FCSLA Annuities Quiz

Thank you for your interest in selling annuities for FCSLA Life.

At the end of this training module, you will be required to input your contact information. Please don’t exit the training without completing the contact information and submitting your answers. For more information regarding products and benefits available to you and your clients/members, please visit fcsla.com or contact the Agent Administrator, at 216-468-1029.

All agents are required to submit State Specific Annuity Training Certificate of Completion in addition to the completion of this training. Check with the Department of Insurance in each state in which you are licensed to do business to make sure you are in compliance with state requirements.

All producers must complete this product specific training prior to soliciting annuity business for FCSLA. If you have not completed this module AND your state specific annuity training, any annuity applications submitted will be returned and must be re-signed and dated after the completion of this course. No exceptions will be made.

The NAIC Model Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities was adopted in July 2008. A majority of states have adopted the Model, in full or in part, prohibiting the use of false or misleading designations. Of particular concern is when words such as “senior” or “elder” are combined with words like “certified,” “advisor,” or “specialist.” Some states limit designations to only those specifically approved and listed by law. Likewise, the use of professional designations for financial professionals is also regulated. In order to comply with all applicable advertising laws, when advertising FCSLA and/or FCSLA products, FCSLA agents should not:

use senior-specific certification or other professional designations unless they have been approved by the FCSLA Compliance Officer and the certification/designation has been maintained as required by issuer; or
use the term “Financial Planner”, or any similar professional designation in connection with FCSLA or the solicitation or sale of FCSLA insurance.

If you have any questions regarding the use of professional designations, please contact Karen Visocan, Compliance Officer, at 800-464-4642 ext. 1050.

Only approved materials may be used to market FCSLA annuities. Product information can be found at fcsla.com.

Any advertisement must be preapproved prior to use. Contact your Regional Sales
Manager or FCSLA Life to obtain Compliance approval.

Begin FCSLA Company Specific Annuity Training

Question 1

FCSLA Elite Annuities are approved in 48 states and the District of Columbia (not NH or MS). Licensed agents must have resident and/or non-resident appointment PRIOR to soliciting business for FCSLA. Contact Agent Administration at 800-464-4642 for efficient state appointment assistance.

1. Can Mississippi residents be members of FCSLA?(Required)

No, FCSLA is not Authorized to do business in Mississippi.

Yes, members are allowed to live in Mississippi or New Hampshire even though FCSLA is not authorized to do business there. We just can't sell there.

Question 2

The following pages describe The Elite Series Annuities. Some features common to all 3 (Silver-5-year, Gold-7-year, Platinum-10 year):

Withdrawals of interest only may be calculated and distributed monthly beginning from day one (minimum $100). NO other monthly income may be taken. Up to 10% penalty free withdrawal may only be taken once per contract year during contract years. After the surrender charge period is over, up to 4 withdrawals per year may be taken, OR monthly interest only payments (minimum $100).
Qualified annuities may be annuitized for 5 - 30 years (any length of time, without restriction, within reason), or up to maximum life expectancy.
Withdrawals of interest-only may be taken monthly, quarterly, or semi-annually. The minimum payment is $100.
Four regular withdrawals can be taken per contract year, however, only one per contract year, up to 10% of the account balance, will be penalty-free.
The Legacy Annuities (sold prior to 2005) have no restriction on the number of withdrawals that can be taken (minimum payment $100). Non-qualified annuities may be annuitized for any term (5 - 30 years). Qualified annuities cannot be annuitized longer than life expectancy.

The Elite Series Annuities can be annuitized, however, the minimum term would depend on how long the annuity has been deferred. For instance, if I open a Platinum Elite Annuity this year and one year from now I want to take settlement payments, the minimum term would be 9 years.

2. Suppose Mr. Banks wants to annuitize his Silver Elite Annuity in Year 2. What is the minimum payout term he may select?(Required)

3 Years

5 Years

It depends on his age.

Question 3

The Silver Elite Annuity is a 5-year, Flexible Premium Deferred Annuity (see illustration). Eligible Issue Age: 0 through 85. Minimum purchase of $250. Premium deposits of $100 or more may be made at any time. Maximum Lifetime contribution is $500,000.

Owner/Annuitant may take a one time per contract year withdrawal, of up to 10% of the account value at the time of the withdrawal, without penalty, during all years including year 1.

The five-year schedule of early withdrawal charges is as follows:

Year 1: 6%
Year 2: 5%
Year 3: 4%
Year 4: 3%
Year 5 :2 %

Withdrawals after the fifth contract year are completely penalty free (no rolling charges), even if subsequent deposits are made. Limit of 4 withdrawals per calendar year. Withdrawals made prior to age 59 ½ may incur IRS penalties.

Our competitive interest rates are credited daily, and can change at any time without notice. Rates may be adjusted up or down, but will never go below the guaranteed minimum rate established by the annuity contract.

Check www.fcsla.com for current credited rates.

3. If Mr. Jones, age 58, opens a Silver Elite Annuity with $5,000, and makes subsequent deposits of $5,000 in years 2, 3, 4, and 5, what is the surrender charge in year 6 on his withdrawal of $25,000?(Required)

It's too complicated to try to figure out.

Question 4

The Gold Elite Annuity is a 7-year, Flexible Premium Deferred Annuity. (See illustration - This is not a complete illustration. Your clients should only see complete illustrations.) Eligible Issue Age: 0 through 85. Minimum purchase of $250. Premium deposits of $100 or more may be made at any time. Maximum Lifetime contribution is $500,000.

Owner/Annuitant may take a one time per contract year withdrawal, of up to 10% of the account value at time of withdrawal, without penalty, during all years including year 1.

The seven-year schedule of early withdrawal charges is as follows:

Year 1: 8%
Year 2: 7%
Year 3: 6%
Year 4: 5%
Year 5: 4%
Year 6: 3%
Year 7: 2%

Withdrawals after the seventh contract year are completely penalty free (no rolling charges), even if subsequent deposits are made. Limit of 4 withdrawals per calendar year. Withdrawals made prior to age 59-1/2 may incur IRS penalties.

Check fcsla.com for current credited rates.

4. Owners of FCSLA Elite Annuities may make one-time, penalty free 10% withdrawals during the first year.(Required)

True

False

Question 5

The Platinum Elite Annuity is a 10-year, Flexible Premium Deferred Annuity (see sample - This is not a complete illustration. Your clients should only see complete illustrations). Eligible Issue Age: 0 through 79. Minimum purchase of $250. Premium deposits of $100 or more may be made at any time. Maximum Lifetime contribution is $500,000.

Owner/Annuitant may take a one time per contract year withdrawal, of up to 10% of the account value at time of withdrawal, without penalty, during all years including year 1. The ten year schedule of early withdrawal charges is as follows:

Year 1: 9%
Year 2: 9%
Year 3: 8%
Year 4: 7%
Year 5: 6%
Year 6: 5%
Year 7: 4%
Year 8: 3%
Year 9: 2%
Year 10: 1%

Withdrawals after the tenth contract year are completely penalty free (no rolling charges), even if subsequent deposits are made. Withdrawals made prior to age 59-1/2 may incur IRS penalties.

Check fcsla.com for current credited rates.

5. Annuitants on of the FCSLA Elite annuities must be 16 years of age or older.(Required)

True

False

Question 6

All the FCSLA deferred annuities are Flexible Premium Deferred Annuities (FPDA). Here is an example of the Platinum Elite Annuity receiving additional premium after year one. (This is not a complete illustration. Your clients should only see complete illustrations.) Please note, there are no rolling surrender charges.

6. What are the surrender charges in year 11, if the client makes an additional deposit of $5,000 in year 9?(Required)

0. There are no rolling surrender charges.

Question 7

The immediate annuity is based upon an Elite series product. Therefore, a 5 or 6 year SPIA is essentially an annuitized Silver annuity currently paying 3.25%. A 7, 8, or 9 year SPIA is a Gold paying 3.5%, and 10+ years of annuitization is a Platinum, with a rate of 3.75%. The interest rate that is credited is based upon the length of the SPIA and current crediting rates as determined quarterly by the Board of Directors.

The maximum age for a Platinum annuity is 79. Therefore, the maximum age for a 10 year or longer SPIA is 79.

The maximum age for a Silver or Gold annuity is 85. Therefore, everyone from age 80-85 may have up to a 7 year SPIA or 5 years plus life payout.

A SPIA payout of Life Expectancy may be calculated for persons of any age to purchase a SPIA, however, if the life expectancy is under 5 years, we will not issue a SPIA, as the minimum SPIA term is 5 years.

Members who already own a deferred annuity are not subject to these parameters. They may annuitize Non-Qualified accounts for just about any term from 5-30 years. They may annuitize Qualified accounts for any term from 5 years up to life expectancy.

Eligible Issue Age: 0 through 85.

Minimum purchase of $2,000.00.

Settlement options are:

Specified Amount (minimum $100 per payment)
Specified Period (5-30 years)
Life Annuity Without Guarantee
Life Annuity With 5 Year Guarantee
Life Annuity With 10 Year Guarantee
Life Annuity With 15 Year Guarantee
Life Annuity With 20 Year Guarantee

Generally, if the annuitant dies prior to receiving all guaranteed payments, the remaining present value of such guaranteed payments is payable to the named beneficiary.

7. Can Mr. Smith, age 86, purchase an immediate annuity with a specific period of 10 years?(Required)

Yes

Question 8

FCSLA Annuities may be owned by one natural owner or a personal trust. There may be only one annuitant. The age of the annuitant will be used to determine the settlement options if a life option is selected.

Both Qualified and Non-Qualified annuities are retirement accounts for tax purposes. Therefore, even though there may not be surrender penalties after the initial term of the contract, there may be IRS penalties applied for early withdrawal if the withdrawal is taken before the insured is a g e 59-1/2.

Life insurance agents that are not CPAs or licensed to offer tax advice by their state of residence or non-residence may not give tax advice. FCSLA agents are instructed to refrain from offering tax advice and suggest that prospective and current members consult with their own tax professionals if they have questions regarding taxation of their annuities.

8. Mr. and Mrs. Brown always title their assets with both names. Can they both be owners of the same annuity at FCSLA?(Required)

Yes

Question 9

A Non-Qualified SPIA may be used to spread an unrealized tax burden across a number of years rather than taking annual withdrawals.

EXAMPLE: Mr. Jones has been saving for 15 years into his Non-Qualified deferred annuity. His contributions total $80,000 and the current value is $137,000. He would like to have income of $12,000 per year, for as long as the money in this account will last, in addition to his pension and social security benefit. He is well beyond the surrender charge period. Mr. Jones wants to pay as little tax as possible.

9. Mr. Jones should select a settlement option of specific Amount ($12,000) in order to spread the taxable portion of his account value out over a number of years.(Required)

True

False

True, but Mr. Jones should consult his own tax professional for tax advice.

Question 10

FCSLA annuities may be qualified or non-qualified.

A qualified account may be Traditional IRA, Roth IRA, SEP or SIMPLE.

Accounts that are rollovers from 403(b), 401(k) or Retirement Plans will be Traditional IRAs at FCSLA.

Qualified and Non-Qualified funds may not be mixed. Nor will Roth and Traditional IRA funds be mixed.

10. Steve wants to simplify his life, so he asks you to consolidate all of his money, both IRA and Non-Qualified, into one annuity. Your recommendation:(Required)

Consolidate all the funds into one account to be tracked by FCSLA.

Steve may consolidate his funds into 2 accounts, one IRA, and one Non-Qualified.

Question 11

See the Single Premium Immediate Annuity Illustration.

11. According to the Illustration above, what is the rate at which the settlement option will be paid?(Required)

.0005%

.05%

3.75%

Question 12

See the Single Premium Immediate Annuity Illustration.

12. If the woman, whose annuity is illustrated, lives to be 100 years of age, what will her monthly income payment be at that time?(Required)

$0, she will be out of money.

$510.00

$375.00

Question 13

Download and print state specific applications on our website: Annuity Applications by State

FCSLA requires that a Non-Resident License must be obtained in each state in which you write business with us. Please make sure you are appointed in each state in which you sell annuities. If you have questions, please contact the Agent Administrator, at 216-468-1029.

13. If I live in Ohio and my client lives in Ohio, but she is paying for an annuity for her granddaughter who lives in Tennessee, do I have to be appointed in TN?(Required)

Yes

Question 14

Let's go through the application.

See Page 1.

Section 1: Personal information of the Annuitant. An individual is a member if he/she already owns a life insurance or annuity certificate with FCSLA. The Annuitant and Owner of FCSLA annuities must be the same person. The only exception to this rule is if the Annuitant has a trust. The trust can be the owner, and the Annuitant is then the Grantor of the trust.

Section 2: a) Select product (Silver, Gold, Platinum) or b) SPIA.

Benefits to Commence at Age: Select a date with your client at which time he/she will be required to take a payout of some sort. This date can be as soon as the end of the term of the product or as late as age 121.

Premium Notice: Would your client like to be reminded periodically that he/she can make additional deposits?

Section 3: Beneficiary Designation

Section 4: Replacement Information

14. Since Sally is 92 years old, and not eligible to purchase an annuity, can her trust own the annuity and name her daughter as the annuitant?(Required)

Yes

Questions 15 and 16

Let's continue to go through the application.

See Page 2 - Fraud Warnings
See Page 3
See Page 4 - Agent Report (make sure to include your Agent ID# and contact information)

From the By-Laws adopted Oct 8, 2014, Section II. Membership: "The Association will have two membership categories to expose more people to our traditions, culture and values. To advance fraternalism and share our common bond, all members are encouraged to participate in fraternal activities. Requirements of Membership

A Principal Member is:
1. A person of Slovak or Slavic birth or descent who is a Catholic of any Ritual Church; or
2. A person of any other creed who is married to a Catholic or Slovak descent or any other Slavic descent; or
3. Any person in the family of a Principal Member, subject to the review of the Board of Directors; and
4. Insured in only those classes of insurance, including annuities, and in such amounts as approved by the Board of Directors.
5. Not to exceed the age of fifteen (15) years for a juvenile applicant, and not less than sixteen (16) years for an adult applicant, or as defined from time to time by the Board of Directors.
6. Any member of the Association that satisfies the criteria in (a), (b) or (c) above and (d) and (e) above of who was a member of the Association as of October 8, 2014.
A Fraternal Member is:
1. A Christian who is following his/her belief.
2. A person who is insured in only those classes of insurance, including annuities, and in such amounts as approved by the Board of Directors, but does not meet the other qualifications of a Principal Member.
3. Entitled to all the Association's fraternal benefits.
4. Not able to have voting privileges at the National level.
5. Not eligible to hold office at the National level.
6. Not to exceed the age of fifteen (15) years for a juvenile applicant, and not less than sixteen (16) years for an adult applicant, or as defined from time to time by the Board of Directors.
All members are:
1. Citizens of the United States of America.
2. Sound in body and mind.
3. Recommended by a member in good standing.
4. Notwithstanding Section 3(a) above, all members of the Association prior to October 8, 2014 shall be deemed to be Principal Members."

15. FCSLA certificate holders who were members prior to October 8, 2014 are Principal Members, even if they aren't Slavic and Catholic.(Required)

True

False

16. The privileges that Principal Members have and Fraternal Members don't have, is that Principal Members can hold national office and vote at the national level.(Required)

True

False

Question 17

Membership Eligibility: Please ask your clients to answer all the questions. According to our by-laws, what our members have in common is our Christian beliefs. That is what allows us to remain a Fraternal Benefit Society, and not a commercial carrier. Maintaining our Not-For-Profit status allows us to continue providing excellent products with outstanding benefits to our members. Thank you for complying with this important request.

See Membership Eligibility Form

Annuity Suitability

FCSLA requires suitability review on all annuity applications regardless of the amount or type of annuity. Generally, FCSLA will not accept annuity applications without the suitability questions completed.

FCSLA may make an exception based on a cover letter from the agent explaining that they have reviewed the suitability questions with the proposed annuitant, and they feel that their client is suitable for the annuity being sold. The agent will have full responsibility for the suitability of the sale of that annuity.

FCSLA uses an independent CPA to review suitability for annuity sales and abides by that review.

These pages show the annuity suitability form and signature page FCSLA uses in annuity applications.

17. Can an applicant who is opening a new $1,000 Platinum Elite Annuity waive the suitability requirement?(Required)

Yes

Question 18

Annuity Best Interest Requirements

Most states have adopted the Annuity Best Interest Standard. Please visit FCSLA.com for details.

There are two components to the Best Interest Requirement, Education and forms. FCSLA will need a copy of the Best Interest CE completion certificate before an agent can write annuity business in states that require Best Interest. Once you have taken Best Interest in one state most other states are reciprocal.

Please see the required forms for all annuity sales in Best Interest states on these 8 pages. Please note that these are Ohio forms and there may be some state variations.

Please see FCSLA.com for more details.

18. Under the Best Interest regulation your obligations to your client are:(Required)

Reasonable Diligence

Reasonable Care

Reasonable Skill

All the above

Questions 19 and 20

Important Terms to Know and Understand

Annuitant - One to whom an annuity is payable, or a person upon the continuance of whose life further payment depends.
Annuity - A periodic income payable during the lifetime of one or more persons, or for a specified period.
Application - A form supplied by a life insurance company, usually filled in by the agent and medical examiner (if applicable) based on information received from the applicant. The form is signed by the applicant and is part of the insurance contract if a policy is issued. This form gives information to the Home Office Underwriting Department so it may consider whether a life insurance policy will be issued and if so, in what classification and at what premium rate.
Attained Age - By ordinary insurance definition, a person 25 years, 6 months and 1 day old is generally considered to have attained the age of 26.
Beneficiary - The person to whom the proceeds of a life insurance contract are payable at the death of the insured.
Cash value - The amount available to the owner when a policy is surrendered to the company. During the early policy years, the cash value equals the policy reserve less a "surrender charge"; in the later policy years, the cash value usually equals or closely approximates the reserve value at time of surrender. A schedule of the cash value per $1,000 (or unit) at the end of various representative policy years is generally included in the contract.
Certificate - The written contract between a fraternal benefit society and the member purchasing the insurance, stating the terms and full details of the agreement.
Contingent Beneficiary - An alternate beneficiary designated to receive payment usually in the event that the original beneficiary has died before the insured.
Contract - The chief requirements for the formation of a valid contract are (1) parties having legal capacity to contract, (2) mutual assent of the parties to a promise, or set of promises, generally consisting of an offer made by one party and an acceptance thereof by the other, (3) a valuable consideration, (4) the absence of any statute or other rule making the contract void, and (5) the absence of fraud or misrepresentation by either party. A life insurance policy meeting these requirements qualifies as a contract.
Deferred Annuity - An annuity contract which provides for the postponement of the commencement of an annuity until after a specified period or until the annuitant attains a specified age. Deferred annuities may be purchased either on the single premium or annual premium basis. Deferred annuities are also known as "retirement annuities."
Fiduciary - A person who occupies a position of special trust and confidence, e.g., in handling or supervising the affairs or funds of another, involving the exercise of confidence and trust.
Fixed Annuity - The traditional annuity which guarantees the periodic payment of a specified amount of income per installment for life or other specified period.
Fraternal Insurance - Insurance protection provided by fraternal benefit societies, organized without capital stock and not for profit, and maintaining a lodge system. Practically all fraternal benefit societies operate in accordance with special fraternal insurance regulation, and under supervision of the state insurance authorities.
Immediate Annuity - An annuity contract which provides for the first payment of the annuity at the end of the first interval of payment after purchase. The interval may be monthly, quarterly, semiannual, or annual.
Legal Reserve - Policy reserves maintained according to the standard established by the insurance laws of the various states.
Liabilities - An insurance company's liabilities consist of its immediate or contingent policy obligations, unpaid claims, funds left under settlement options, assigned surplus, the miscellaneous debts.
License - Certification, issued by a state department of insurance, that an individual is qualified to solicit insurance applications for the period covered. Usually issued for a period of one year, renewable on application without necessity of the individual's periodic repetition of the original qualifying requirements. Each agent should study carefully the licensing laws and regulations of his/her own state.
Life Annuity - An annuity which is payable during the continued life of the annuitant. No provision is made for the guaranteed return of the unused portion of the premium.
Life Expectancy - The average duration of the life remaining to a number of persons of a given age, according to a given mortality table.
Mortality Tablez - The instrument by means of which are measured the probabilities of life and death. A mortality table, based on large groups of people covering a long period of time, shows death rates, compiled for all ages.
Policy - The name given by the commercial companies to the written contract of insurance corresponding to the fraternal benefit certificate of a fraternal society.
Premium - The term used for the rate changed for a given form of insurance policy or annuity contract at a given age, or the amount payable to the company for the benefits provided under a certain contract.
Premium Notice - Notice of premium due, sent out by the company or one of its agencies, to an insured.
Proceeds - The net amount of money payable by the company at the death of an insured or at the maturity of a policy.
Rebating - The granting of any form of inducement, favor, or advantage to the purchaser of a policy not available to all under the standard policy terms. Rebating in some states is a penal offense for which both the agent and the person accepting the rebate can be punished by fine or imprisonment, and with the agent also subject to revocation of license.
Rider - A special policy provision, added to the standard contract, which expands or limits the standard benefits thereof (e.g., Double Indemnity, Waiver of Premium, family income, etc...).
Single Premium - The lump sum required to cover the entire cost of a life insurance or annuity contract.

19. Life insurance and annuity agents have a fiduciary relationship with their clients. What does that mean?(Required)

The agent should act in the best interest of the client regarding the sale of FCSLA annuities only.

The agent occupies a position of special trust and confidence and should always act in the best interest of the client.

The agent may only sell to relatives.

20. Mary is retiring. She asks for help from General Agent Bob Schmidt. Bob knows Mary is looking around at different companies, and he really wants to roll her 401(k). Bob stands to make a big commission, so he tells Mary she can take her family to his beach house for a week if she buys from him. This is called:(Required)

Rebating

Rewarding

Entertainment Expense

Question 21

DOL PTE 84-24 Disclosure Form

The Department of Laber Form PTE 84-24 Disclosure Form is required to be completed for all qualified annuity business. Please see these 6 pages for details regarding the DOL PTE 84-24 form. You can also go to FCSLA.com for details.

Please note that the Commission percentage that is required to be filled in on the DOL form is 2.5%. If the agent is a General Agent (GA) then they would enter their own name in the blank FCSLA General Agent who is getting paid the additional .5% to total 3% commission.

If the agent writing the annuity is a Representative Agent (RA) of FCSLA then they would enter the name of their General Agent in the blank space for FCSLA General Agent.

Licensed Recommenders would enter their own name in the blank space for FCSLA General Agent.

21. Recordkeeping rules for the DOL PTE 84-24 Form require the agent to securely keep records of a qualified annuity sale including the DOL form for:(Required)

Six Months

One Year

Six Years

Forever

Contact Information

Name(Required)

First Last

Email(Required)

Phone(Required)

State(Required)