Characteristics and Insurance Features
Chapters in this video
- 0:00 The two-headed hybrid: security plus insurance
- 1:16 Dual licenses Riley needs to sell
- 2:32 Separate account versus general account
- 3:06 Accumulation units and annuity units
- 3:57 Death benefit mechanics and tax traps
- 5:15 GMIB, GMWB, GMAB cage match
- 6:23 Guarantees backed by the general account vault
- 7:04 Rapid-fire exam recap
What this video covers
- Why a variable annuity is simultaneously a security and an insurance product, and which licenses Riley the rep must hold to sell one legally
- How the separate account (roller coaster, investment risk to owner) differs from the general account (steel vault, backing for guarantees)
- The two phases of a variable annuity: accumulation phase with accumulation units, then annuitization into annuity units during the payout phase
- How the guaranteed minimum death benefit (GMDB) pays the greater of current account value or total premiums minus withdrawals, and why enhanced riders step up or ratchet to lock in highs
- Why death benefit earnings are taxed as ordinary income to the beneficiary, and the critical absence of a step-up in cost basis for inherited annuities
- The three living benefit riders side by side: guaranteed minimum income benefit (GMIB), guaranteed minimum withdrawal benefit (GMWB), and guaranteed minimum accumulation benefit (GMAB)
- Why all insurance guarantees depend on the claims-paying ability of the issuing insurance company, not the separate account, and what happens if that insurer becomes insolvent
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