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Annuity News for November 2011
What's New 
Urgent Notice on Product Specific Annuity Training


As each state adopts the NAIC Suitability model, product specific training will be required -

for each carrier you are contracted with- before an application may be taken. 


If a submitted application is dated before the required product training has been completed, the application can not be processed and will be returned by the home office.  In this environment of falling interest rates, failure to complete product specific training in a timely manner may affect your clients ability to lock in a stated rate before rates fall again. 

If you write business in any of the following states, you must complete product specific training for each Carrier before an application may be taken:  CO, DC, IA, MD, ND, NY, OH, OK, OR, RI, SC, TX, WI, WV.  

 As of January 1, the following states will be added to the list of those requiring product specific training:  CA, HI, IL, IN, KY, MN. 

All states will be adopting the NAIC suitability model at some point in the future and will require product specific training.  Please check frequently to see if your state has been added to the list. 

Please do not delay!  Complete your required, carrier specific product training today.



Additional States Adopt NAIC Suitability Model


As of November 1, Maryland has adopted the same or similar requirements to the NAIC's new Model Suitability Rule.  Additional states are on schedule to adopt the rule in early 2012:



November 1, 2011


January 1, 2012


January 1, 2012


January 1, 2012


January 1, 2012


January 1, 2012


January 1, 2012


February 18, 2012

The rule requires all insurance producers selling or soliciting annuity products to obtain a four-hour continuing education course from an approved vendor.  This is a one-time requirement and is not a condition of license renewal. 

Product specific training - by each Carrier - will also be required.


Additional States Adopt NAIC Suitability Model


Effective 11/1/2011, American National (ANICO) reduced compensation 1 pt on the following products in all states (including NY):   

WQ Citadel 5 Diamond

WQ Citadel 7 Diamond

Palladium MYG 5-Year





What's Hot


Best of Fixed Annuities Snapshot 



Click here to enlarge.  Updated as of 11/7/2011.

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In the Market


Worried? Take a Fixed Annuity and Sleep Easy


Throughout 2011, I have been writing quarterly in Agent's Sales Journal. As I prepared to write my last piece for the year I pulled out past publications and reflected on my articles and others published about annuities in ASJ in 2011 and recent years. An interesting observation surfaced. The old saying, "The more things change the more they stay the same" really is true.


Following is a list of just 10 changes that jumped out of the pages at me:

  1. The frequency and degree of annuity rate changes in the past 12 to 18 months has been unprecedented.
  2. Most cannot remember a time when annuity rates have been this low.
  3. The NAIC Suitability Model has placed additional responsibilities on those who sell fixed annuities.
  4. Market Value Adjustment (MVA) and Non-MVA products increase flexibility perhaps but also increase complexity.
  5. An increased interest for indexed annuities by clients has caused many who previously sold only deferred or immediate annuities to become educated quickly.
  6. Annuities have been highlighted more than ever before in the press over the past couple of year and not always in a positive light.
  7. Impact and changes to insurance carrier ratings are now vitally important to all of us.
  8. Concepts like split annuities, 1035 exchanges for long-term care premium, stretch IRA and longevity insurance are becoming more and more common when discussing annuities.
  9. Clients are more educated and involved than in years past. You can Google anything these days and clients have an increased personal responsibility for their retirement savings.
  10. Many Americans now believe there is a retirement crisis, and they feel they are unprepared. They fear outliving their money more than they fear death. 

This article originally appeared in the October edition of Agents Sales Journal,  Written by Laura Hahn (Managing Director of our Annuity Center). Click here to read more of the article.



Sales Ideas


Rebuilding Retirement Income


Have your clients lost retirement savings as a result of recent market conditions? Are they worried about having to postpone retirement in order to save additional funds? Offer them a solution which provides principal protection and guaranteed income for Life!

Case Study:

CLIENT: Ann Smith, a 50 year old female

NEED: Ann had planned to retire in 10 years, but her retirement savings have dropped by more than 50% as a result of recent market conditions. She needs a solution which will help her rebuild her retirement income, while protecting her from any further loss. Her retirement income need is $25,000 annually.

SOLUTION: The ING Income Protector Withdrawal Benefit is an optional living benefit (available on all ING USA fixed index annuity contracts) which provides flexible guaranteed income for life.

The hypothetical illustration below shows how an ING USA fixed index annuity with the optional ING Income Protector Withdrawal Benefit can help clients like Ann by providing principal protection and guaranteed income for life. (click here to enlarge)  


ING Withdrawal Benefit

Let's Explore


Contingent Annuities - Are They Actual Annuities?



Not sure what a contingent annuity is?  You're in good company.   Many states aren't sure exactly what the product is, and haven't a clue how to classify and regulate it.  The NAIC has stepped in and formed a task force to study and report on these products.

So what exactly are contingent annuities?  Often touted as "group annuities", they are a stand-alone Guaranteed Lifetime Withdrawal Benefit (GLWB) contract offered to mutual fund advisors, normally by an insurance company.  The investor pays a fee equal to a percentage of the account value, and at a set age he may begin taking systematic withdrawals equal to a particular percentage of the account value.   (The amount of the withdrawal depends on the gender and age of the investor.)   If the value of the covered account reaches zero, the contingent annuity will kick in and the investor will continue to receive payments in the same amount as the systematic withdrawals - until death.

Although the design and function of these contingent annuities isn't revolutionary, there have been considerable abnormalities as filings have passed through the state regulatory process.  Some states have ushered the product through the regulatory process with minimal vetting or research.  Other states have determined that the product is neither an insurance nor an annuity product, and the future of sales through an insurance company in those states is uncertain.  Finally, there are some states which classified contingent annuities as "financial guarantee insurance" and forbid their sale by insurance companies completely.

Industry representatives have largely defended these products as annuities, not financial guarantee insurance, but it is not completely clear if the risk covered by a contingent annuity was a longevity risk (that people would live longer than their life expectancy) or a market risk (that people would run out of assets).

The NAIC started their inquiry into contingent annuities in 2010, and there is still uncertainty about whether they are legitimate annuities and where exactly they should fall in the retirement income market.  


Some of the questions the NAIC task force has addressed are:

Do contingent annuities meet the definition of an annuity?

Can insurance companies offer contingent annuities?

Is a contingent annuity financial guarantee insurance?

Is a contingent annuity a fixed annuity?

Is a contingent annuity a variable annuity?What does the IRS say?

Still confused?  One thing is certain - the NAIC will provide more guidance in the future.  The NAIC is urging state regulators to thoroughly review whether they have received any contingent annuity filings, and if those filings were correctly classified and meet all requirements for an insurance product under state law


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Dworkin Associates Inc. 22 South Main Street Rochester, NH 03867