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.

Course Publication Date: May 25, 2023

This course is available with NO ADDITIONAL FEE if you have an active self study membership or all access membership or can be purchased for $90.00!

Author:Paul Winn
Course No:TAX-ANNU-3193
Recommended CPE:9.00
Delivery Method:QAS Self Study
Level of Knowledge:Overview
Advanced Preparation:None
Recommended Field of Study:Taxes
Learning Objectives
  • Describe the profile of a typical annuity purchaser.
  • Identify the principal reasons why individuals purchase annuities.
  • Explain the traditional concept of an annuity.
  • Identify the parties to an annuity contract and discuss their roles.
  • 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.
  • 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 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.
  • List the factors that should be evaluated in determining the suitability of 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.
  • 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 ratio and its impact on the tax-free recovery of basis from periodic annuity payments made under nonqualified annuity contracts.
  • Explain the income and estate tax treatment of 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.
  • Describe the suitability recordkeeping obligations to which insurance producers are subject in connection with recommended annuity transactions.

CPE Depot Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website:

Sponsor Number: 109423


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