10 Credits: Taxes
In this course you will be introduced to terms and concepts used in connection with annuity contracts. Each new term is defined in the text and included in the Glossary. The concepts are explained and, where appropriate, are demonstrated through the use of examples.
At the conclusion of each lesson, a Chapter Review is presented to test comprehension of the material presented in the chapter. A response is given to each answer you select to the questions in the Chapter Review affirming the correct choice or explaining why the choice you selected was incorrect.
This information is important for agents selling annuity contracts to customers and for advisers assessing the appropriateness of an annuity contract for a client. An understanding of the operation, advantages and disadvantages of annuities and the methods used to determine their cash value will assist the agent and adviser to better serve consumers and help ensure that annuity contracts are recommended and purchased only when they are suitable to meet client needs.
When you have completed this course 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.
- Identify the methods by which annuity premium payments are made;
- List the expensesgenerally 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.
- Discuss how cash values are determined in a variable annuity;
- Explain how the various variable annuity cash valuemanagement 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 ownerto 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 suitabilityof a variable annuity for a customer.
- 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.
- Discuss the income tax treatment of nonqualified annuity premiums and cash values;
- Explain how nonqualified annuity surrenders and withdrawals are taxed;
- Describe the exclusion ratioand 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 treatmentof death benefits received under a nonqualified annuity contract.
- 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.
April 3, 2023
There are no prerequisites.
IRS Provider Number: 0MYXB
IRS Course Number: 0MYXB-T-02338-23-S
IRS Federal Tax Law Credits: 10
CTEC Course Number: 2071-CE-1906
CTEC Federal Tax Law Credits: 10
CFP Notice: Not all courses that qualify for CFP® credit are registered by Western CPE. If a course does not have a CFP registration number in the compliance section, the continuing education will need to be individually reported with the CFP Board. For more information on the reporting process, required documentation, processing fee, etc., contact the CFP Board. CFP Professionals must take each course in it’s entirety, the CFP Board DOES NOT accept partial credits for courses.
CTEC Notice: California Tax Education Council DOES NOT allow partial credit, course must be taken in entirety. Western CPE has been approved by the California Tax Education Council to offer continuing education courses that count as credit towards the annual “continuing education” requirement imposed by the State of California for CTEC Registered Tax Preparers. A listing of additional requirements to register as a tax preparer may be obtained by contacting CTEC at P.O. Box 2890, Sacramento, CA, 95812-2890, by phone toll-free at (877) 850-2832, or on the Internet at www.ctec.org.
Meet The Experts
Paul J. Winn CLU ChFC is a writer with more than 30 years experience in the life insurance and securities industry as an agent/registered representative, an agency head, a marketing vice president for a life insurance company and the president of a corporate registered investment adviser. He was a long serving member of the advisory board to the New York State insurance department. He is a published book author and creator of more than 200 taxation, insurance and securities training courses.