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[The Encyclopedia To Indexed Products: Annuity and Life]

TABLE OF CONTENTS

ANNUITY   1
SALES PRACTICES   1
Introduction   1
Overview   1
Client Suitability   1
The Right Questions to Ask the Insurer of a Fixed-Indexed Annuity   3
TYPES OF ANNUITIES   7
General Description   7
Fixed-Indexed Annuity Definition   7
Distinguishing Characteristics among Fixed, Indexed, and Variable Annuities   7
The Most Frequently Asked Questions About Annuities   8
SUMMARY   11
CONTRACTUAL PROVISIONS   13
Overview   13
Description of FIA Owners   13
Indexes   14
Surrender Charges   15
Participation Rate Percentage   16
Annual Charge   16
Spread/Withdrawals/Annutization   17
Surrender Penalties   17
Methods of Crediting Growth   18
Return of Principal   20
Contract Renewal   20
Death Benefit   21
Surrender Charge Waiver (Nursing Home & Terminal Illness or Unemployment)   21
Guaranteed Minimum Value   22
Cash Value Strategies   22
Life Insurance Riders   23
Long-Term Care Riders   23
Loans   23
Good Common Sense Sales Practices   23
Bonus Teaser Rates   24
Issue Ages   24
Crisis Waivers   24
Stretch   25
Surrender Charges / Overview   25
Market Value Adjustment   26
Withdrawal Privilege Options   26
Annuitization Options   26
Maturity Date   27
Death Benefit   27
Charges and Fees   27
Guaranteed Minimum Cash Surrender Value   27
Portfolio / New Money Renewal Rates   28
Minimum Guaranteed Interest Rate/Overview   28
Low Interest Rate Environment   28
Summary   28
CONTRACTUAL PARTIES   31
Introduction   31
Important Parties to an Annuity   31
Example   31
Insurance Rating Services   32
Rights and Options to Beneficiaries   33
Summary   33
ADVANTAGES AND DISADVANTAGES   35
Overview   35
Advantages and Disadvantages of Annuitization   35
Under and Over Age Under Age 60 Years Old   36
Advantages/Annuities   37
Disadvantages/Annuities   39
Comparison/Choices   40
QUALIFIED/NON-QUALIFIED PLANS AND ANNUITIES   43
Introduction   43
Overview   43
Partial Withdrawals/Qualified   43
Example   44
Loans and Assignment Qualified   44
Loans and Assignments / Non-qualified   45
IRS Section 1035 exchanges   45
Gift of an Annuity   45
Sale of an Annuity by the Owner   46
Death of an Annuitant   46
Example   46
Exclusion Ratio   46
Example   47
SUMMARY   47
Interesting Statistics   48
Reasons to Invest in Annuities   48
Good Sales Practices   49
4 Things We Should Know About the IRA Rollover   49
3 Things You Should Know About an IRA Transfer   50
Example   50
5 Reasons Customers Should Consolidate Their IRAs   50
SEP   51
Secondary Problem/Solution   52
Miscellaneous Comments   52
SUMMARY   53
THE SENIOR MARKET   55
Introduction   55
Overview   55
Thinking About Your Money   56
Acting Now/Acting Later   57
Post Retirement Planning   57
5 Risks   58
5 Myths   59
Where an Insurance Company Has Its Assets   64
Surrender Charges Revisited   64
The Rule of 72   65
Simple Explanation   66
Inflation   67
What’s Happening to a Dollar   68
Reducing Taxes on Social Security   68
SUMMARY   69
HISTORICAL DEVELOPMENT OF ANNUITY CONTRACTS   71
Introduction   71
How Annuities Have Evolved   71
Indexed Annuities 20 Years Ago   72
How Products and Practices Evolved   72
Excise Federal Tax Penalty   73
Market Overview/Typical Purchaser   75
Market Overview / Sales   76
Market Overview / Future Need for Annuities   79
SUMMARY   80
POINT-OF-SALE   81
Common Sense Sales Practices   81
Words and Phrases To Use (and avoid)   81
Split Annuities   82
Guaranteed Minimum Withdrawal Riders   83
Guaranteed Minimum Death Benefit Riders   87
Two-Tiered Annuities   87
INTERNAL TRAINING   89
Fluctuating Participation Rates   89
How Insurers Invest   89
Mid-Term Withdrawals   89
Minimum Non-Forfeiture   90
Hypothetical Models   90
Renewals   91
INDEXED LIFE   93
INTRODUCTION   93
VARIOUS TYPES OF LIFE INSURANCE   95
Introduction   95
TERM LIFE PLANS   95
WHOLE LIFE PLANS – Traditional Whole Life   96
WHOLE LIFE PLANS – Interest-Sensitive Whole Life   97
Variable Life   98
Universal Life   98
Traditional Universal Life   100
Variable Universal Life   101
Indexed Universal Life   101
CREDITING METHODS   105
Point-to-Point Crediting Methods   105
Averaging Crediting Methods   105
Fixed Crediting Methods   105
Examples   105
Summary   107
Trends in Crediting Methods   108
The Index and Indices   108
Illustrated Rates and Indexed Life   109
Interest Crediting   112
TERMINOLOGY   117
Minimum Guarantees on Indexed Life   117
Bonuses on Indexed Life   118
Liquidity Option on Indexed Life   118
Example/ Surrender Charges   118
Issue Ages on Indexed Life   121
Minimum Face Amount on Indexed Life   121
SUITABILITY AND MARKETING PRACTICES ON ANNUITIES   123
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