Annuity Update: 2021
Presented by: Patrick D. Hatting, MBA, ChFC, CLU, CASL, LUTCF
IA Course #105927
Annuities come in many types. With a tax-deferred annuity, you give the insurance company money and your money grows and without reportable income. With a payment plan annuity, the insurance company gives you money and the amount of premium paid may be returned to you tax-free. Some are based on variable sub-accounts and some have a stated guaranteed fixed rate. Some are more of a hybrid of a variable and fixed annuity. An annuity can be purchased with a lump sum, as part of a series of ongoing contributions, as a tax-free policy exchange, or even with tax-qualified dollars, such as in the case of a rollover. The DOL Rule sought to protect consumers by putting in place a framework for the insurance industry to follow to help make sure that IRA rollovers would be in the best interest of clients. Deferred annuities can be illiquid due to some components such as a surrender charge. Immediate annuities are by nature illiquid because once you pick your planned payout, you are locked into it for the period chosen, whether that is life or a certain period or the longer of the two. Annuities can offer the best of times or the worst of times, and it all comes down to the producer understanding the needs of the client and helping decipher which, if any, type of annuity is appropriate to recommend. Producers need the training to be able to do this. We will cover all the major content areas relative to annuities, such as types, parties, taxation, uses and more. We will also cover suitability requirements and appropriate sales practices. By the time we wrap up, even producers who do not sell or service annuities will have gained some useful knowledge for their everyday lives and should be able to identify who or isn’t a candidate for various types of annuities.