Avoiding Penalties on Annuity Withdrawals


All producers understand how important it is to know the products they sell. However, it's one thing to understand and explain a product's features and functionality; it's another thing entirely to be able to place the product into a client's hands with confidence that not only will the product serve the client's needs but that the client grasps how the product works, how it will perform, and what his or her responsibilities are with regard to its operation.

This course explores a narrow but important topic: how to avoid unnecessary penalties and fees on annuity withdrawals. It's imperative that producers advise clients on how annuities can and should be used in order to take full advantage of the benefits these products offer and avoid certain negative consequences.

Learning Objectives

Upon conclusion of this course, students will understand:

  • the basic principles of annuities and the different types of annuities
  • annuity benefits and drawbacks
  • how an annuity's lack of liquidity can be mitigated
  • how to avoid the common surrender charges insurers impose on their deferred annuity products
  • the tax implications of taking withdrawals from annuities before the age of 59½
  • how a substantially equal periodic payment plan (SEPP) can be used to avoid early distribution penalties, and how the elements of such a plan can be manipulated to meet client needs
  • the importance of educating clients with regard to the "do's and don'ts" of annuity withdrawals and distributions

Designed For

Life and health insurance producers; financial advisors

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License or Certification