California 8 Hour Annuity Training Course

This 8-hour course meets the state requirements for the required annuity insurance continuing education course, and is based on the content outline provided by the state of California. The course includes important information for those in the annuity business, including the historical development of annuities, their primary uses, types and classifications, the parties to the contract, fixed, variable, and indexed annuities, qualified and non-qualified plans, income taxes and annuities, sales practices, Medi-Cal, the senior market, record-keeping, penalties associated with violations, the California Life and Health Insurance Guarantee Association, and specific required attachments. 

Specifically, the course explores the following: 

• The historical development of annuities and how they evolved into the products and practices seen today as related to consumers, including a history of legislation; 
• The primary uses of and how the state defines annuities, and how the utilization of annuities helps fulfill consumer’s retirement goals as compared to other financial planning vehicles (e.g., certificates of deposit, mutual funds, bonds, savings accounts); 
• Types and classifications, including definitions, how and when premiums are paid, immediate and deferred annuities, and annuities types according to investment options; 
• Identify the parties to an annuity, including eligible persons and entities, rights of the owner and annuitant, rights and obligations of the insurance company, including non-qualified annuities, IRAs, tax-sheltered annuities, and qualified retirement plans; 
• Describing the rights and options available to beneficiaries, how Medi-Cal may affect home and facility rules, settlement options for annuities as an individual, a surviving spouse, and others; 
• How fixed, variable, and index annuity contract provisions affect consumers, including issue ages, maximum ages for benefits to begin, premium payments, market value adjustments, surrender charge waivers and triggering events, required notices, administrative charges and fees, withdrawal options and restrictions, and common contract provisions; 
• Identifying and discussing income distributions, including split-annuities, settlement and payout options, and advantages and disadvantages of the options; 
• Common contract provision, such as death benefits, charges and fees, interest rate strategies and crediting methods, minimum guaranteed interest rates, and how low interest rates impact the markets; 
• Variable annuities, including license requirements, prospectus, the Financial Industry Regulatory Authority (FINRA), general versus separate accounts, variable options, Securities and Exchange (SEC) regulation, equity and risk-based factors, charges and fees associated with variable contracts, dollar-cost averaging, and death benefit and living benefit guarantees; 
• Indexed annuities, including interest crediting strategies, spread, cap and par rates, minimum guaranteed interest rates, the impact of premature surrender charges, two-tier annuities and related concepts, and related charges and fees; 
• Identify and discuss available riders, such as life insurance, long-term care, crisis versus long-term care riders, qualifications for coverage and restrictions, skilled nursing, hospice riders, loan provisions, other riders, terms of riders, and costs; 
• Qualified and non-qualified plans and annuities, the difference between them, defined benefit and defined contribution plans, traditional and Roth IRAs, Tax-sheltered annuities (403b plans), 401(k) plans, Simplified Employee Pensions (SEPs) and annuities and retirement planning; 
• Income taxation of qualified and non-qualified annuities, including (but not limited to) the payment of premiums, cash value accrual, partial withdrawals, loans and assignments, IRS Section 1035 exchanges, annuities as gifts, sales of annuities, death of an annuity owner, benefits distributions, the exclusion ratio and its application in distributions, tax-deferred compounding, the tax effect on beneficiary and related estate issues, and Attachment II: Disclaimers; 
• Advantages and disadvantages of annuities for persons younger and older than age 60, including surrender charges, and illustrations showing alternatives, such as CDs, money markets, savings, mutual funds, stocks, bonds, commodities, options, limited partnerships, promissory notes, real estate investment trusts (REITs), and viatical settlements; 
• Sales practices for California life licensees, including life insurance annuity product training, the additional obligations of insurance producers, required disclosures, product-specific illustrations and sales aids, replacement, and the importance of reviewing sample contracts; 
• Appropriate advertising: general advertising, the definition of advertisement, envelopes, stationary, business cards, use of the word “insurance,” required information to be displayed, direct mailers, endorsement implications, exemptions, fines and penalties for violating code, internet ads, ads specific to seniors and veterans; 
• Prohibited sales practices,  such as selling annuities for Medi-Cal eligibility, selling to persons age 65 and older, prohibitions, assets and the community spouse resource allowance, in-home solicitations and the required notices and criteria, sharing commissions with attorneys, unnecessary replacement, bait and switch concerns pretext interviews, the unauthorized practice of law-drafting and delivering/interpreting legal documents, causes for suspension and revocation, loans, licensee named as beneficiary, trustee and/or power of attorney, and penalties for violations; 
• Client suitability: Best Interest standards, related definitions, acting in the consumer’s best interest, importance of determining client suitability using consumer profile information, the four obligations required in the best interest standard, disclosure obligations, conflicts of interest and how to handle them and related documentation, who the best interest obligations apply to, including activities not considered under this rule; 
• Insurer responsibilities, providing or delivering marketing or educational materials, product-specific training, pre- and post-issuance review of recommendations, licensee training, dual regulation, required full contact disclosures, policy cancellation and refunds, and free-look provisions; 
• Medi-Cal: home and facility care, with material on home equity limits, the establishment of the hardship exception, look-back periods, California’s role as remainder beneficiary of annuities, and the effect of annuity income on Medi-Cal qualifications; 
• The senior market and the duty of honesty, good faith, fair dealing, and the breaches of those duties, market volatility, risk tolerance and the senior client, pre- and post-retirement planning, financial concerns, like Social Security, retirement plan distributions, investing retirement assets, and surrender charges; 
• Insurance concerns, such as health, long-term care, and estate planning; 
• Selling to the senior market: product complexity, surrender charges, and the issue of buyer competence, including the recognition of indicators that the prospective insured may lack the short-term memory or judgment to legally enter into an insurance contract, when there are recissions of a contract based on mental incompetence, and suitability for the senior market; 
• Record-keeping - discussing the required records retention based on associated California insurance code sections; 
• Penalties: administrative, violations of provisions in the Insurance Code, penalty amounts, rescission of contract for senior insurance, and allegations of misconduct against a person who is a senior citizen; 
• Role of the California Life and Health Insurance Guarantee Association in relation to annuities; 
• Attachment I (Provider legislative reference), Attachment II (Life licensee disclosure requirements), and Attachment III - Penalties 
• Conclusion of course. There is a 45-question final exam that must be passed in order to receive certification for the course.