How to Structure an Annuity Contract

Study Level: Advanced
Delivery Method: Online self-study
Provider of Record: WebCE
Field of Study: Specialized Knowledge, Financial Planning
Prerequisites: A basic understanding of annuities and their purpose

Course Description
One of the challenges for financial professionals who sell or give advice about annuities is understanding the impact of properly structuring the contract: designating the contract’s owner, annuitant, and beneficiary in a way that supports a client’s objectives. This course provides that understanding. It covers the unique features of annuities that may be affected by contract structure, and details the differences between simple and complex structures and owner-driven vs. annuitant-driven contracts. The effects of an annuity’s structure on a contract’s death benefit are explored, as are common mishaps that may occur if annuities are not structured properly. The last section of the course considers the advantages and disadvantages of trust ownership of an annuity.

The course includes the following chapters:

• Unique Features of Annuity Contracts
• Tax Treatment of Annuity Distributions
• Elements of Annuity Structuring
• Effect of Annuity Structure on the Death Benefit
• Annuity Structure Mishaps
• Trusts as Annuity Owners

This is an advanced level course.

Learning Objectives
Upon conclusion of this course, students will be able to:

  • demonstrate understanding of the core annuity features that may be affected by annuity contract structure
  • describe the tax treatment of amounts received when a contract is annuitized versus other types of withdrawals from annuities
  • identify the elements that affect annuity structuring, including: the designation of the parties to the contract; whether the designation of the contract’s parties produces a simple or complex structure; whether the contract is owner-driven or annuitant-driven; and the contract’s provision for a death benefit and when it is payable
  • demonstrate understanding of the effect of annuity structure and design on the payment of death benefits
  • identify the consequences that may result from improper annuity structure
  • demonstrate understanding of the factors to consider before recommending annuity ownership by a trust

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