Insurance Based Products: Rapid Fire
Chapters in this video
- 0:00 The magic word that sorts every product
- 1:07 Separate account versus general account: the two-column split
- 1:51 Indexed annuity: the exam trap with a guaranteed floor
- 2:51 Life insurance evolution in four steps to VUL
- 3:28 Unsuitable: variable annuity inside an IRA
- 4:17 LIFO versus exclusion ratio: the two tax phases
- 5:01 All annuity gains are ordinary income, never capital gains
- 5:51 Age 59 1/2, 10% penalty, and 1035 exchange direction rules
- 7:26 Life only versus joint and survivor payouts
- 7:58 Rapid-fire exam recap
What this video covers
- Why the word "variable" instantly identifies a separate account product, client-borne investment risk, and the need for both a securities and insurance license
- How fixed, indexed, term, whole, and universal life sit in the general account with insurer-borne risk, state regulation only, and no prospectus
- The indexed annuity exam trap: participation rate, cap rate, spread, and floor do not make it a security because the guaranteed floor means zero client investment risk
- Why funding an individual retirement arrangement (IRA) with a variable annuity is unsuitable: redundant tax deferral, extra fees, and surrender charges with no added benefit
- How accumulation-phase withdrawals use Last In, First Out (LIFO) taxation while annuitization payments use the exclusion ratio, and why mortality and expense (M&E) charges stop at annuitization
- Why all annuity gains are ordinary income without exception, even from decades in equity subaccounts, while life insurance death benefits pass income-tax-free to beneficiaries
- How a 1035 exchange carries basis across or down (life to annuity allowed) but never up (annuity to life barred), and why surrender charges still apply
Read the full lesson, free
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