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    Suitability of Annuity and Life Insurance Transactions for Seniors
    Suitability of Annuity and Life Insurance Transactions for Seniors
    Suitability of Annuity and Life Insurance Transactions for Seniors
    Ebook104 pages55 minutes

    Suitability of Annuity and Life Insurance Transactions for Seniors

    By Michael Lustig

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    About this ebook

    Suitability of Annuity and Life Insurance Transactions for Seniors provides an in-depth examination of annuity and life insurance for Seniors in the United States with an emphasis on the regulations and policies that govern it and the types of annuities according to premiums paid, payout and investment options. This textbook provides a wealth of information regarding annuities, including public policy regarding Florida legislation protecting seniors and duties of insurers and insurance agents, and is a good source of information both for those new to annuities and senior life insurance transactions as well as a great review for those who are the more experienced in the field.

    LanguageEnglish
    PublisherMichael Lustig
    Release dateAug 8, 2011
    ISBN9781933891705
    Suitability of Annuity and Life Insurance Transactions for Seniors
    Author

    Michael Lustig

    Michael Lustig is a graduate of the University of San Diego, California and a former Professor at California State University at Pomona and Immaculate Heart College (Los Angeles). He has been a California Real Estate Broker and the Owner and President of Real Estate License Services, a California real estate and insurance licence school, since 1978, offering state-approved license courses in 47 states and the District of Columbia. He is the author of 35 books on real estate and insurance topics.

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      Book preview

      Suitability of Annuity and Life Insurance Transactions for Seniors - Michael Lustig

      SUITABILITY OF ANNUITY AND LIFE INSURANCE TRANSACTIONS FOR SENIORS

      Prepared by Michael Lustig

      Contributing Editor: Denise Iona

      Distributed by:

      Real Estate License Services

      5059 Newport Ave. #209

      San Diego, CA 92107

      Phone Toll-Free 1-800-877-5445

      Smashwords Edition

      © Copyright 2010 - 2006 by Michael Lustig, Real Estate License Services. Copyright registered. All contents protected by laws of copyright. No portion of this book may be reprinted, reproduced, transmitted, stored in a retrieval system or on the Internet, or otherwise utilized in any form or by any means, electronic, mechanical, or otherwise, including photocopying or recording, now existing or hereinafter invented, nor may any part of this book be used for teaching without the prior written consent of Michael Lustig.

      Contents

      CHAPTER ONE: NEW FLORIDA LEGISLATION PROTECTING SENIORS

      INTRODUCTION

      SENIORS AT RISK

      THE JOHN AND PATRICIA SEIBEL ACT

      DEFINITIONS - SUITABILITY - COMPARISON OF BENEFITS - FREE LOOK PERIOD- ETHICAL CONDUCT - USE OF DESIGNATIONS - FALSE SIGNATURES - PENALTIES - COMPLAINTS - CONTINUING EDUCATION REQUIREMENT

      CHAPTER ONE QUIZ

      ANSWERS TO CHAPTER ONE QUIZ

      CHAPTER TWO: ANNUITY PRODUCTS

      INTRODUCTION

      ISSUE AGES - ANNUITY CONTRACT PHASES - THE PROCESS OF ANNUITIZATION

      ANNUITY TYPE ACCORDING TO PREMIUMS PAID

      IMMEDIATE ANNUITIES - DEFERRED ANNUITIES

      ANNUITY TYPE ACCORDING TO PAYOUT

      IMMEDIATE ANNUITIES—SINGLE PREMIUM - DEFERRED ANNUITIES—SINGLE PREMIUM - DEFERRED ANNUITIES—FIXED PREMIUMS - DEFERRED ANNUITIES—FLEXIBLE PREMIUMS

      ANNUITY TYPE ACCORDING TO INVESTMENT OPTIONS

      FIXED ANNUITIES - VARIABLE ANNUITIES - EQUITY INDEXED ANNUITIES - MARKET VALUE ADJUSTED ANNUITIES - GROUP ANNUITIES - SETTLEMENT OPTIONS

      CHAPTER TWO QUIZ

      ANSWERS TO CHAPTER TWO QUIZ

      CHAPTER THREE: DUTIES OF INSURERS AND INSURANCE AGENTS

      INTRODUCTION

      COLLECTING NECESSARY INFORMATION

      PERSONAL INFORMATION - INVESTMENT OBJECTIVES - RISK TOLERANCE - FINANCIAL SITUATION AND NEEDS - EXISTING ASSETS - ANNUAL INCOME - TAX STATUS - LIQUID NET WORTH AND LIQUIDITY NEEDS - THE INTENDED USE OF THE ANNUITY - SOURCES OF FUNDS TO PURCHASE THE ANNUITY - OTHER RELEVANT INFORMATION

      IF THE INFORMATION IS NOT PROVIDED

      IF THE SENIOR IS CURRENTLY HOLDING AN ANNUITY CONTRACT

      IF THE TRANSACTION IS AN EXCHANGE

      DISCLOSURE

      CREDITING METHODS - GUARANTEED INTEREST CREDITS - ADVANTAGES OF TAX DEFERRAL - POTENTIAL TAX IMPLICATIONS - RISK FACTORS

      SUPERVISORY SYSTEMS

      AGENT PROCEDURES TO ENSURE SUITABILITY COMPLIANCE

      CHAPTER THREE QUIZ

      ANSWERS TO CHAPTER THREE QUIZ

      CHAPTER FOUR: ETHICAL CONSIDERATIONS

      INTRODUCTION

      THE ISSUE OF BUYER COMPETENCE

      LEGAL CAPACITY TO CONTRACT

      UNIQUE ETHICS AND COMPLIANCE ISSUES

      POLICYHOLDER BILL OF RIGHTS

      AGENT CODE OF ETHICS

      FLORIDA ADMINISTRATIVE CODE - THE NATIONAL ASSOCIATION OF INSURANCE AND FINANCIAL ADVISORS (NAIFA)

      AGENT FIDUCIARY RESPONSIBILITY

      CASE LAW AND FIDUCIARY RESPONSIBILITY

      MITIGATION OF RESPONSIBILITY

      REASONABLY APPROPRIATE ACTION - PENALTIES MAY BE REDUCED OR ELIMINATED

      HARM TO A CONSUMER

      UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS

      PROHIBITED PRACTICES

      PENALTIES

      HEARING REQUEST - ADMINISTRATIVE FINES - PROBATION

      RECORDKEEPING

      REPRESENTING UNAUTHORIZED ENTITIES

      CHAPTER FOUR QUIZ

      ANSWERS TO CHAPTER FOUR QUIZ

      CHAPTER ONE: NEW FLORIDA LEGISLATION PROTECTING SENIORS

      INTRODUCTION

      Annuity sales have become big business in recent years. This is of special concern in Florida because of the state’s high number of senior residents. According to the U. S. Census Bureau, Florida has the highest proportion of elderly (ages 65 and over), 19 percent. Seniors are especially at risk and vulnerable when it comes to sales pitches of any kind.

      Many senior citizens have amassed significant savings, have benefited from real estate appreciation, and have had the advantage of long-term employment and pension plans. As a result, they are often targeted differently from a marketing perspective than younger people without such assets.

      Insurance companies, brokerage firms, and financial planners understand the money to be made by selling annuities to this group. Significant growth opportunities exist for annuity products because of favorable demographic and economic trends, and many issuers and financial professionals are directing their marketing efforts toward older Americans.

      Older consumers are understandably concerned about medical care and costs, increasing living expenses and inflation, the reliability of our Social Security system, and even pension uncertainties. In homes and retirement communities, seniors with time on their hands and money in the bank are inundated with sales pitches over invitations to breakfast, lunch, and dinner.

      Clearly, senior citizens are a growing market and increasingly likely to hear sales pitches for annuities, most of which are legitimate presentations but, unfortunately many of which are motivated by hefty commissions. Variable annuities can generate sales commissions two to twenty times higher than sales commissions gained through the sales of mutual funds. They pay a large up front commission

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