Suitability Guidelines

Suitability information is required to determine whether the recommended product is appropriate for the applicant. Annuity cases are evaluated based on the applicant's individual circumstances unless the Distributor's suitability guidelines have been reviewed and approved by AXI Compliance.

If the applicant fails to provide the required suitability data, Axonic Insurance cannot complete its review and will reject the application.

In circumstances where the basis for a recommendation cannot be readily determined, or where the applicant falls outside the established thresholds and guidelines, we may require supplemental information or documentation to support the recommendation and to evidence that the proposed annuity is consistent with the applicant’s financial objectives.

Liquidity and Financial Thresholds

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

• After purchase, applicant has less than $50,000 in liquid net worth

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

• After purchase, applicant has less than $50,000 in liquid net worth and has an income less than $75,001

Factors to be considered:

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

Household liquid assets on the Supplemental Financial form includes:

• Checking accounts

• Savings accounts

• Certificates of Deposit

• Stocks/bonds/mutual funds

• Money Market accounts

• Free withdrawals from other annuities

• Cash value from any life insurance policies

• Any other accounts or investments that can be converted to cash without fees or penalties

 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 death claims and 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.

• Our standard threshold for owners below the age of 80 is no greater than a 5% net loss*. Net Losses* above 5% will require extra processing time, as they require an enhanced due diligence review, and additional forms including but not limited to:

  • A current carrier account statement.

  • For a fixed indexed annuity replacement, we will accept a written narrative summary from the producer.

    * Exchanges in California involving a net loss* of >0 will not be considered.   

Aged 80+

• As of December 1st, the maximum allowable net loss* before an exception review is required for annuity replacements recommended to owner(s) aged 80+ will change from a net loss* of 5% to 0%.

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

Factors to be considered:

• The value of any forfeited benefits or features related to the surrendered policy: Guaranteed Minimum Accumulation Benefits (GMABs), Guaranteed Minimum Death Benefits (GMDBs), and Guaranteed Lifetime Withdrawal Benefits (GLWBs)—if these benefits are no longer available after the surrender. The impact of these factors is determined by the suitability analysis which will depend on the client’s objectives for the exchange, and which features they are choosing to forfeit.

• Whether the applicant will incur a surrender charge or early withdrawal fee
  
  
• How the applicant will significantly benefit from this transaction over the life of the contract. Policy details include current interest rates, caps, participation rates, surrender charge periods, guarantee periods, initial bonus amounts, fees, limitations, riders, etc.
  
  
• Whether the applicant will lose a significant benefit by replacing the current annuity
  
  
• If the existing contract includes an income rider with a benefit value greater than the current cash surrender value, the case will be referred to for additional review by the Suitability Team.

• Any potential forfeiture of a death benefit or Guaranteed Minimum Accumulation Benefit (GMAB) may require additional review and approval prior to processing.

Documents Needed for Non-Natural Person Owned Applications

Trust Owned Annuities

• Trust Certification Form

• A copy of the Trust Documents including:

  • Title Pages

  • Pages listing all grantors/settlors and trustees

  • Pages listing the powers of the trustees

  • Signature Pages

Corporation Owned Annuities

• A copy of the articles of incorporation/charter/establishing documents

• Documentation of authorization by the corporation for the applicant to purchase the proposed annuity

• Proof of business address

Non-Profit Corporation Owned Annuities

• A copy of the articles of incorporation/charter/establishing documents

• Documentation of authorization by the corporation for the applicant to purchase the proposed annuity

• Proof of business address

• Proof of tax-exemption/501c status

AML Screening Process

AML screening is required for all owners, joint owners, entities and trusts at the time of application and must be completed before the 1035 Exchange/Transfer paperwork can be submitted to the ceding carrier or, if cash with app, before the policy can be issued.

Effective December 1st, we will no longer conduct AML screenings on primary beneficiaries at the time of application. We will instead perform the full AML screening on the beneficiaries prior to a payment being disbursed.   

Although we will not be conducting AML screenings on primary beneficiaries, we will be verifying the identity for all the primary beneficiaries. The primary beneficiary portion of the application should be completed accurately and in its entirety. Primary beneficiary verification will not hold up the issuance of the annuity contract.  

If Compliance is unable to verify the owner(s) and/or primary beneficiaries with the information submitted on the application and any supporting documentation, additional information may be required. Axonic may need to request additional information including but not limited to:

• Names

• Addresses

• Dates of Birth

• Social Security / Tax Identification Numbers (or any other relevant government identification numbers).

• Copies of other supporting documents, including a driver's license, passport, or government identification (including an alien registration card). Expired documents will not be accepted.

• For entities, documents may include a Certificate or Articles of Incorporation, a Business License, or Corporate Resolutions.

Power of Attorney  

Why do insurance carriers require their own specific Power of Attorney (“POA”) Certification Form even if a general POA exists?

Carriers often require their own specific Power of Attorney (POA) form for annuity applications, even if a general POA exists, primarily for risk management and to ensure the document meets their precise legal standards. General POAs are often not specific enough for the complex and sensitive transactions involved in financial products like annuities. 

 Why is a general POA not sufficient for annuity applications?

• A standard, general POA may not explicitly state the authority to conduct annuity transactions, such as making a withdrawal, changing beneficiaries, or purchasing a contract. Axonic Insurance’s specific form requires the authorized person to be granted this exact power, preventing ambiguity.

• POA laws can vary significantly by state. An insurer's standardized form is designed to meet all the legal requirements of the state where the annuity contract is issued. This helps prevent legal challenges based on mismatched requirements for witnessing, notarization, or specific language. For example, a POA drafted in one state may not meet the requirements of the state where the carrier or policy is located.

• To prevent fraud and abuse: Requiring our own form allows Axonic Insurance to mitigate the risk of financial abuse by ensuring a clear and direct line of authority. A specific form is also part of the carrier's broader effort to combat financial abuse, especially for older or incapacitated clients.

• To simplify the review process: When a carrier's own specific POA form is submitted, the review process is faster and more efficient because the Compliance team is already familiar with the form's language and knows it meets their requirements. This avoids the time-consuming process of deciphering and validating various custom-drafted legal documents.

• To track the document: Using our own form allows Axonic Insurance to better track the POA in its own systems and apply it directly to the specific annuity contract in question.

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