Annuities

  • 2021 - NAIC - Annuity Disclosure Model Regulation (#245) - Project History -  6p
  • 2007 0624 - ThinkAdvisor - New Disclosure Documents Seen Aiding Annuity Purchasers, By Jim Connolly - [link]
    • Brenda Cude, a NAIC-funded consumer representative and a professor with the University of Georgia in Athens, said the project is important because its developers went right to consumers to ask them what they felt was important.
      • Consumer focus groups gave developers a better sense of what consumers read and what they need, she added. The overall opinion of consumers that assessed the work was that it is readable, she noted.
    • “I think it is admirable that an industry group says, ‘We need help doing a better job,’” Cude said.
      • There are different disclosure templates for variable and fixed annuities, she noted. “This is a requirement, and they’re saying, ‘Why shouldn’t we do the best that we can?’” she added.
    • “In many ways the insurance area is behind the curve, compared with other areas in the financial services industry in finding more effective ways of disclosure,” and this offers a way to catch up, Cude said.
  • 1977 - SOA - Effective Product Management, Society of Actuaries - 12p
  • 1980 1119 - GOV (Senate) - Taxation Of Certain Annuity Contracts And Normalization Requirements For Certain Public Utility Property: Subcommittee On Taxation And Debt Management Generally - 144p
  • 1989 - SOA - Anuuities: Is Anyone Making Money?, Society of Actuaries - 16p
  • 1995 - SOA - IV. Annuity Persistency Study, Society of Actuaries - 80p
  • 2005 - SOA - Annuity Risk Management Seminar, Society of Actuaries - 23p
  • John P. Fritz: Moving along to the annuity line, how do consumers view an annuity?
  • Allen D. Booth: How do consumers view an Annuity? What a change since ERISA!
    • ____ years ago, an annuity was $X per month for life to the American public, if indeed, the American public had any idea at all what an annuity was.
      • Not so today.
    • An annuity, in the mind of the American Consumer, is clearly a savings account with a guaranteed interest yield.
    • Surely, I exaggerate.
      • But maybe only momentarily.
    • It should be obvious that ERISA brought us, for the first time, into head-to-head competition with Banks and Savings and Loan associations.
    • At first, many of us felt that we would benefit from the advertising that other financial institutions were doing.
    • After all, they could spend money to advertise, but we had the marketing force, our agencies, in place and ready to move. Unfortunately, somewhere along the way the worm turned.
    • What with Federal disclosure forms pointing out sales charges, and Bank/Savlngs and Loan publicity, we have been bitten as an industry.

1977 - SOA - Effective Product Management, Society of Actuaries - 12p

  • 1981 0330 - JCS-9-81 - Description of tax bills (S. 388, S. 446, S. 464, S. 476, S. 499, S. 500, and S. 501) : scheduled for a hearing before the Subcommittee on Taxation and Debt Management of the Committee on Finance on March 30, 1981 - [link]
    • (p3) - Tax Treatment of Investment and Wraparound Annuities
      • Under rulings issued by the Internal Revenue Service in 1977 and 1980, earnings on assets invested in certain investment annuity contracts and "wraparound" annuity contracts are taxed currently to the individual owning the contract.
      • Under the bills, which are substantially identical in effect, tax would be deferred until benefits are paid under the contracts.
        • Thus, investment annuities and wraparound annuities would receive the same tax treatment accorded traditional commercial annuities under present law (Code sec. 72(a)). The provisions of the bills would apply upon enactment.
    • (p8) - "Wraparound Annuities"
      • The principles of Rev. Rul. 77-85 (earnings taxed currently to the individual) were recently extended by Rev. Rul. 80-274, 1980-42 I.R.B. 5, to certain "wraparound" annuity contracts.
        • A wraparound annuity is generally the same as an investment annuity except that the individual does not retain control over the investment and the insurer's reserve for the contract may be a separate account or the insurer's general reserve.
        • Under the wraparound annuity contract described in Rev. Rul. 80- 274, an individual could transfer cash, passbook savings, or a certificate of deposit in a savings and loan association to a life insurance company.
        • Under the contract, the asset (reduced by a fee) was deposited by the insurer in a separate account of the originating savings and loan association, 6 and invested in a certificate of deposit. v\Then the certificate of deposit matured, the insurance company was generally required to reinvest the proceeds in another certificate of deposit. The individual could surrender (or partially surrender) the contract before annuity benefits began and receive cash equal to the amount held in the account (less any applicable charges).
    • Issue
      • The issue is whether prior law, which permitted tax deferral under investment annuities and wraparound annuities, should be restored.
    • Explanation of the bills
      • Under the 'bills, which are substantially identical in effect, (1) the gross income of the owner of an investment annuity contract or a wrap- 4 The exclusion ratio test applies in computing the income element of an annuity payment under an investment annuity arrangement.
        5 In litigating challenging Rev. Rul. 77-85, the U.S. District Court for the District of Columbia issued a declaratory judgment that the ruling was unreasonable and that the Internal Revenue Service had exceeded its statutory authority in issuing it. On appeal, the order of the District Court was reversed. The appellate court held that the Anti-Injunction Act (Code sec. 7421(a)) barred relief to the plaintiff, marketers of investment annuities, and therefore did not address the merits of the investment annuity issue. Investment Annuity, Inc. v. Blumenthal, 609 F. 2d 1 (D.C. Cir. 1979), rev'g 442 F. Supp. 681 (D.D.C. 1977). 6 Wraparound annuitie~ could be invested in a mutual fund or publicly traded securities in addition to deposits in a bank or savings and loan association. 9 around annuity contract, and (2) the tax treatment of the reserves of a life insurance company under such a contract, would be determined without regard to Rev. Rul. 77-85 or Rev. Rul. 80-274. Accordingly, these types of annuity contracts would receive the same tax treatment accorded traditional annuity contracts nnder present law.
      • Effective date
        • The provisions of the bills would apply upon enactment.
      • Revenue effect
        • It is estimated that the bills would involve a moderate revenue loss for fiscal year 1981, but could involve substantial revenue losses for future years.
  • CDA - Contigent Deferred Annuity
    • NAIC - Contingent Deferred Annuity (A) Working Group - 2014-2, NAIC Proceedings
      • (p6-11) - 2014 0816 - 2. Heard a Presentation from the CEJ on Consumer Concerns with CDAs
  • Negrete v. Allianz Life Ins. Co. of N. Am. (estimated settlement value of $250 million),
  • In re Nat’l W. Life Ins. Deferred Annuities Litig. (estimated settlement value of $21.02 million),
  • In re Midland Nat’l Life Ins. Co. Annuity Sales Practices Litig. (estimated settlement value of $79.538 million),
  • Negrete v. Fidelity & Guar. Life Ins. Co. (estimated settlement value of $52.7 million),
  • and In re Am. Equity Annuity Practices & Sales Litig. (estimated settlement value of $129 million).

Steven M. Jodlowski - rgrdlaw.com/attorneys-Steven-M-Jodlowski.html