1. Describe a typical annuity buyer and the principal reasons individuals buy annuity contracts
2. List the characteristics of annuities and the benefits of tax deferral
3. Explain how variable annuities work
4. Identify the cash value management tools available to a variable annuity contract owner
5. List the factors to be considered in determining variable annuity suitability
6. Calculate interest to be credited under various fixed annuity contracts
7. Explain the operation of indexed annuities
8. Describe how annuities are taxed

Chapter 1
Introduction to Annuities and Annuity Buyers

• Describe the profile of a typical annuity purchaser;
• Identify the principal reasons why individuals purchase annuities;
• Explain the traditional concept of an annuity; and
• Identify the parties to an annuity contract and discuss their roles.

Chapter 2
Characteristics of Annuities

• Identify the methods by which annuity premium payments are made;
• List the expenses generally associated with annuity contracts;
• Explain when payout begins under deferred and immediate annuities;
• Discuss how cash values are accumulated;
• Describe annuity death benefits; and
• Discuss the various annuitization methods available to settle annuity proceeds.

Chapter 3
Variable Annuities

• Discuss how cash values are determined in a variable annuity;
• Explain how the various variable annuity cash value management tools help contract owners manage the volatility of variable annuity cash values;
• Identify the various guaranteed living benefits available on variable annuity contracts;
• Describe how variable annuitization may enable a contract owner to overcome the erosion of annuity income and keep pace with inflation;
• Discuss the features and benefits of variable annuities; and
• List the factors that should be evaluated in determining the suitability of a variable annuity for a customer.

Chapter 4
Types of Fixed Annuity Contracts

• Discuss how the current crediting interest rate is determined in declared-rate annuities;
• Distinguish bonus and multi-year guarantee annuities from other types of annuities;
• Describe the factors that affect the effective crediting interest rate in indexed annuities;
• Explain how index call options are used in the operation of equity indexed annuities; and
• Identify the various interest crediting methods used in equity indexed annuities.

Chapter 5
Annuity Taxation

• Discuss the income tax treatment of nonqualified annuity premiums and cash values;
• Explain how nonqualified annuity surrenders and withdrawals are taxed;
• Describe the exclusion ratio and its impact on the tax-free recovery of basis from periodic annuity payments made under nonqualified annuity contracts; and
• Explain the income and estate tax treatment of death benefits received under a nonqualified annuity contract.

Chapter 1 - Introduction to Annuities and Annuity Buyers

Important Lesson Points

Chapter Learning Objectives

Introduction

Demographics of Non-Qualified Annuity Purchasers

Why Buyers Purchased Non-Qualified Annuities

The Annuity Concept

Annuities in Operation

Summary

Chapter 2 - Characteristics of Annuities

Important Lesson Points

Chapter Learning Objectives

Introduction

Premiums

Single Premium Annuities

Level Premium Annuities

Flexible Premium Annuities

Annuity Expenses

Surrender Charges

M&E Charges and Investment Advisory Fees

Lives Covered by the Annuity

Multiple Life Annuities

When Payout Begins

Deferred Annuity

Immediate Annuity

Cash Value Accumulation

Fixed Annuities

Variable Annuities

Death Benefits

Annuitization Methods

Temporary Annuity

Life Annuity

Summary

Chapter 3 - Variable Annuities

Important Lesson Points

Chapter Learning Objectives

Introduction

Deferred Annuity Accumulation

Managing Cash Value Volatility

Diversification

Asset Allocation

Automatic Subaccount Re-balancing

Fund Transfer

Dollar Cost Averaging

Interest Sweep

Variable Annuity Death Benefits

Living Benefit Guarantees

Variable Annuity Payout Phase

Mechanics of Variable Annuitization

Features and Benefits

Suitability

Compliance Requirements

Combining Fixed and Variable Annuities

Summary

Chapter 4 - Types of Fixed Annuity Contracts

Important Lesson Points

Chapter Learning Objectives

Introduction

Traditional Declared-Rate Annuities

Bonus Annuities

Multi-Year Guarantee Annuities

Interest Indexed Annuities

Equity Indexed Annuities

Determining Equity Indexed Cash Value

Index Call Options & Participation Rate

Interest Crediting Methods

Total Interest Rate Methods

Annual Interest Rate Methods

Combination Indexing Methods

Interest Rate Cap

Annuitization in EIA Contracts

Summary

Chapter 5 - Annuity Taxation

Important Lesson Points

Chapter Learning Objectives

Introduction

Income Tax Treatment

Premiums

Cash Values

Ownership by Non-natural Persons Generally

Ownership by Natural Persons and Certain Trusts

Surrenders and Withdrawals

Premature Withdrawals and Surrenders

Annuity Payments During Lifetime

Fixed Annuities

Variable Annuities

Annuitant’s Death After Annuity Starting Date

Contract Owner’s Death Before Annuity Starting Date

Estate Tax Treatment

Summary

Appendix A - Bond Ratings

Appendix B - Basic Characteristics Of Securities

Appendix C - Decisional Factors in Variable Annuity Suitability

References

Glossary