IMPORTANT NOTICE: Fidelity & Guaranty Life Releases Improved Suitability Form

Transcription

1 ` IMPORTANT NOTICE: Fidelity & Guaranty Life Releases Imprved Suitability Frm Fidelity & Guaranty Life greatly appreciates yur cperatin in helping make ur redesigned suitability prgram as effective and efficient as pssible since it was intrduced in January Since then we have made peridic changes always lking t imprve the prgram and tday we are annuncing additinal adjustments which include revising ur Suitability Acknwledgement Frm and streamlining ur escalatin review prcess. These changes will take effect n April 1, ========================== First, we have mdified the Suitability Acknwledgement Frm t make it clearer and mre user-friendly. Attached yu will find a cpy f the updated Suitability Acknwledgement Frm (ADMIN ) tgether with an anntated versin highlighting key changes. Sme f the changes include: Mving the multiple applicatins fr the same husehld bx at the tp f the first page t make it mre prminent. Clarifying the residence questin item 2 - t split ut applicant and c-applicant and prvide clearer chices as between hme, assisted living facility, and nursing hme cnfinement. Mdifying item 6 the questin abut the reasn fr purchase t ask whether the annuity is being purchased t qualify fr any gvernment prgram benefits (previusly the questin nly asked abut Medicaid and VA benefits but since Safeguard is n lnger a prduct ptin we have mdified this questin and remved the related questin whether an annuity bught t qualify fr Medicaid r VA benefits was purchased at advice f cunsel). Prviding n the financial page fr a breakdwn f liabilities as between shrt and lng term liabilities s it can be determined whether debts affect the suitability f purchasing an annuity. Clarifying the anticipated distributins questin item 11 s it is mre precise in asking abut distributins ther than RMDs, GMWB withdrawals, and surrender charge free withdrawals r annuitizatins. Adding a questin, item 16, whether the applicant has a reverse mrtgage even if the reverse mrtgage is nt the funding surce which is nw required t be asked in certain states and helps us ensure an annuity purchase is nt being indirectly funded by such financing. Significantly revising questins n surrender csts assciated with any replaced prduct which will nw be item 17 requiring amng ther things that agents prvide accunt value prir t surrender charges, surrender charge amunt, surrender charge percentage, and MVA amunt whether psitive r negative. Clarifying the ratinale questin item 19 t fcus n the psitive financial benefit fr the applicant ver the life f the annuity. Fidelity & Guaranty Life is the marketing name fr Fidelity & Guaranty Life Insurance Cmpany issuing insurance in the United States utside f New Yrk and, in New Yrk nly, Fidelity & Guaranty Life Insurance Cmpany f New Yrk. Each Fidelity & Guaranty Life cmpany is slely respnsible fr its cntractual cmmitments. FOR PRODUCER USE ONLY NOT FOR THE USE WITH THE GENERAL PUBLIC. Fidelity & Guaranty Life Insurance Cmpany, Baltimre, MD w w w. f g l i f e. c m

2 It is imprtant that yu familiarize yurself with the changes because cmpleting the frm cmpletely and accurately is always the best way t expedite the suitability review prcess and avid unnecessary delays in the prcessing f applicatins. Secndly, in additin t mdifying the Suitability Acknwledgement Frm, we are als making changes t streamline ur review prcess t help reduce fllw up requests fr agents and clients. A thrugh descriptin f ur current prcess can be fund in ur Annuity Suitability Instructins and Definitins (ADMIN 5542) and ur Agent Suitability Guide Questins and Answers (ADMIN 5627). In rder t make this prcess mre efficient, we will be adpting stricter frnt-end review standards, which means we may be declining sme applicatins in rder t reduce escalatins and thereby speed up the verall review prcess. Mre specifically, ging frward, we will be declining applicatins autmatically that d nt meet certain minimum standards. Fr example, the cmpany will n lnger be cnsidering any applicatin where the suitability acknwledgment frm shws the client t have less than $20,000 in remaining liquid assets. Whereas this has been a benchmark fr clser review in the past, nw it will be a minimum requirement, and any applicatins shwing less than that amunt in remaining liquid assets will be declined withut further review. We will be adpting similar guidelines n ther factrs such as surrender charges incurred n replaced annuities which may cause autmatic decline r in ther cases result in clse scrutiny beynd ur usual heightened review. While there are n bright lines in suitability because each case is inherently unique, we plan t use the fllwing minimum criteria fr reviewing applicatins frm a suitability standpint, and yu may want t use these as guidepsts in determining whether t submit an applicatin n behalf f yur client, knwing applicatins that d nt meet these simple criteria in sme cases may be autmatically declined r at least subject t clse scrutiny beynd ur usual heightened review: A minimum f $20,000 in remaining liquid assets Surrender charges n greater than five percent (market value adjustments applied against surrender charges will typically be cnsidered nly up t 50% f MVA value) Incme f at least $18,000 per year Dispsable incme f at least 10% f net incme Amunt f annuity is n greater than 50% f ttal liquid assets fr applicants 65 r ver and n greater than 75% fr applicants under 65 T be clear, these criteria are nt exclusive and applicatins meeting these criteria are still subject t decline r fllw up questins depending n all the factrs cnsidered in ur suitability review. Fr example, we typically expect remaining liquid assets even if in excess f $20,000 - t equal at least six mnths f expenses if the applicant is emplyed and twelve mnths f expenses if the applicant is unemplyed. Hwever, we are hpeful by sharing these basic minimum criteria, yu can better gauge whether it is wrthwhile submitting applicatins fr ur cnsideratin. FOR PRODUCER USE ONLY NOT FOR THE USE WITH THE GENERAL PUBLIC. Fidelity & Guaranty Life Insurance Cmpany, Baltimre, MD w w w. f g l i f e. c m

3 What we have fund ver the last year is that the cmpany suitability team spends cnsiderable time reviewing certain cases that are clse calls frm a suitability standpint which invariably entail cnsiderable back and frth with agents and clients wh ftentimes get frustrated with this prcess. While we believe that kind f detailed hands-n review wrks well in assessing the unique circumstances f each applicatin resulting in mre refined analysis n clse call cases, it is inherently time-cnsuming and requires mre wrk fr hme ffice persnnel and agents. Thus we are mving in the directin f tightening frnt-end standards t reduce escalatins and thereby imprve the verall experience fr agents and clients, even if it means the pssible lss f business that might therwise ultimately be cnsidered suitable. We are cnfident in the lnger run this streamlined prcess based n the abve minimum standards - will be better fr all cncerned. If yu have questins r cncerns, yu are always welcme t discuss this with ur Reginal Sales Vice Presidents. ======================== It is ur hpe that these changes in ur suitability frm and prcedures will serve as anther step frward in making ur suitability prgram bth effective and efficient. Our gal always is t ensure we fulfill ur regulatry duty t review applicatins fr suitability prir t issuance while at the same time facilitating new business prcessing t avid unnecessary paperwrk r delays. Of curse we reserve the right t make further changes t ur prgram and t make exceptins as necessary t take int accunt the individual circumstances f each client and situatin. As we cntinue imprving ur frms and prcedures frm time t time, we always welcme yur input s let us knw if yu have questins, ideas, r cncerns. Thank yu fr yur cntinuing business with Fidelity & Guaranty Life and yur cntinuing interest in gd cmpliance practices. FOR PRODUCER USE ONLY NOT FOR THE USE WITH THE GENERAL PUBLIC. Fidelity & Guaranty Life Insurance Cmpany, Baltimre, MD w w w. f g l i f e. c m

4 Mved this checkbx n the frm t make it mre prminent since it was smetimes verlked. Remved checkbx fr FG Safeguard- Incme which is n lnger ffered. Revised residence questin s it is mre precise as t type f residence fr wner and jint wner. Checkbx mdified s it pertains t any gvernment prgram nt just Medicaid and VA if a primary reasn fr buying annuity is t qualify fr benefits.

5 Clarified that qualified plans are cnsidered Liquid Assets if the applicant is ver 59½ and there are n penalties n any annuity prducts funding the qualified plan. Otherwise treat the qualified plan as Nn-Liquid Assets. Blanks have been added t shw lng term and shrt term debts which must add up t ttal liabilities. Lng term debts are thse extending beynd the annuity surrender perid. Shrt term debts are thse cming due within the surrender perid.

6 This questin has been clarified t ask nly abut anticipated distributins ptentially subject t surrender charges. RMDs, GMWB withdrawals, surrender charge free withdrawals, and surrender charge free annuitizatins are mre clearly excluded. Surrender charge infrmatin pertaining t any replaced prduct is nw cnslidated under questin 18 which includes a table calling fr details abut accunt value, surrender charges, and MVA. IMPORTANT NOTE: d nt reduce surrender charges by any bnus n the new annuity r MVA adjustment n the replaced annuity. This questin is new asking whether the applicant has a reverse mrtgage even if it is nt the surce f funds fr the annuity. Generally annuity purchasers shuld nt have reverse mrtgage bligatins. Nte the lk-back questin whether there were previus replacements within the past 3 years ges back 5 years fr Califrnia as required by that state s law. Clarificatin is prvided as t the type f infrmatin needed if there were previus replacements t expedite suitability review.

7 This questin n ratinale is clearer that the prpsed transactin must result in a psitive financial benefit ver the life f the annuity.

8 Prduct Infrmatin ADMIN 5463 Suitability Acknwledgement Frm Please check this bx if submitting multiple applicatins fr the same husehld ANNUITY TYPE (check ne) Qualified Nn-Qualified Infrmatin abut the Owners DEFERRED/IMMEDIATE ANNUITY (check ne) Fixed Indexed Multi-Year Guarantee FG Immediate-Incme Owner s Name: (see instructins if Owner is nt a natural persn) Jint Owner s Name: Age: Age: 1. Wrk Status: Owner: Retired Emplyed Unemplyed Other Jt. Owner: Retired Emplyed Unemplyed Other 2. Residence: Owner: Living at hme Assisted Living Facility Nursing Hme Jt. Owner: Living at hme Assisted Living Facility Nursing Hme 3. Federal Tax Rate: 0% 10% 15% 28% 33% + 4. D yu currently r have yu previusly wned any f the prducts listed belw and fr hw lng? 0-5 yrs. > 5 yrs. 0-5 yrs. > 5 yrs. Stcks & Bnds Gvernment Securities Mutual Funds Fixed Annuities Variable Insurance I have nt wned any f the abve prducts. Certificates f Depsit 5. What is yur risk tlerance? Cnservative Mderate Aggressive* Cautius Des nt like t take Cmfrtable expsing sme Attempt t achieve maximum n any risk r minimal risk assets t vlatility returns takes n additinal risk *Fixed Annuities are generally NOT cnsidered aggressive savings vehicles. They are nt securities and d nt cnstitute a direct investment in the stck market. 6. What are the primary reasns fr purchasing this annuity? (please check 1-3 primary reasns) Tax Deferral** Ptential fr better rate Prtectin frm Market Risk Retirement Incme Wealth Accumulatin Death Benefit Qualify fr Gvernment Prgrams (e.g., Medicaid, VA) Immediate Incme Estate Planning Other **Annuities purchased in a tax qualified accunt ffer n additinal tax deferral benefit ver ther tax qualified prducts r accunts. ADMIN 5463 ( ) Fidelity & Guaranty Life Insurance Cmpany Baltimre, MD Fidelity & Guaranty Life Insurance Cmpany f New Yrk New Yrk, NY Page 1 f 4

9 ADMIN 5463 Suitability Acknwledgement Frm Financial Infrmatin (client financial infrmatin prir t purchase f annuity) Please prvide all the infrmatin belw and perfrm calculatins in bxes (c),(d),(e),(f),(h) and (j). 7. Surce(s) f Incme Salary/Wages Scial Security Interest Incme Dividends Pensin/IRA Payments Other Annuities Trust Incme Other 8. Mnthly Incme/Expenses Apprximate Mnthly Husehld Incme (net after taxes): $ (a) Apprximate Mnthly Husehld Expenses: $ (b) Mnthly Dispsable Husehld Incme: $ (c) (a) (b) = (c) 9. Nn-Liquid Assets Value f Hme Business Interests Other Real Estate Qualified Plans (if under 59½) Mutual Funds/Brkerage Accunts nt readily cnvertible t cash withut penalty Annuities/Insurance cash values subject t surrender penalties Other Ttal Nn-Liquid Assets: $ (d) 10. Liquid Assets Cash Shrt Term CDs Checking/Savings/Mney Market Qualified Plans (if ver 59½ and n surrender penalties) Mutual Funds/Brkerage Accunts readily cnvertible t cash withut penalty Annuities/Insurance cash values nt subject t surrender penalties Other Ttal Liquid Assets: $ (e) Grss Value f Assets $ (f) (Ttal Nn-Liquid Assets plus Ttal Liquid Assets) (d) + (e) = (f) Ttal Liabilities, Debts, and Lans Lng term (e.g., mrtgage) $ + Shrt Term (e.g., credit cards) $ = $ Ttal Net Wrth $ (h) (f) (g) = (h) What is the ttal amunt f this annuity purchase? $ Amunt frm liquid assets? $ (i) Amunt frm nn-liquid assets? $ Remaining Liquid Assets (after purchasing this annuity) $ (j)* * (j) = (e) (i) if annuity is purchased with liquid assets (j) = (e) if annuity is purchased with nn-liquid assets (g) ADMIN 5463 ( ) Fidelity & Guaranty Life Insurance Cmpany Baltimre, MD Fidelity & Guaranty Life Insurance Cmpany f New Yrk New Yrk, NY Page 2 f 4

10 Other Imprtant Cnsideratins ADMIN 5463 Suitability Acknwledgement Frm 11. With the exceptin f any (i) RMDs (required minimum distributins), (ii) GMWB (guaranteed minimum withdrawal benefit) withdrawals, r (iii) surrender charge free withdrawals r annuitizatins, d yu anticipate taking distributins frm this annuity and when? (Nt applicable t single premium immediate annuities) 0-5 year frm nw 6-7 years frm nw 8-10 years frm nw years frm nw 15 r mre years frm nw D nt plan t take distributins ther than RMDs, GMWB, and surrender charge free withdrawals 12. After purchase f this annuity, d yu believe yu have enugh remaining liquid assets and ther surces f incme t cver any emergencies r cntingencies such as sudden health care needs r increased living expenses? Yes N 13. D yu anticipate any adverse change in assets, living expenses, medical expenses, and/r incme during the surrender perid f this cntract? Yes N (if yes, please explain): 14. Is the purchase f this annuity in any way cnnected t r based n infrmatin prvided during the establishment f a trust sld t yu by (i) yur Fidelity & Guaranty Life (FGL) agent r affiliate f yur FGL agent r (ii) an attrney prvided t yu thrugh yur FGL agent r affiliate f yur FGL agent? Yes N 15. What is the surce f funds fr this annuity purchase? (check all that apply) Cash r Cash Equivalent Anther Fixed Annuity Variable Annuity Life Insurance Cash Value Mutual Fund Redemptin Inheritance 16. D yu have a reverse mrtgage? Yes N Reverse Mrtgage/Hme Equity Lan Other (please specify): 17. Will yu have t pay any surrender charge r penalty t withdraw funds frm yur current financial prduct (i.e., the surce f funds fr this annuity purchase)? Yes N If yes, prvide the name f the cmpany and prduct, accunt value prir t surrender, dllar amunt f surrender charge r penalty, and percentage f surrender charge r penalty. D nt reduce the amunt r percentage by any bnus earned n the prpsed annuity and d nt reduce the penalty by ffsets such as psitive MVAs (market value adjustments). If applicable prvide MVA amunt separately and indicate psitive r negative. Cmpany/Prduct Accunt Value Prir t Surrender Charge r MVA Surrender Charge Amt ($) Surrender Charge Amt (%) MVA Amt ($) (+/-) 18. If surce f funds is an annuity r life insurance plicy, indicate whether yu replaced r exchanged any life r annuity cntracts within the past 36 mnths (past 60 mnths if yu reside in Califrnia): Yes N Surce f funds is nt an annuity r life insurance plicy If yes, describe details f past replacements (e.g. hw lng ag, whether they invlved the same agent, whether they invlved the same funds): ADMIN 5463 ( ) Fidelity & Guaranty Life Insurance Cmpany Baltimre, MD Fidelity & Guaranty Life Insurance Cmpany f New Yrk New Yrk, NY Page 3 f 4

11 Ratinale (t be cmpleted in all cases whether r nt a replacement) ADMIN 5463 Suitability Acknwledgement Frm 19. Basis fr recmmendatin t purchase this annuity explaining hw this purchase taking int accunt surrender csts r ptential disadvantages f any exchange r replacement will result in a psitive financial benefit fr the applicant ver the life f the annuity: Acknwledgements I understand an annuity is a lng term cntract that I shuld nt plan t fully surrender befre cmpletin f the surrender charge perid. I understand that my principal may be subject t a surrender charge if I surrender r partially surrender my cntract befre cmpletin f the surrender charge perid. I understand that this annuity charges a surrender charge schedule beginning at % and declines ver years. I understand surrender charges may apply t withdrawals, withdrawals may be taxable and when made befre age 59½, may result in tax penalties. I understand annuities that ffer bnus features may have higher fees and charges, lwer credited interest, and lnger surrender charge perids than annuities that d nt prvide a bnus feature. (if replacement) I understand the benefits and csts f this replacement, including but nt limited t surrender charges, pssible lss f benefits, tax cnsequences, prduct features and enhancements, fees, and expenses. My Agent has prvided a cmparisn f the benefits and restrictins f bth cntracts. I understand that I shuld cntact my tax prfessinal r attrney fr any tax r legal advice. DO NOT SIGN THIS FORM IF ANY ITEM IS LEFT BLANK. PLEASE CAREFULLY REVIEW THE FORM AND SIGN ATTESTING THAT THE INFORMATION IS TRUE AND CORRECT TO THE BEST OF YOUR KNOWLEDGE. Owner/Applicant's signature Jint Owner/Applicant's signature Agent s Statement Date Date I believe the purchase f this annuity cntract is suitable after carefully reviewing the suitability infrmatin prvided t me by the Owner. If applicable, I have discussed the advantages and disadvantages f any replacement r exchange f anther annuity cntract r life plicy. I have reasnably infrmed the wner(s) f all imprtant features f the annuity and prpsed transactin. T the best f my knwledge, the questins n this frm have been answered truthfully and I have cmplied with Fidelity & Guaranty Life suitability requirements cnsistent with my cntractual bligatins. Agent signature Agent s Printed Name and Prducer Number Date ADMIN 5463 ( ) Fidelity & Guaranty Life Insurance Cmpany Baltimre, MD Fidelity & Guaranty Life Insurance Cmpany f New Yrk New Yrk, NY Page 4 f 4