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Course Details

Annuities (Course Id 174)

Updated / QAS / Registry / EA   Add to Cart 
Author : Paul Winn, CLU, ChFC
Status : Production
CPE Credits : 5.5
IRS Credits : 5
Price : $54.95
Passing Score : 70%
Primary Subject-Field Of Study:

Taxes - Taxation for Course Id 174

Description :

Annuities examines the annuity concept and explains what an annuity is and how it works. The mechanics of the accumulation and payout phases of an annuity are examined and sample calculations are discussed. An explanation of settlement options and their appropriate uses are covered.

The course also discusses annuity taxation. Federal income tax treatment of premature withdrawals, lump-sum distributions and periodic payments is considered. Annuities discusses the different annuity contracts available and compares them with respect to client suitability, with particular emphasis on variable and fixed annuities. Both product types are discussed in terms of single vs. periodic premium, immediate vs. deferred, qualified vs. non-qualified, and settlement options.

Usage Rank : 0
Release : 2017
Version : 1.0
Prerequisites : None.
Experience Level : Overview
Additional Contents : Complete, no additional material needed
Additional Links :
Advance Preparation : None.
Delivery Method : Self-Study.
Intended Participants : Anyone needing Continuing Professional Education (CPE).
Revision Date : 08-Feb-2017
NASBA Course Declaration : Participants must complete the final examination within one year of purchase and with a minimum passing grade of 70% or better to receive CPE credit unless otherwise noted on the Course History page (i.e. California Ethics must score 90% or better). After logging in click on the Course History links on your My Courses page for the Begin date and Expire date for the Final Exam.
Approved Audience :

NASBA QAS - NASBA Registry - IRS Enrolled Agents - 174

Keywords : Taxes, Annuities, cpe, cpa, online course
Learning Objectives :

Course Learning Objectives

Upon completion of this basic course, the student should be able to:
    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

In this chapter we will look at the demographics of annuity buyers and the principal reasons for their purchase of an annuity. In addition, we will examine the annuity concept and discuss the parties to an annuity and their roles.

When you have completed this chapter you should be able to:
    • 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

In this chapter we will look at the fundamental characteristics of annuities, including their premiums, expenses, cash values, death benefits and options for settlement of any proceeds.

When you have completed this chapter you should be able to:
    • 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

In this chapter we will consider variable annuities and will examine their operation and the cash value management tools available to variable annuity contract owners.

When you have completed this chapter you should be able to:
    • 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 allocated to variable subaccounts;
    • 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

In this chapter we will consider fixed annuities in some detail and will discuss traditional declared-rate annuities, bonus annuities, multi-year guarantee annuities and indexed annuities.

When you have completed this chapter you should be able to:
    • 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 indexed annuities; and
    • Identify the various interest crediting methods used in indexed annuities.

Chapter 5
Annuity Taxation

In this chapter we will consider the tax treatment afforded nonqualified annuities. In so doing, we will examine their income tax treatment and their estate tax treatment.

When you have completed this chapter you should be able to:
    • 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 6
Annuity Sales Practices, Replacement and Disclosure Requirements

In this chapter we will consider the obligations insurance producers have with respect to their sales practices in selling annuities. In particular, we will examine the requirements and limits of suitability, the need to obtain relevant client information and the annuity disclosure requirements mandated to ensure the client is fully informed.

When you have completed this chapter you should be able to:
    • Define suitability in the context of an annuity transaction;
    • Describe the client information required to perform an appropriate annuity suitability analysis;
    • List the types of information that must be disclosed when making an annuity recommendation;
    • Identify those situations in which an insurance producer has no suitability obligation to the client; and
    • Describe the suitability recordkeeping obligations to which insurance producers are subject in connection with recommended annuity transactions.
Course Contents :

Course Learning Objectives

How You Will Learn

Why This Information is Important and How You Can Use It

Chapter 1 - Introduction to Annuities and Annuity Buyers

Chapter Learning Objectives

Important Lesson Points

Important Note About the DOL Fiduciary Rule

Introduction

Demographics of Non-Qualified Annuity Purchasers

Annuity Demographic Changes

Why Buyers Purchase Non-Qualified Annuities

The Annuity Concept

Annuities in Operation

Summary

Chapter 2 - Characteristics of Annuities

Chapter Learning Objectives

Important Lesson Points

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

Chapter Learning Objectives

Important Lesson Points

Introduction

Separate Account and Structured Investment Option

Insurer’s General Account Supports Variable Annuity’s Fixed Account

Deferred Annuity Accumulation

Variable Subaccounts Comprise Insurer’s Separate Account

Variable Subaccount Value may Fluctuate Daily

VA Accumulation Units

Structured Investment Option

Managing Separate Account Volatility

Separate Account Management Tools

Diversification

Asset Allocation

Automatic Subaccount Re-balancing

Fund Transfer

Dollar Cost Averaging

Interest Sweep

Variable Annuity Death Benefits

Traditional Variable Annuity Death Benefit Guarantee

Variable Annuity Rollup Death Benefit Guarantee

Variable Annuity Step-Up Death Benefit Guarantee

Living Benefit Guarantees

Guaranteed Minimum Income Benefit

Guaranteed Minimum Accumulation Benefit

Guaranteed Withdrawal Benefit

Variable Annuity Payout (Annuitization) Phase

Mechanics of Variable Annuitization

Features and Benefits

Suitability

Compliance Requirements

Combining Fixed and Variable Annuities

Summary

Chapter 4 - Types of Fixed Annuity Contracts

Chapter Learning Objectives

Important Lesson Points

Introduction

Traditional Declared-Rate Annuities

Bonus Annuities

Multi-Year Guarantee Annuities

Indexed Annuities

Current Interest Rates base on an Interest Index

Current Interest Rates base on an Equity Index

Determining Indexed Annuity Cash Value

Index Call Options

Interest Crediting Methods

Spread

Cap Rate

Annuitization in Indexed Annuity Contracts

Summary

Chapter 5 - Annuity Taxation

Chapter Learning Objectives

Important Lesson Points

Introduction

Income Tax Treatment

Premiums

Cash Values

Surrenders and Withdrawals

Annuity Payments During Lifetime

Annuitant’s Death After Annuity Starting Date

Contract Owner’s Death Before Annuity Starting Date

Estate Tax Treatment

Summary

Chapter 6 Annuity Sales Practices, Replacement and Disclosure Requirements

Chapter Learning Objectives

Important Lesson Points

Introduction

Suitability

Suitability Defined

Suitability Requirements

Buyer Competence

Replacement and Exchange

Mitigation of Suitability Requirement

Obtaining and Maintaining Records

Disclosure

Potential Surrender Period and Surrender Charge

Potential Tax Penalties

Mortality and Expense Risk Charges and Investment Advisory Fees

Rider Charges and Features

Limitations on Interest Crediting

Insurance and Investment Components

Market Risk

Summary

Appendix A - Bond Ratings

Appendix B - Basic Characteristics Of Securities

Appendix C - Decisional Factors in Variable Annuity Suitability

References

Glossary

Taxes Course 174 Home: https://www.cpethink.com/tax-cpa-courses
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