Annuity Field Guide. Royal Choice Annuity. v 5 Year v 7 Year v 9 Year (California Only) v 10 Year. For agent use only. Not for public distribution.

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1 Annuity Field Guide Royal Choice Annuity v 5 Year v 7 Year v 9 Year (California Only) v 10 Year Form 2978-B; Rev For agent use only. Not for public distribution.

2 Royal Neighbors of America Royal Choice Annuity Field Guide This guide has been designed with our ease of doing business philosophy in mind. It will help you efficiently process annuity business with Royal Neighbors of America. Contact our Annuity Team at (844) for any additional questions you may have regarding the processing of annuity business. Completing Application items commonly missed Please use the current application form available on the Royal Neighbors Administrative agent website: Section 1 Proposed Owner / Annuitant Indicate marital status / Sex Indicate country/place of birth Owner must be a U.S. Citizen or legal U.S. resident. Owner and Annuitant must be the same person for qualified plans. Corporations and Trusts are not permitted as Owners Joint owners are not permitted Section 2 Proposed Annuitant or Payor other than Owner (If Applicable) Annuitant may be different from the Owner only on Non-Qualified. Joint Annuitants are not permitted Section 3 Proposed Owner s Other Insurance Indicate proposed Owner s other insurance and annuities Replacements Submit replacement form with application when o If applicant has already-existing annuity or life insurance (NAIC) o Applicant intends to replace or use funds from any existing or applied-for annuity or insurance product o Include other state required forms Section 4 Beneficiaries Include full names, address, DOB, SSIN and relationship to proposed owner. Indicate if the Beneficiary is a primary beneficiary or contingent beneficiary. The total share percentage of all primary beneficiaries must be 100%. If there are one or more contingent beneficiaries, the total share percentage of all contingents must be 100%. If using separate form for beneficiary designations, it must be signed and dated by owner and contain the full name, address, DOB, SSIN and relationship to proposed owner along with percentages and whether primary or contingent beneficiaries. Do not use Per Stirpes to indicate beneficiary(ies). Include Trust documents when Trust is beneficiary(ies) (name, date, and signature page). 1

3 Section 5 Type of Annuity Plan name is Royal Choice Choose Initial Guaranteed Credited Interest Rate Period o All States except California: 5 year, 7 year or 10 year o California only 5 year, 7 year or 9 year If choosing a qualified plan, please be sure to indicate if it is an IRA, Roth IRA or SEP. Note: Required Minimum Distribution (RMD) will incur surrender charges and Market Value Adjustment (MVA) in the first certificate year. Clients that are age 70 ½ or older should take their RMDs before transferring funds to this Certificate. Transfer Forms complete Form 2365 Include street address and phone number of custodian so Royal Neighbors can expedite mailing to other company. Indicate complete or partial transfer. Indicate non-qualified 1035 exchange, qualified transfer or rollover. Note: If original annuity has two owners, the annuity must be assigned to one owner before Royal Neighbors requests funds. If original annuity has joint annuitants, the annuity must name a single annuitant at time of transfer as long as owner stays the same. Agent must sign the form. Signatures Designated Power of Attorney (POA) signatures are accepted only if the proposed Owner is a current member. Submit copy of the POA agreement if proposed Owner is a current member along with any applicable documentation regarding conservatorship/guardianship. Suitability Section Your client s age, income, net worth, liquid assets, and financial objectives are used to determine suitability of an annuity sale. Therefore, it is critical that this information be as accurate as possible. Annual gross income: Indicate the combined household income of spousal/domestic partner prior to deduction of taxes. Annuities in payout status should be included. Total net worth: Equals total assets minus total debt. Do not include the value of primary residence or contents. Examples of assets to include: pension, 401(k), other property, annuities, business value. Also make sure to include liquid assets and the premium for this purchase. Liquid assets: In the event of an emergency Royal Neighbors must ensure the proposed owner has funds available that are easy to access without penalty. Liquid assets include checking/savings accounts and securities that can be sold without penalty. Do not include the value of primary residence or contents. Do not include premium for this purchase. For any corrections made on the annuity application and accompanying documents, the Owner needs to initial and date correction(s). 2

4 Suitability Scenarios The following are examples of cased that would be considered suitable: Single Premium Deferred Annuity (SPDA) 5 years for $50,000 Age 75 Net worth of $300,000 Liquid assets of $40,000 Income of $30,000 Financial objective is protection of principal and transfer of funds to beneficiary(ies). This would be considered suitable. The amount of premium is 17% of person s net worth and this liquid asset amount assures us that funds would be available in the event of an emergency without having to surrender annuity. Single Premium Deferred Annuity (SPDA) 7 years for $40,000 Age 60 Net worth of $100,000 Liquid assets of $12,000 Income of $25,000 Qualified funds with financial objective to accumulate for retirement income. This would be considered suitable. Client has 6 years until retirement, so funds would not need to be surrendered prior to this. Since the funds are qualified and being transferred into a qualified vehicle, the premium is in line with net worth, and liquid assets are close to 50% of person s income, indicating funds are available for emergency. The following is an example of a case that would not be considered suitable. SPDA 5 years for $150,000 Age 78 Net worth of $250,000 Liquid assets of $10,000 Income of $15,000 Financial objective to accumulate for retirement income. This would be considered unsuitable. The annuity amount is higher than an acceptable percent of the net worth to ensure a balanced portfolio. Older age and low liquid assets potentially have a greater risk to surrender in first five years. 3

5 Product Highlights Type Markets Issue Ages Minimum/Maximum Premium Minimum Guaranteed Credited Interest Rate Market Value Adjustment (MVA) State Availability Guarantee Terms Second Guaranteed Interest Rate Period Single Premium Deferred Annuity Qualified, Non-Qualified, IRA, Roth IRA or SEP Age Last Birthday $10,000 Certificate Minimum to $1,000,000 Certificate Maximum; over $1,000,000 (cumulatively) will require Home Office approval* 1% The MVA is applied to any surrender or partial surrender during the Guaranteed period and may either increase or decrease the Account Value. MVA is not available in California. US states except AK, AL, DE, HI, LA, MA, NH, NY 5 Years, 7 Years, 9 Years (California Only), 10 Years (all states but California) The annuity enters a Second Guaranteed Interest Rate Period for the same duration as the Initial Guaranteed Interest Rate Period. In Florida, there is no Second Guaranteed Interest Rate Period for the 7 and 10 year annuity when the Owner is age 65 or older on date of issue. *If the premium is over the maximum the agent must receive approval from Royal Neighbors in advance. Prior to writing the application, the agent will need to submit Annuity Exception Questionnaire Form Fax to: (844) , ATTN: Annuity Team. The request will be reviewed and the agent will be notified of the decision. State Specific Instructions/Exclusions California Initial Guaranteed Credited Interest Rate Periods are 5, 7, and 9 years. There is no MVA in California. Florida When the Owner is age 65 or older at issue, there is no Second Guaranteed Interest Rate Period for the 7 and 10 year annuity. 4

6 Frequently Asked Questions and Answers 1. What do I need to know about interest rate changes? Rate change notifications will be communicated to agents in advance of the rate change. Agents may receive the notification 2 weeks prior to the interest rate changes. When rates are decreasing: Applications received before the decrease effective date are allowed 60 days from the new effective date to receive funds and retain the prior interest rate. When rates are increasing: We will issue at the new higher interest rate when the funds are received. 2. What is the rate lock on the Royal Choice Annuity? 60 days 3. Can a Corporation or Trust own a Certificate? 4. What if the application is signed in a different state other than the resident state? The state in which the application is signed is the Issue State. The agent must be licensed and appointed in the Issue State. The Owner cannot reside, or sign an application, in a state RNA is not licensed in. 5. Are the commissions based on the age of the Owner or Annuitant? Commissions are based on the attained age of the Owner at the time the Certificate is issued. 6. Is there ever a chargeback of commissions? There is no chargeback for death. There is a 100% chargeback for surrender during the free look period. There is a chargeback on commissions equal to a percentage of the premium removed on partial surrenders (excluding interest), surrenders and annuitizations. 100% for 0-6 months and 50% for months Is there a commission chargeback on change of ownership? Yes, there is a chargeback of commissions if the change in ownership occurs within the first Certificate year and the age of the new Owner results in a different commission rate. 8. When will commission be paid to the Agent? Commissions are paid at Certificate issue via ACH. No paper checks. 9. Is there a limit on the amount of commission paid at issue? 5

7 10. What are the acceptable forms of payment? Money orders ($500 or less). No cashier s checks unless a bank letter is included indicating the name and account number. No starter checks, unless a bank letter is included showing account and name. No Cash on Delivery (COD) will be permitted. 11. Who should the checks be payable to? Royal Neighbors of America. 12. Can I add money to a Royal Choice Annuity after it has been issued? Once issued, no additional funds may be added to the certificate. 13. Does RNA accept inherited IRA s? 14. What if there are multiple transfers for one annuity? What if the funds are being transferred from multiple sources? Royal Neighbors will not issue the Certificate until all transfers have been received. Royal Neighbors will hold application open for 90 days. If funds are not received by then, Royal Neighbors will reach out to the Agent to discuss options. 15. Does RNA accept wire transfers? Yes, please contact Royal Neighbors of America for instructions on wiring funds. 16. Where do I send new business applications? Applications can be mailed, faxed or ed. Mailing Address: Royal Neighbors of America P.O. Box Clearwater, FL Overnight/Express Mailing Address: Royal Neighbors of America 2650 McCormick Drive Clearwater, FL Fax: (844) royalneighbors@aiasvcs.com 17. Who do I call if I have questions about the product, pending cases, outstanding requirements and customer service? (844) When will the Certificate be issued? Royal Neighbors will issue a Certificate when all funds and required forms are received and completed and meets Royal Neighbors underwriting standards. 6

8 19. Is there a delivery requirement? Yes. The Certificate must be delivered, and the delivery receipt must be signed, dated and returned to Royal Neighbors of America. The Certificate delivery receipt must be signed, dated and returned to start the free look period. 20. When does the free look period start? The free look period starts on the date the Owner receives the Certificate and signs and dates the receipt. The Agent can fax, mail or the receipt to Royal Neighbors of America. 21. Can the Owner take the interest only from her/his annuity? Yes. The Owner may withdraw any accrued interest earned in the current certificate year. Interest earned in the current certificate year (not cumulative) can be withdrawn without surrender charge or Market Value Adjustment. 22. What are the death benefits for the Royal Choice Annuity? If the Owner dies prior to the certificate maturing, death benefit proceeds paid will equal the account value without the Market Value Adjustment and without Surrender Charges. 23. Is spousal continuation allowed at death? Does the spouse have to be the beneficiary on the Certificate? If the spouse is named as the sole primary beneficiary, the spouse can continue the Certificate without surrender charges starting over. 24. What is the member packet my client will receive? Royal Neighbors will mail the membership package to the Certificate Owner after the certificate is issued, if the Owner is not already a Royal Neighbors of America member. The membership packet is sent separately from the Certificate. The welcome packet contains information about the client s local chapter as well as membership benefits. The Agent will not receive a copy of the membership packet. If the Agent is interested in the details on what is sent, additional information can be provided. 25. Does the Agent receive a copy of the member packet the client receives? 26. Can I get a Certificate number in advance to put on the check? 27. When does the Owner receive an annual report? Annually on Certificate anniversary. 28. Is the Agent copied on the annual report? 7

9 29. Is the Agent copied on letters the Owner receives?[ Only on new business letters. 30. Is the Agent copied on a death claim? 8

10 Important Contact Information Agent Web Portal: Download forms and applications See status of pending business See commissions Complete product specific training Order supplies Phone: (844) New Applications: Agent Supply Orders: Fax: New Applications: (844) Agent Supply Orders: (855) Mailing Address: Royal Neighbors of America Administrative Office P.O. Box Clearwater, FL Overnight/Express Mail Address: Royal Neighbors of America Administrative Office 2650 McCormick Drive Clearwater, FL Form 2978-B; Rev