Suitability FAQs

The maximum acceptable net loss for an annuity exchange is 5% for applicants younger than 80 years of age. For clients over 80, the net loss cannot be greater than 0%. For California applicants, the net loss cannot be greater than 0%.

Net loss is calculated by subtracting the current surrender charge, inclusive of any applicable Market Value Adjustment, after adding any applicable premium bonus.

Exchanges that involve a net loss exceeding 5% require additional review and documentation, including, but not limited to:

• A current account statement from the existing carrier
• For fixed indexed annuity replacements, the producer will provide a written narrative summary.
• Any exchange resulting in a net loss greater than 5% will require enhanced due diligence review and may be denied. These reviews will require extra processing time, as such cases may also be escalated to the Compliance Committee for review and approval.

Yes. AXI considers required minimum distributions (RMDs) as part of the annuity application review for all products. This includes evaluating whether the applicant needs to take an RMD from the proposed account, whether they are already taking RMDs from an existing account, and when future RMDs will be required.

If an RMD is required in the calendar year of a proposed 1035 exchange to AXI, we recommend that the RMD be taken from the ceding carrier before the application is submitted to AXI.

Withdrawals taken during the first contract year of an AXI annuity will incur a surrender charge, as the 10% free withdrawal provision is not available until after the first contract year anniversary.

For annuities that include a Premium Bonus or Enhanced Premium Bonus, RMD calculations will not include any unvested portion of the bonus.

Exchanges involving the forfeiture of an income rider are reviewed on a case-by-case basis.

There are additional sections within the application where the producer can state the client’s reasoning for this exchange.

• Producer’s statement – at the bottom of the page
• Suitability Questionnaire - page 3 at the top of the page
• Side by Side Comparison Form - at the bottom of the page.

If the producer does not explicitly state in the application that the client is willing to forfeit the income rider in alignment with their financial objectives, Suitability will request additional clarification.

AXI will not deny a case due to income rider forfeitures or Guaranteed Lifetime Withdrawal Benefits (GLWB) if such rider does not align with the client’s future financial objectives, as it may not be applicable to their future financial needs.If the client indicates income is an objective, we will follow up with the client and/or producer for additional clarification.

Regarding the forfeiture of a Guaranteed Minimum Death Benefit (GMDB), we will review the client's objectives, as such benefit may not be applicable to their future financial needs, before determining if the case has met suitability thresholds. If the client indicates passing assets to beneficiaries, we will follow up with the client and/or producer for additional clarification, if applicable.

AXI will apply any applicable premium bonus in the net loss calculation.

Yes, AXI will 1035 Exchange from life insurance policies.

We accept the following:

• Whole Life Insurance – builds cash value over time. You can use the accumulated cash value to fund an annuity.
• Universal Life Insurance – includes both traditional universal life and indexed universal life, because the accumulated cash value that can be surrendered for an annuity.
• Variable Life Insurance – Since the policy is invested in underlying investments, the value may fluctuate with market performance, so the amount available for the annuity may vary.

Yes, we will consider exchanges from life insurance policies that have active loans. Additional requirements apply - see next question.