Guide to Completing the. Form

Transcription

1 Guide to Completing the Form AIC 638; Rev. 3-17

2 When to Complete the Annuity Disclosure Form The purchase of a new variable annuity contract The purchase of a new fixed indexed annuity contract The purchase of a new, qualified Ameritas fixed annuity Contributions to existing variable annuity contracts* Contributions to existing indexed annuity contracts* Contributions to existing, qualified Ameritas fixed annuity contracts* * If no recommendation was made and the client acted alone in submitting funds to carrier, the RR does not need to complete the annuity disclosure form. However, a Principal from the Home Office may reach out to confirm this is the case.

3 Page 1: General Information A B C D A. Client Information & Product Name Provide the client s name (if joint, add the joint client s name on the same line). Provide the SSN of the client that the contract will be under. Provide the specific product name and the vendor or carrier it will be purchased through (ex. Jackson National, Ameritas). B. Tax Status Indicate if the funds are qualified or non-qualified as this will determine the level of review required for the purchase. If non-qualified funds are used, it must be suitable. If qualified funds are used, it must be in client s best interest. C. New or Existing Contract This form should be used for both new contract purchases as well as contributions to existing annuities. If purchasing a new contract, the disclosure must be completed in full. If client is adding to an existing contract, the policy number should be included and then only Sections IV and VI must be completed. D. Solicited vs. Unsolicited Indicate whether the purchase/contribution is solicited or unsolicited. Typically a new purchase will be solicited. Contributions to existing annuities could be either solicited or unsolicited.

4 Page 1 Section I: Type of Annuity Contract Proposed (VA) The left-hand column under Type of Annuity Contract Proposed should be completed in full if the client is purchasing a Variable Annuity. A. Fees & Expenses Provide all applicable base contract fees (found either in the prospectus or on Morningstar Annuity Intelligence). Provide the names and associated fees of all optional riders that were selected. Provide the total fees by adding the base contract fees plus the fees of all additional riders. B. Share Class Select the share class of the contract the client is purchasing (share class of the VA is not related to the underlying sub-accounts). Generally, the share class is indicative of the surrender period and base contract fees B Share VA: 5-7 yr surrender period; lower fees C share VA: No surrender period; higher fees L Share VA: 3-4 yr surrender period; higher fees X Share VA: 8-9 yr surrender period; higher fees; bonus If unsure of the share class, refer to the prospectus or look up on Morningstar Annuity Intelligence. C. Surrender Period & Charges Provide the surrender charge for each year of the surrender period. This information is available in the prospectus or on Morningstar Annuity Intelligence. A B C D D. Contract Holding Period Select the holding period that best aligns with the client s investment time horizon with regard to the proposed annuity contract. *If any section is not applicable to the contract the client is purchasing, write N/A.

5 Page 1 Section I: Type of Annuity Contract Proposed (FIA) If the client is purchasing an Indexed Annuity, the middle column under Type of Annuity Contract Proposed must be completed in full. A. Fees & Expenses Provide the administrative fees associated with the contract. If the fees don t apply, please write in 0 or N/A. If any optional benefits are chosen, provide the name(s) and fee(s) associated with each. B. Interest Crediting Factors* Provide the margin or spread percentage. Provide the initial earnings cap. Provide the initial participation rate. Provide the bonus or credit enhancement. Provide the bonus vesting schedule. If any of the above do not apply to the proposed contract, state N/A. *If selecting multiple indices, please list out the interest crediting factors for each index. Please use the margins on the form to include this information. C. Rating of the Issuing Company Provide the A.M. Best rating of the carrier. AIC s policy for indexed annuities states that the carrier must have a rating of A- or better by A.M. Best. D. Indexing Select the method of indexing that will be employed (select all that apply). Select the term of the index period (select all that apply). E. Selected Market Index Indicate the index or indicies that were selected on the proposed contract. F. Surrender Period & Charges Provide the charge (%) for each year of the surrender period. AIC s policy for fixed indexed annuities states that the contract cannot have greater than a 10 year surrender period with a maximum surrender charge no greater than 10%. G. Contract Holding Period Select the holding period that best aligns with the client investment time horizon with regard to the proposed annuity contract. A B C D E F G

6 Page 1 Section I: Type of Annuity Contract Proposed (FA) If the client is purchasing a qualified Ameritas Fixed Annuity, the right column under Type of Annuity Contract Proposed must be completed. The type of fixed annuity should be selected (deferred or immediate). A A. Deferred Fixed Annuity Provide the administrative fees associated with the contract. If any optional benefits are chosen, provide the name(s) and fee(s) associated with each. Provide the guaranteed minimum interest rate. Provide the rating of the issuing company. Select the premium type. Provide the charge (%) for each year of the surrender period. Select the holding period that best aligns with the client investment time horizon with regard to the proposed annuity contract. B. Immediate Fixed Annuity Provide the administrative fees associated with the contract. Provide the guaranteed minimum interest rate. Provide the rating of the issuing company. Select the premium type. B

7 Page 2 Section I: Intended Use of Contract Provide a detailed explanation as to why you believe the recommended contract will help meet the client s investment and retirement needs. Include in this explanation: Why specific riders were selected and when the client plans to utilize selected riders, If no riders were selected, how the features of the basic annuity will benefit the client, If the contract is a VA, specifically address how this purchase meets FINRA rule 2330 requirements, If the client intends to add more money to the contract in the future.

8 Page 2 Section II: Existing Annuity Holdings If the client does not have any current annuity contracts, this section does not need to be completed. This section allows the Principal to evaluate the number of contracts the client has, the types of contracts, the diversification between different carriers, what the client already has as far as living and/or death benefits, and finally, to understand how many of the client s annuities are liquid (out of surrender). Provide information on all current annuity contracts the client owns including: The type of contracts (variable, fixed or fixed indexed), The tax status of each contract (qualified or non-qualified), The vendor and product names, The surrender period remaining (if any) and surrender charge that would be assessed on the remaining years, If the contract has a rider such as stepped up death benefit or income benefit and the name of the riders, If the client has more than four contracts, attach a separate sheet with all requested information.

9 Page 3 Section III: Financial Information & Annuity Concentration This section provides a clearer picture of the client s overall financial situation, and the specific information that is requested here should align with the general financial information on the new account form. Please note that the client s primary residence cannot be included in their Net Worth or Liquid Net Worth. The client s total concentration in annuities will be considered in the suitability/best interest review as well as the client s current need for liquidity. If the client is disclosing joint financial information, the annuity holdings of both individuals must be included in this section. A detailed explanation is required if the client s concentration in annuities comprises 50% or more of their net worth OR if the proposed contract alone will make up 40% or more of the client s net worth as these are considered to be a relatively high concentrations in annuities.

10 Pages 3 and 4 Section IV: Source of Funds (Fixed or Variable Insurance Contract) If replacing an existing annuity or VUL contract to purchase the new contract, complete the first section under Source of Funds. Provide information on the current contract so that an accurate and thorough comparison between the current and proposed contracts can be performed. The requested information can typically be obtained from recent statements or from the carrier. A copy of a recent statement must be submitted along with the disclosure form. If any sections are not applicable to the product that will be liquidated, write N/A. The explanation for replacement should include reason(s) why the current product no longer meets the client s needs. Additionally, if there is a stepped up income or death benefit base that the client will be losing, address why this is in the client s best interest. Finally, provide any other factors that may help in explaining the recommendation to replace.

11 Page 4 Section IV: Source of Funds (Investment Product other than Insurance) If liquidating a securities product other than an insurance product, the second section under Source of Funds should be completed in full. A copy of a recent statement should also be included with the annuity disclosure form. A. Basic Information* Provide the company (vendor) and product name the holding(s) that will be liquidated. Provide the date of purchase and the name of the RR who sold the product to the client (if known). Included the original investment amount (if there have been additions or withdrawals, these should be taken into account, if known) If the client will incur a CDSC or surrender charge on the liquidation, include that amount in this section. Provide the net amount the client will receive after liquidation (if exact amount is not known, provide the general amount expected). B. Product Specific Information* Provide the fees the client is paying on the current product.** Provide any upfront sales charge the client paid to purchase the product. C. Risk Exposure Indicate the change in the client s exposure to risk as a result of the switch. D. Explanation Provide detailed reasoning as to why the current product no longer meets the client s investment objective, risk and/or retirement goals. *If after making a reasonable attempt to obtain some of the requested information, it is not known, state Unknown. **If the client is liquidating an account with multiple funds, the fees for each fund do not need to be disclosed. Instead provide an average of the fees charged to the client on the account.

12 Pages 4 and 5 Section IV: Source of Funds (Employer Sponsored Plan Roll-Over) If the annuity will be funded by the roll-over of an employer sponsored retirement plan, the third section under Source of Funds should be completed Information about the plan can be obtained from a copy of a statement or from plan documents If, after a reasonable attempt to obtain details about the plan, some information is still not known, state Unknown. Provide an explanation as to why it is in the client s best interest to move out of their qualified retirement plan and into the proposed annuity. Consider all factors including fees, investment options, accessibility of funds as well as any other factors considered in making the recommendation.

13 Page 5 Section IV: Source of Funds (Cash or Personal Check) If the client is purchasing the annuity contract with a personal check, the last section under Source of Funds should be completed In this section, the following explanation is required: The source of funds (savings from earnings, inheritance, sale of property, sale of a business, etc.) Why it was recommended that the client use these particular funds to buy this specific annuity

14 Page 7 Section VI: Acknowledgements and Signatures The client (and joint client, if applicable) must sign and date the form in Section VI. The RR must sign and date the form in Section VI. A Home Office Principal will sign off on the form as Supervising Principal.