Purchasing or Exchanging Variable Annuities

What this video covers

• The difference between deferred and immediate variable annuities, and why deferred annuities are the primary focus of sales-practice rules
• Every layer of variable annuity fees, from mortality and expense (M&E) risk charges to contingent deferred sales charges (CDSC), rider charges, and 12b-1 fees
• Why the 10% free withdrawal allowance avoids surrender charges only and does not protect from the 10% federal tax penalty if the owner is under age 59 1/2
• Exceptions to the 10% early withdrawal penalty, including death, disability, terminal illness, and substantially equal periodic payments (SEPP), also called 72(t) distributions
• How right of accumulation (ROA) uses breakpoints to reduce fees, and how that differs from waiver of premium, which is a disability rider typically on variable life insurance
• The permitted directions of 1035 tax-free exchanges and why an annuity can never be exchanged backward into life insurance
• The 36-month look-back rule and why supervisors review it to detect churning for commissions