IRES / JMRF St. Louis, MO August 2014

Transcription

1 Life and Annuity Basics IRES / JMRF St. Louis, MO August 2014

2 Presented by Gary Frank, Vice President of Compliance Global Atlantic Life and Annuity Ernest Nickerson, Senior Manager Risk and Regulatory Consulting Mary Mealer, Life and Health Manager Missouri Department of Insurance Jim Mealer, Chief Market Conduct Examiner Missouri Department of Insurance

3 Life Insurance

4 History of Life Insurance Roman Military 100BC Burial Expenses 1800 s Creation of new insurance companies Impact of Depression Widow and Orphaned Children Fund 1900 s First Group policy issued 1911 Post World War Today

5 Life Product Types Term Life Insurance Permanent Life Insurance Whole Life Universal Life Variable Life Equity Indexed Life

6 Analysis of Life Insurance needs Who purchases life insurance and why???

7 Ownership Defined: The policy owner is the person named in the insurance contract who has control Rights: To name beneficiary To assign the ownership To surrender or cancel the policy To borrow money from the policy

8 Beneficiary Defined: the person(s) who will receive the life insurance proceeds upon the insured s death Types: Primary and contingent Specific or Class Revocable or irrevocable

9 Life Insurance Riders Defined: additional coverage that can be added to the base policy Types: Waiver of Premium Return of Premium Accidental Death Guaranteed Renewability

10 Life Insurance Riders continued Types Long Term Care Disability Critical Illness Living Benefit (Accelerated Death) Payer Benefit Family Insurance

11 Recent Evolution of Life Insurance Life Settlement Viaticals STOLI COLI

12 Market Regulation Aspects of Life Insurance Products Market Conduct Annual Statement Market Conduct Examinations and Investigations

13 Annuity Basics

14 Annuity History Roman Empire Annua Middle Ages 1800 s Funding for Pennsylvania church pastors Benjamin Franklin 1900 s Multi-generational home decline First Variable Annuity--1952

15 Annuity Defined Annuity: a specified income payable at stated intervals for a fixed or a contingent period, usually the recipient s life, in consideration for a stipulated t premium paid either in a single payment or in prior installment payments.

16 Analysis of Annuity needs Who purchases annuities and why???

17 Parties to an Annuity Insurance Company Owner Annuitant Beneficiary

18 Types of Annuities Immediate income stream begins upon receipt of the first premium Deferred income stream begins later

19 Annuity Phases Accumulation growth begins after the first payment by annuitant Annuitization the point where the insurance company begins to payout

20 Basic Types of Deferred Annuities Fixed Fixed Indexed Variable

21 Fixed Principal guaranteed by insurer* Minimum interest rate guaranteed Current interest rate determined by the companies rate setting committee Low risk product *principal can be impacted by surrender charges during the surrender period

22 Fixed Deferred Indexed Annuities Partial or whole principal guaranteed by the insurer* Minimum interest rate may be guaranteed Current interest rates determined by market index Not as liquid id as Fixed Deferred Annuities * principal can be impacted by surrender charges during the surrender period

23 Variable Annuities Market based investment without guarantees* A security Agents must have both FINRA and insurance license * typically consumers may purchase riders at an additional cost that will guarantee the principal.

24 Methods of Funding Single Premium Fixed Premium Payments Flexible Premium Payments

25 Advantages Guaranteed income stream Tax deferred Protection of assets from probate and p creditors depending on state law

26 Disadvantages Fees and Penalties Liquid Limitations withdrawal charges Long term commitment Can be complex products Taxed at ordinary income

27 Common Annuity Riders Income riders Enhanced death benefit riders Long term care riders Cost of Living riders Guaranteed anteed Minimum m accumulation value Guaranteed Minimum withdrawal benefit

28 Market Regulation Aspects of Annuity Products Market Conduct Annual Statement Market Conduct Examinations and Investigations Suitability