Liability Form / What is Due Diligence? |
338 |
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Fiduciary Duties |
339 |
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Keeping Current on New Trends |
339 |
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Chapter 10: Insurance Ethics |
341 |
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Ethic Subject Matter for Continuing Education |
341 |
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Meeting Education Requirements in a Timely Manner |
342 |
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Example |
342 |
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The Doctrine of Utmost Good Faith / Breach of Utmost Good Faith |
343 |
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Duty of Disclosure / Representations and Warranty |
344 |
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Representations |
345 |
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Warranty / Action Taken by Insurer against a Breach / Principle of Waiver & Estoppel |
345 |
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Guaranty Association |
346 |
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Knowledge of the Product |
347 |
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A Difficult Career Choice |
347 |
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It is a Matter of Perspective |
348 |
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Three Reasons why people seem to find it difficult to save |
349 |
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Establishing Ethical Goals |
350 |
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Example |
352 |
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Why Be Ethical? |
353 |
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Following the Law |
354 |
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Ethics in the Workplace |
355 |
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The Same by Any Name |
356 |
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Putting the Past in Perspective |
357 |
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Personal Values |
358 |
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Companies Set Guidelines |
360 |
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Example: Scenario #1 |
365 |
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Example: Scenario #2 |
365 |
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Promoting Ethical Behavior |
365 |
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Is it possible to teach ethical behavior to others? |
368 |
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What is the scope of ethics? |
368 |
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What does it take to be a moral person? |
370 |
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What quality of work do you want to perform? |
371 |
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What do I want my legacy to be? |
371 |
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The Leaders of the Pack |
371 |
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Example #1 |
372 |
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Example #2 |
373 |
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What are our responsibilities to other moral persons? |
373 |
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Objectivist Ethics |
376 |
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Holding on to our Ethical Code |
377 |
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Example |
378 |
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Sympathy and Empathy |
382 |
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Looking the Part / Courtesy |
383 |
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Mores |
384 |
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Example |
384 |
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Example |
387 |
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Education |
388 |
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Getting Education in a Timely Manner |
389 |
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Product Knowledge |
389 |
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Example |
390 |
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Laying Out Policy Benefits and Limitations |
391 |
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Minimizing consumer misunderstandings |
392 |
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Policy Replacement / Why would an agent replace their own business? |
394 |
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When an Agent Allows Misconceptions |
395 |
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When the Client Thinks the Premiums are too High |
396 |
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Obtaining Proper Application Signatures / Keeping in Touch after the Sale |
397 |
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Selling the “Fast Buck” Item |
398 |
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Commingling Funds / The Professional |
399 |
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Preparing for Tomorrow / Financial Management |
400 |
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Due Diligence |
401 |
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If It’s Legal . . . |
410 |
United Insurance Educators, Inc.
PO Box 1030
Eatonville, WA 98328
(253) 846-1155