Characteristics and Insurance Features
Chapters in this video
- 0:00 The split personality product: mutual fund stitched to insurance policy
- 0:43 Cast of characters: Carla's need, Riley's pitch, Sam's compliance check
- 1:09 The dual anatomy: subaccounts in the separate account, guarantees in the general account
- 2:37 Two phases, two units: accumulation phase versus annuity phase
- 3:41 General account versus separate account: the pause-and-check moment
- 4:45 Guaranteed minimum death benefit: greater of account value or premiums paid
- 5:42 Decoding the living benefit acronyms: GMIB, GMWB, GMAB
- 6:53 Rider charges and the drag on market returns
- 7:19 The tax trap: no step-up in cost basis at death
- 8:13 Rapid-fire exam recap: four must-know checks
What this video covers
- Why a variable annuity requires both a securities license (Series 6 or Series 7) and a state insurance license to sell, plus broker-dealer association
- The accumulation phase versus the annuity phase, and the critical conversion from accumulation units to annuity units at annuitization
- Which account holds market risk (the separate account) versus which account backs insurance guarantees (the general account), and why the claims-paying ability of the issuer matters
- How the guaranteed minimum death benefit (GMDB) pays the greater of current account value or total purchase payments minus withdrawals, and why it bypasses probate
- What each living benefit rider guarantees: guaranteed minimum income benefit (GMIB), guaranteed minimum withdrawal benefit (GMWB), and guaranteed minimum accumulation benefit (GMAB)
- The typical 0.50-1.50% annual rider charge deducted from the benefit base, and how fees compound with each added guarantee
- Why inherited variable annuities do NOT receive a step-up in cost basis at death, and why the earnings portion is taxed as ordinary income to the beneficiary
- What happens to guarantees if the issuing insurance company becomes insolvent, and why the separate account assets remain protected
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