Suitability Guidelines

 

Liquidity and Financial Thresholds

For applicants aged 65 and older, cases may be rejected if after purchase:

• The applicant has less than $50,000 in liquid net worth
• The applicant has less than six months of monthly expenses liquid in the event of an emergency.
• All annuities owned by the applicant represent more than 50% or more of his/her net worth.

For applicants aged 64 and younger, cases may be rejected if after purchase:

• The applicant has less than $50,000 in liquid net worth
• The applicant has less than three months of monthly expenses liquid in the event of an emergency.
• All annuities owned by the applicant represent more than 50% or more of his/her net worth.

If the applicant exceeds or is near these thresholds, a Supplemental Financial Form outlining liquid from non-liquid assets and monthly household income and expenses is required.

Other considerations that may enhance the applicant's financial flexibility:

• Monthly and yearly disposable income
• Other unique circumstances that can be accounted for in the suitability process

Replacements

For all replacements, tangible and significant benefit to the applicant must be proven.

• Any funding from an existing annuity will be considered as a replacement, including annuities surrendered within 60 days of receiving an application.
• An Annuity Comparison Form is required for all replacements of an existing annuity. For applications with multiple replacements, a separate Annuity Comparison Form for each replacement is required.
• Any replacement within two years of the original annuity purchase date will only be considered on a case-by-case basis. A current account statement will be required.

Net Loss

• Contract owners under the age of 80, the maximum allowable net loss* is 5%. Net Losses* above 5% will require additional processing time due to an enhanced due diligence review. 

  • The following documents must be provided for an exception review:
    
    • A current statement from the existing carrier
    • A letter from the applicant acknowledging and accepting the surrender charges, penalties, or loss associated with the proposed exchange. The letter must:
      
      • Identify the amount of the applicable surrender charge, penalty, or loss
      • Explain the applicant’s rationale for the replacement in relation to the current financial objectives
      • Describe why the proposed contract better aligns with the applicant’s financial goals

• Contract owners 80 years of age and older, transactions resulting in a net loss* greater than 0% will require additional Compliance review and approval before the exchange may proceed. Please provide evidence showing how the exchange results in a substantial financial benefit to the consumer.
  • The following documents must be provided for an exception review:
    
    • A current statement from the existing carrier
    • A letter from the applicant acknowledging and accepting the surrender charges, penalties, or loss associated with the proposed exchange. The letter must:
      • Identify the amount of the applicable surrender charge, penalty, or loss
      • Explain the applicant’s rationale for the replacement in relation to the current financial objectives
      • Describe why the proposed contract better aligns with the applicant’s financial goals.

• For California exchanges, transactions resulting in a net loss* greater than 0% and involving a contract owner age 65 or older require additional Compliance review and approval before the exchange may proceed. Please provide evidence showing how the exchange results in a substantial financial benefit to the consumer.
  • The following documents must be provided for an exception review:
    • A current statement from the existing carrier
    • A letter from the applicant acknowledging and accepting the surrender charges, penalties, or loss associated with the proposed exchange. The letter must:
      • Identify the amount of the applicable surrender charge, penalty, or loss
      • Explain the applicant’s rationale for the replacement in relation to the current financial objectives
      • Describe why the proposed contract better aligns with the applicant’s financial goals.

*Net Loss of Account Accumulation Value is calculated by subtracting the current surrender charge, including any applicable Market Value Adjustment (MVA), from the account accumulation value after adding any applicable premium bonus.

 

For exchanges involving an existing income rider, after accounting for potential accumulation benefits, AXI must offer a higher benefit.

 

Any net loss* resulting from these exchanges will be evaluated in conjunction with the loss of existing benefits, guarantees, as well as any applicable fees or penalties.

 

For applications with two covered persons, the age of the oldest applicant will be used to determine net loss threshold.