With the implementation of Regulation Best Interest, ESI is reminding reps that the use of annuities within qualified accounts is generally limited to (click links for approved list):
- Indexed Annuities
- Registered Indexed Linked Annuities (RILA, aka Hybrid Variable Annuities)
- Variable Annuities with Living Benefit riders (income or accumulation)
In certain circumstances variable annuities without living benefit riders will be considered for qualified accounts if the following conditions are satisfied as outlined in FN 2018-12:
- The annuity will provide a leveraged or enhanced death benefit over the contract premium. Return of premium, contract value only, or potential step-up only death benefits are generally not eligible; there must be a roll-up feature.
- The annuitant is age 60 or older.
- The annuitant is uninsurable or heavily rated, making life insurance unavailable or cost prohibitive.
- The annuitant’s primary goal is for the annuity is to transfer maximum assets to their beneficiaries.
- The premiums should not be needed for living expenses, and only accessed in the event of an emergency.
The use of variable annuities without income riders or leveraged death benefit riders (as described above) would be considered investment-only variable annuities which are only permitted in non-qualified accounts.
Existing Annuities in Qualified Accounts
Investment-only variable annuities in qualified accounts that were established prior to 6/10/2017 are permitted to make additional investments, however since the investment strategy may be replicated with other lower cost and/or more liquid investments options, such as mutual funds, consideration should be given to utilizing those other options.
QUESTIONS
If you have any questions, please contact your supervisor or ESI Suitability at 800-344-7437.
TC125364(0222)1