VARIABLE ANNUITY LETTER OF UNDERSTANDING

Transcription

1 VARIABLE ANNUITY LETTER OF UNDERSTANDING This form is required to be completed and submitted with the variable annuity application. Cutter and Company, Inc. would like to ensure that the product you are purchasing is suitable for you with consideration of your financial status and investment objectives. With your signature, you are certifying your understanding that an annuity is a long-term investment and that withdrawals may be subject to charges. Owner's Name: Age: Joint Owner's Name: Age: Product Name: Estimated Purchase Amount: Total Purchase as of Net Worth: Annuity Type: Qualified n-qualified A. HOUSEHOLD FINANCIAL INFORMATION 1. Household Income vs. Household Expenses A. Monthly Household Income B. Monthly Household Expenses (i.e. Employment salary, pension, Social Security, investment, disability) (i.e. Cost of daily living, mortgage/rent, car, health/ltc/auto insurance, loan repayments) 2. Household Net Worth: Assets - Liabilities (debts). Premiums for all household pending applications are to be included in the funding source(s) below. Liquid Assets - Does not include primary residence, personal possessions, cars, etc. n-liquid Assets - Does not include primary residence personal possessions, cars, etc. Current dollars invested Current dollars invested A. Stocks/Bonds E. Money Market B. Annuities - Out of surrender period C. Mutual Funds - (Excluding B shares) D. CDs J. Real Estate - (Exclude primary home) K. Annuties - In surrender period L. Pension/401(k) - (Under 59 1/2) M. Limited Partnership F. Checking/Savings G. Pension/401(k) - (Over 59 1/2) H. Net cash surrender value of life insurance (total of A through H) (total of J through M) I. Total Liquid Assets: N. Total n-liquid Assets O. Total Household Assets: (total of I plus N) P. Household Liabilities (debts): (exclude primary home mortgage) Q. Total Household Net Worth: (O minus P)

2 B. FINANCIAL OBJECTIVES 1. Why are you purchasing this annuity? 2. Excluding this transaction, has your representative sold you any other policies or annuity contracts? 3. Do you have sufficient funds available for monthly living expenses, medical expenses, and emergencies other than the funds planned for this annuity or any other annuities already owned? 4. Do you anticipate a significant change in your future income or expenses during the surrender charge period? If yes, explain: 5. What are your financial objective(s) in purchasing this product? (Check all that apply) Liquidity Transfer assets to beneficiaries Preservation of principal Guarantees provided Long-term growth Long-term growth, followed by income Guaranteed death benefit Guaranteed lifetime withdrawal benefit Safety Income now Flexibility Other (please explain) : 6. Describe your risk tolerance. (Check all that apply) Conservative Moderately Conservative Moderate Moderately Aggressive Aggressive Other (please explain) : 7. What other financial products do you own, or have you previously owned? (Check all that apply) CDs Fixed Annuities Variable Annuities ne Stocks/Bonds/Mutual Funds Years of Experience: C. ACCESSING YOUR MONEY 1. How do you anticipate taking distributions from this annuity? Required Minimum Distribution Penalty free Annuitize Interest only withdrawal Lump sum Leave to beneficiary Guaranteed lifetime withdrawal benefit Immediate income Immediate access to funds 2. Investment Time Horizon Short-term (1-5 years) Mid-term (5-10 years) Long term (more than 10 years) 3. When do you expect to take money out of this product? Less than 1 year Between 1 & 5 years Between 6 & 9 years 10 or more years ne anticipated 4. An annuity is a long-term contract with substantial penalties for early surrenders and/or withdrawals. Do you understand that if you take money out of this annuity, in excess of the penalty-free surrender amount during the surrender charge period, that you will incur a surrender charge and market value adjustment (also referred to as an interest adjustment in some annuity contracts/endorsements) - if applicable? D. FUNDING SOURCE & REPLACEMENTS OF LIFE OR ANNUITY CONTRACT(S) 1. Excluding this transaction, have you exchanged or replaced any other life policy or annuity contract within the last 5 years? If yes, please provide the transaction dates and corresponding companies:

3 (Section D Continued - Funding Source & Replacements of Life or Annuity Contract(s)) 2. Source of funds to purchase this annuity. (Check all that apply) Money Market/Brokerage Account CDs Salary reduction Death claim proceeds Reverse Mortgage/Home Equity Loan Checking/Savings Pension/401(k) Stocks/Bonds Mutual Fund Liquidation Sale of primary residence Inheritance Annuity Life Insurance 3. Is this a replacement of an annuity, life contract, or are the source of funds from a mutual fund liquidation? **IF YES, COMPLETE THE SWITCH AUTHORIZATION FORM** E. FEES & EXPENSES The surrender period and applicable surrender charges for this purchase are as follows: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Your contract will allow you to withdraw of your account value or principal (see prospectus) each year without paying a surrender charge. Following are the fees and expenses associated with this purchase: Mortality & Expense (M&E) Risk Charge Administrative Fees Charges for Riders or Special Features Additional comments related to fees and expenses: Bonus Credit Feature Additional Charges: Total Annual Charges INITIAL YOUR UNDERSTANDING OF ANY OF THE FOLLOWING ITEMS THAT PERTAIN TO THIS PURCHASE. Under 59 1/2 Years of Age - I am under 59 1/2 years of age and understand that there may be a tax penalty for withdrawals prior to age 59 1/2 70 Years of Age or Older - I am 70 years of age or older; however, I meet the age requirements for this purchase, as disclosed in the prospectus. This long-term investment is appropriate and meets my investment time horizon. Large Purchase Amount - My intended purchase is 100,000 or more and/or exceeds 30 of my liquid net worth. I understand this reduces the diversification in my portfolio, but I believe this purchase to be suitable for my situation and liquidity needs. Bonus Annuity Purchase - I intend to purchase a variable annuity which credits my account with a bonus. I understand that costs may be higher and/or the surrender charge period may be longer than a comparable annuity without the bonus features. Qualified Plan Purchase - I understand that the tax deferral features of the variable insurance product are unnecessary because my qualified plan itself provides this feature. I have a need for the other benefits of this product such as guaranteed income, death benefit, and other features discussed in the prospectus. PLEASE REMEMBER TO COMPLETE SWITCH AUTHORIZATION FORM ON NEXT PAGE, IF APPLICABLE F. OWNER'S ACKNOWLEDGEMENT & SIGNATURE I have received a prospectus and understand the material features of the product we are purchasing. I understand that the value of the underlying sub-accounts will fluctuate in response to market changes and other factors and the values are not guaranteed. I understand that an annuity is a long term investment and my representative has reviewed the product features and benefits of this annuity as well as any applicable fees and surrender charge schedule with me. I understand that my variable insurance contract has a "free look" period during which I can terminate the contract without paying any surrender charges. By signing below, I certify that: 1) to the best of my knowledge and belief, the information provided to my representative, and shown above is true and complete; 2) the annuity meets my financial needs and objectives; and 3) this annuity is suitable for me. Owner's Signature Joint Owner's Signature Representative's Signature

4 EXPLANATION OF TERMS Owner's Name - List the person(s) who will own this annuity. Product's Name - List the product that is being applied for. Estimated Purchase Amount - What is the total amount of premium being used to fund this purchase? Annuity Type - What type of annuity is being applied for: Qualified or n-qualified? Tax status of the contract is critical for suitability. We recommend you keep accurate records of the origin of the funds in the event further review is necessary. Household Financial Information Monthly Household Income - What is your approximate monthly household income? Include your spouse's/partner's income in this value. Annuities in payout are considered a source of income. Monthly Household Expenses - What is your approximate monthly household expense? Include your cost of living, mortgage/rent, car, auto, health and LTC insurance, as well as any loan payments. Household Net Worth: Assets - Liabilities (debt) Do not include the value of primary residence, personal possessions or automobiles in this figure. Liquid Assets - These are defined as assets that are readily available without surrender charges or other penalties upon withdrawal. n-liquid Assets - These are defined as assets that cannot be converted into cash quickly. Surrender charges or other fees may apply to convert these assets to cash. Household Liabilities - Do not include the mortgage on your primary residence. Examples of debt are credit card debt, student loans, mortgages on other property, etc. Financial Objectives Financial Objectives - What are your objectives for purchasing this annuity? Check all that apply. If there are objectives not listed, specify in the "other" section. Describe your risk tolerance - Check all that apply. Other Financial Products - Check all that apply and include the years of experience in each investment. Accessing Your Money How do you anticipate taking distributions? Check all that apply. If you are unsure of how you will take distributions, select the most likely choice. Responses are not binding. Please note: A lump sum is not considered income for the purposes of suitability. Investment Time Horizon - Total length of time that you expect to hold this annuity investment based on your income needs and desired risk exposure. When do you anticipate taking the first distribution? Check only one choice. If unsure or you do not anticipate taking distributions, select "none anticipated." Funding Source & Replacements of Life or Annuity Contracts Source for this annuity premium - Check all that apply. Is this transaction considered a replacement of an annuity or life product? A replacement occurs when a new policy or contract is purchased and, in connection with the sale, you discontinue making premium payments on the existing policy or contract, or an existing policy or contract is surrendered, forfeited, assigned to the replacing issuer, or otherwise terminated or used in a financial purchase. If yes, do you incur a surrender charge for this replacement? Be aware of the impact of surrender charges compared to the benefits of the replacement. If there is a surrender charge, list the percentage of the charge on each policy or contract being replaced. Please document your files with the original contract value and surrender charge for each replacement in case further review is necessary. Fees & Expenses Please review this section with your producer. It is imperative that you understand the fees and expenses in association with withdrawals from this annuity. Initial Your Understanding - Initial where applicable your understanding of the listed items as they pertain to this annuity purchase.

5 REPRESENTATIVE'S CONFIRMATION: te: The following section is to be completed by the representative proposing purchase. Each question requires a response. section may be left blank or contain a response of "ne" or "N/A". 1. Advantages of purchasing the proposed annuity : 2. Disadvantages of purchasing the proposed annuity : 3. The basis for my recommendation to purchase the proposed annuity or to replace or exchange your existing annuity(ies) : Representative's Signature Cutter & Company Principal's Signature