LI 

f.inan6al Securit\t, .. for Lif.e. 

Gary Hughes 

Executive Vtce President & General Counsel 

June 24, 2015 

The Honorable Thomas E. Perez 

Secretmy of Labor 

United States Department of Labor 

200 Connecticut Ave, NW 

Washington, DC 20210 

Dear Mr. Secretary: 

On behalf of the American Council of Life Insurers and its approximately 300 member companies 

operating in the United States and abroad, I would like to address concerns you raised about the 

regulation ofvariable annuities at the House Health, Education, Labor and Pensions hearing on June 

171'"· 

ACLl advocates in federal, state; and international forums for public policy that supports the life 

Insurance marketplace and the 75 million American familles that rely on life insurers' products for 

financial and retirement security. ACL! members offer life insurance, annuities, retirement plans, longterm care and disability income insurance and reinsurance, representing more than 90 percent of 

industry assets and premiums. 

The issuance and sale of variable annuities is regulated more comprehensively than most financial 

products oriented toward retirement security. This is accomplished through a combination of state and 

federal Jaws, rules and regulations. As the Department of Labor continues its consideration ofa 

proposed change to the definition of "fiduciary"' under ERISA, we believe an appreciation for this 

regufatory construct is essential. 

State Insurance Regulatory Considerations 

The variable annuity product approval and sales process is heavily regulated at the state level. State 

insurance departments have broad powers to assure proper sales practices and to audit company 

compliance with applicable rules and regulations through periodic market conduct examinations. 

Insurance departments also have robust consumer affairs divisions that are responsive to consumer 

questions and complaints. In addition, insurance agents selling these products must pass rigorous 

licensing requirements and can lose their licenses for inappropriate sales practices. 

Relevant state regulatory provisions include: 

"' Rules mandating truthful disclosure in advertising, which rules encompass print, audiovisual, 

and web-based materials used in mass communication media. Among other things, these rules 

prohibit misrepresentation of policy benefits. 

Arneric;om Council of Ute Insurers 

1.01 Constilv:ion Avenl)e, NW. Washir115'ton, DC 20001·2133 

(202) 624·2.120 t (866) 953-4083 r garyhughes@acii.com 

www.acli.com 
• Laws and regulations calling for the approval by state insurance officials of every variable annuity 

contract form before rt can be offered and sold. 

• Requirements for extensive product disclosures, including a buyer's guide developed by the 

National Association of Insurance Commissioners (NAIC). The guide contains basic information 

that consumers should know about variable annuities including how money is invested, 

applicable fees, how rates are calculated and how often applicable rates can be changed, and 

available options and restrictions for withdrawing money. A copy of the buyers guide Is 

appended to this letter. 

• Laws identifying and prohibiting "unfair trade practices" that govern virtually all aspects of the 

variable annuity sales process. 

• Regular market conduct and financial examinations during which state insurance regulators 

review company sales and compliance programs. 

• Requirements for company and agent licensing specific to variable annuity products. 

• Rules establishing standards for determining whether a variable annuity is suitable for a 

particular client and requiring life insurance companies to oversee the propriety of 

recommendations made by sales representatives to purchase a variable annuity. 

• Required consumer disclosure when a sales representative recommends replacing an annuity 

with another insurance product. 

• Regulations addressing the use of senior-specific certifications and professional designations. 

• "Free lookH provisions enabling a variable annuity purchaser not satisfied with a purchase 

decision to return the product for a full or partial refund. Most "free look" periods last 10 days, 

but rules vary by state. Neither mutual funds nor any other financial product have this feature. 

Federal Securities Regulatory Considerations 

Because variable annuities are also regulated as securities, the federal securities laws are fully 

applicable to the issuance and sale of these products. The Securities and Exchange Commission (SEC) 

and the Financial Industry Regulatory Authority (FINRA) set rules governing the sales practices of brokerdealers selling these products. 

• Federal securities laws impose broad antifraud prohibitions applicable to the sale of variable 

annuities and glve the SEC significant enforcement authority. 

• SEC requires that potential buyers of an individual variable annuity receive a prospectus 

summarizing the annuity's funding options. The content of variable annuity prospectuses, 

particularly the disclosure provisions regarding fees and risks, is reviewed by the SEC. 

• FINRA issues member conduct rufes to govern the activity of variable annuity sales 

representatives, including standards addressing the suitability of variable annuities for customers 

as well as advertising and supervision standards. 

__________________________________________ ............... -· 
• Variable annuity advertbing must be filed with and reviewed by FINRA. 

• Variable annuity contract owners may use the FINRA arbitration process to rectify grievances 

concerning the sale of the product. Federal securities laws also give the variable annuity 

purchaser a private right of action against the issuer for material misstatements, material 

omissions, and fraud. 

• We also note the SEC's recently announced Retirement-Targeted Industry Reviews and 

Examinations initiative designed to ensure that brokers and advisers are offering reasonable 

investment advice and disclosing conflicts to retirement-age investors. 

Beyond these state and federal regulatory provisions, it should be noted that under specific 

circumstances, such as death or terminal illness, most annuity contracts allow early wlthd rawafs without 

incurring surrender charges. They may also allow annual withdrawals of a certain amount for any reason 

without triggering a surrender charge., 

In sum, variable annuities are highly regulated products uniquely providing consumers with guaranteed 

lifetime income. For many, this product constftutes an important component of their retirement portfolio. 

ft is not in consumers' best interests to unreasonably constrain the at:tility of advisors to provide relevant 

guidance and education regarding these products as we believe your proposed rule does. 

We will continue to work constructively with you and your staff to craft a rule that truly benefits America's 

workers and retirees and appropriately facilitates their ability to make informed decisions regarding their 

retirement security. 

Thank you for your consideration of our views. 

{~el~ 

Gary Hughes 

NAIC 

1he National Association ofinsurmce Commissioners is an asrociatfon of state insurance reguhitoryofficials. 

1hls association helps the wrious ia.suraru:e departtnent5 fu coordinate insurimce laws fur the benefit of all consumers. 

This guide does not endorse any company or policy: 

Reprinted by .•. 
NAIC Buyer's Guide for Deferred Annuities 

It'& important that you understand how annuities can be different from each other so you can 

choose the type of annuity that's best :fur you. The purpose of t:llli Buyer's Guide is to help you do 

that. This Buyer's Guide isn't meant to offer legal, financial, or tax advice. You nuywant to con.suit 

.independent advisors that specialize in these areas. 

This B11fer's Guide is idmut: defe:tted annuities .in gaier:d and !Jome of thcir most common 

features. The annu.ityyo11 select ma.y have unique teatlln$ this Guide doesn't describe. It's important 

for you to carefully read the material you're given or ask your annuity sale5person, ezpecially if 

you're interested in a particular annuity or specific annuity fuatun:s. 

This Buyer's Guide includes questions you should ask the insurance company or the annuity 

salespers-00 (the agent, producer, broker, or advisor). Be rore )nu'rc satisfied with the answers before 

you buy an annuity. 
© 1999, 2007, 2013 National Association oflnsuranee Conui:Ussfoncrs. All righta reserved. 

Printed in the United Stat:eS of America 

No part of this book may be reproduced, stored in a retrlewl system. or transmitted in any fonn or by any means, el.ectmci.c or 

mechanical, including photocopying, rccw:diog or any storage o.r retrieval syrtcm, without written pcnnission from the NAIC. 

NAIC Executive Office 

444 North Capitol Street, NW 

Suite 701 

Washington, DC 20001-1509 

202.471.3990 

N.AIC Central Ofiici:: 

1100 Walnut Street 

Suite 1500 

Kamas City, MO 64106-2197 

816.&42.3600 

NAIC CapitalMarket!i & 

Investment Analym Office 

48 Wall Street, 6th Floor 

New York, NY 10005-2906 

212.398.9000 
Buyer's Guide for Variable. Deferred. Annuities 

Table of Contents 

Wb.at Is an Annujty? ......................................................................................... 1 

When Anttuifu;s Sta.rt to Maks; Inwme Paym1<nt§ .......................................................... -....... 1 

How Deferred Annuities &e Alikt; .................... -.......................................... .-....................... 1 

Ho:w Deferred Annuities Are Different ................................................................................... .2 

How Does the Value of a Deferred.Annuity Chaqge? ........................................ 3 

Vatiable Annuioo ..................................................................................................................... 3 

What Other Infuunation Should You Consider? ...................................... ~ ....... 3 

Fees, Ch~. and A.i;iju.stments ................................................. - ............................................ 3 ..... 

J:imv Anmrities Mm P;zynirow ............................................................................................... 4 

~h,ru:tuiti@ Are Tmd _, ..................................................................................................... 5 

Findi"4i" au Annuity That'1 Right fOJ Y2y .............................................................. -··--·····---······5 

<J.ru:stions You Should Ask .............................................................. -....................................... 6 

When You Receive Your Annuity Contract .................................................. - ........... - ...... -. .... 6 

© 2013 Natkm:tl A$socl.ation of Insurance Commi85ioners 
Buyer's Guide for Variable Deferred.Annuities 

1 

What Is an Annuity? 

An annuity is a amtract with an i.nsunmce company. All annuities have one feature in common, and it 

makes annuities different from other financial producil!. With an ammiJy, the insurance company f>romiYe:s ta 

pay you int:!lme i9n a regular lmsit for a perilhi of timt you cb<ii>se-including the rest of your life. 

When Annuities Start to Make Income Payments 

Some mmuities begin paying income t-0 you Goon afti:r you buy it (an immed.im: annuity). Others begin at 

some later date you choose (a deferred annuity). 

How Deferred .Annuities Are Alike 

There arc ways that mm deferred annuities are alike. 

Tuey have an accumulation. period and a payout period. During the accumuhtion period, the 

value of your annuity changes has.e.d on the type of annuity. During the payout period, the annuity 

makes income payments to you. 

They offer a basic death benefit. ff you die during the accumulation period, a deferred annuity 

with a basic death benefit Plo/S some or all of the annuity's value to your survivors (~d 

beudicia.ries) either in one payment or multiple paymerrhi over time. The amount is usually the 

gn:atcr of the annuity account value or the minimum guaranteed surrender value. 1£ you die 

after yuu begin to reccive income pa:ymcnts (.s..nmUt:lze), your chosen 5UIVivors may not receive 

anything a~ 1) your annuity guarantees to pay 

out at least as much a• you pa.id into the anm.Uty, or 

2) you chose a payout option that continues to make 

payments after your death. For an extra cost, you may 

SO'W't'.CS ofinfurmation be able to choose enhanced death benefits that increase 

the value of the: bask death ~ncfit. 

Ccmtnu:t: The legal doosment 

between yoo and the insurunce 

compdny that binds both of you to 

the terms of the agreement. 

DisclvtUR: A document that 

desert bes the key feritures of your 

annuity, lndudlng what fs guaranteed 

al'ldwhatl.sn't, and your annuity's 

fees and charge:;. If you buy a variable 

armulty, you'li receive a prospectus 

that lndudes detailed information 

about lnvemnent obfectlves, risks, 

charges, '1nd expenses. 

lllllStratico.: A personalized 

document that shows how your 

anooity :features might work. Ask 

what Is guaranteed and what Isn't 

and what assumptions were made to 

create the illustration. 

You ll8Ually have to pgy a charge (called a swrende:r 

o:r withdrawal chlltge) if you take some or all of 

your money out too early (usually before a set time 

period eruls). Same annuities may not charge if you 

withdn.w &mall amounts (fur example, 100Ai or less 

of the acrount v:tlue) each year. 

Any money your annuity earns is tax.ddi::md. That 

means you won't pay income tax on earnings until 

you take them out of the annuity. 

You can add featu.res (calied ride.ts) to mllIIY 

annuities, usually at an extra cost. 

An annuity salesperson must be licensed by ywr 

state i.nsumnce department. A person i;elling a 

Vllriahle annuity also must be registered with 

FINRA1 as a representative of a broker/dealer 

that's a FINRA member. In sowe states, the state 

Hecurities department also mullt license a penoo. 

selling a variable annuity. 

© 2013 National &sod<ll:ion oflnslll'.llrn;e Cumrniosioaers 
Buyer's Guide for Variable Deferred Annuities 

Irururance companies sdl annuities. You w-a.nt to buy from 11.n insurance company that's £Illlllcially 

sound. There are various ways you = research an insurance company's financial strength. Yo11 

cm visit the insur.mce company's webaitto o:r ask your annuity salesperson for more .infonnatinn. 

You also can review an insurance company's rating from an independent rating agency. }?our main 

firms currently rate insurance rorn.pawe&. Tuey are A.M. B1:$t Company, Stanrlud and Poor's 

Corporation, Moody's lnvestar& Service, and F'.tteh Ra.tings. Yo11r insurance department may have 

more information about inmrance companies. An easy way to find con.tact infurmation fur your 

in.surance department is to ~sit =w.l'W.::.arg and click on "States arulJnmdictiom Map." 

Insu.tance wmpanies usually pay the annuity salesperwn afu:r the sale, b11t the payment doesn't 

roduce the amount you pay into the annuity. You can ask your salesperson how they earn money 

funn the sale. 

How Deferred Annuities Are Different 

There are differenl:eS among deferred annuities. Some of the diffurences are: 

Whether you pay for the annuity with one or more than one payment (calkd a premium). 

'Ihe types and amounts of the tees, chaxges, md ~ While almost all annuities have 

rome fees and charges that could reduce your accountVlllue, the types and amounts Cll.11 be diffi:rent 

among annuities. &ad tbf Fees, Cbtxrges. and .tldfartmmtr mtirm in this Bir.ryers Guide far mqre 

ivfonn111:itin. 

Whether the annuity is ,a fu:ed annuity or a vari~ annuity. How the value of an annuity changes 

is different depending on whether the annuity is fixed or wrillble. 

Fixed ammitiies guarantee your money will earn at least a minimum interest rate. Fixed 

annuitie5 may earn interest at a rate higher than the minimum but only the minimum tatc is 

guaranteed.. Tue insuraru:e company sets the rares. 

Fixed itulaed anmlities are a. type of fured annuity that earns in.l:el:est based on changes in 

a market index:, which measures bow the ma.dret or part of the market pei:furms. Tue interest mte is 

guaranteed to never be le!il: than zero, even if the market goes down. 

Variable armuities earn Jnvestmc:ot :returns based on the perl"o=nce of the investment 

portfulios, known as "subaccounts,p whe:re yoo choose to put your money. Tue return earned in a 

varfahle annuity isn't guaranteed. The valu.e of the subaccounts you choosr.:: could go up or down. If 

they go up, you could make money. But, if the; value of these suhaccounts goes down, you could lose 

money. Also, income paymentll to you c0uld be .less than you c::xpeeted. 

Same :annuities offer a pumium honm, whlch usually is a lump sum amount the innu=e company 

adds to your annuity when you buy it or when you add money. It's usually a set percentage <If the 

amount you put into the amm.i.ty. Other ann:uitks ofter an intm:st bomui, which is an amount the 

insurance company adds tO your annuity when you earn inten:st. It's usually a. set pc:rcentage of the 

i.nrere5t earned.You mayn<>t be ahle to withdraw some or all of your premium bonus fur a set period 

af time. Alm, you rrmla lose the bonus if JC" tall£ s111nt trr ull of tbe mtmey out of your tUUtUity 

'IJJithiusetperiDd if time. 

© 2013 Natkmlll fus<>cia.tion Qfinaurance Commissioners 2 
Buyer's Guide for Variable Deferred Annuities 

3 

How Does the Value of a Deferred Annuity Change? 

Variable Annuities 

Money in a variahle annuity earns a return based on the pcrfun:nancc of the invemnent portfolios, known 

as ~mhaccounts," where you choose to pllt your money; Your investment chokes likely will include 

subacrounts with different types and levels of risk. Your choices will affect the return you eam on your 

2Il.Iluity. Subaccounts usually have no guaranteed return, but you may have a choice to put a:ome money in a 

:fixed i!lteICst rare aecount, with a rate that won't change for a set period. 

'Ihe value of your annuity can ch!ing<: every day as the subaccounts' V'alues change. If the suhaccounts' 

values increase, your annuity earns money. But there'r mi g:Jtn4ntee that the wllirMc af the subacr:uuntt 'tJJill 

increase. If the subacr:rmml 'llahm go down, you may em! up with kss money in your annuity than you paid 

into it. 

An insurer may offei:-scventl vcnilons of a variable deferred 

annuity product. 'The diffurent versions usually a.re 

identified as share classes. The key diffcreru;es between 

the version8 are the fues yott'll pay cvcty yt:tr you own 

the annuity. The rules that apply if you take money out 

of the annuity also may be different. Read the pro&pecru& 

am:fully . .Aak. the annuity B~n to explain the 

differences among the versions. 

What Other Information 

Should You Consider? 

Feesr Charges,, and Adjustments 

Fees and charges reduce the value of your annuity. They 

hdp cover the insurer's ooats to sell and manage the 

annuity and pay ~nefu:s. The in1;urer may subtract these 

i:osts directly from your annuity's value. Most annuities 

have fees and charges but they can be different for 

different annuities. Read the contract and disclosure or 

prospo::tus carefully and ll5k the annuity sakspen1on to 

describe these costs. 

A sun:ender or withdrawalclnuge is a cllarge if you take 

part or all of the money out of your annuity during a set 

period of fani;, The ~ is a percentage of the amount 

you take out of the annuity. The percentage usualo/ goes 

down each year until the srurender charge period ends. 

Look at the contract and the disclosure or prospectus for 

details about the charge. Also look fur any wahrers for 

events (such as a death) or the right to take out a small 

amount (umially up to 10%) each year without paying the 

charge. If you tllke all of your money out of an :umuity, 

you've surreoderecl it and no longer IDive my right tn 

future income payments. 

Annuity Fees 

and Charges 

Contu.rtfec -A flat dollar amount or 

percentage charged once or annually. 

Pcrc:entage of pwxbue pa.ynll:ll'.f:-

A front-end ~tes food or other charge 

deducted from each premium paid. 

The percentage may vary over time. 

P.t'l:lllbnn tax-A tax some states 

~on mmultles.. The Insurer 

may subtrctct the amount of the tax 

wheo }'OU pay your premium, when 

you wlthdrawyourcontractvalue, 

when YQU start to receive income 

payments, or when ft pays a death 

benefit to your benefidary. 

Trans!l.Ction me -A charge for 

rert(l'ln troru;actlons, such as transfers 

or withdmwals. 

Mortality Md ~e(M&.E) 

rl«cbrge-A fee clwrged on 

varlllbk an11111tles. It's" percentage 

of the account wlue investerl in 

subac:i::oi.mts. 

Underly:lng:fundcharges -

fees and charges on a variable 

11.onurty's subaccounts; may indude 

!ll'l investment mrmagement fee, 

distrfbutfon and service (12b-1) feei;, 

and other fees. 

© 2013 Natiomd Associ:ttlon oflo= Commissioners 
Buyer's Guide for Variable Deferred Annuities 

Some annuities have a Market Vitlue Adjnstment: (MVA). An MVA could increase or decrease your 

annuity's account value, c;u;h surrender value, and/or death benefit value if you. withdraw money from your 

a<:coutrt:. In general, if interest mtes are lerwer when you withdraw money than they were when you bought 

the annuity, the "NfVA could increase the amount you could take &oat your annuity. lf interest nttes are 

~~~~~~m~~~~~~~~~~~~ 

annuity. Every MVA calculation is different. Check your contract :1.nd diocl.orure or prospectus for details. 

How Annuities Make Payments 

Arumitize 

At. some future time, you cau choose t:o imnwtize your annuity and start to i:cceive guaranteed fixed incotne 

pll)'IDcnts for lifi: or a period of time you choose. After pa:pnents begin, you can't take any other money 

out of the annuity. You also usually can't change the amount of your payments. For more infurmation, see 

a Pa)'...¢ Options" in this Buyer's Guide. If you die befure the payment period ends, your survivors may not 

receive any payments, depending on th1! payout option you choose. 

Full Withdxawal 

You can withdraw the cash 5tmend.er value of the 

annuity in a lump sum payment and end your annuity. 

You'll li!ely pay a t:barge to tio this if it's during the 

wrrewkr dNzrge pericti. If you withdraw your annuity's 

cash surrender value, your 11mru.ity is cancelkd. Once 

that happens, you can't start or continue to rcccive 

regulaT iocome paymenl:6 from the annuity. 

You roay be able to with.chaw .l'Qme of the money fiom 

the am:utity's cash snm:nder value withou:t c:nding the 

annuity. Most annuities with su.i:.render charges let you 

tike out a certain amount (umally up to 10%) eru::h 

year without paying surrender charges on that amount. 

Check your contract and tfu;ciosure or prospectus. Ask 

your annuity salesperson about othi::.r ways yuu can take 

money from the annuity without paying chargi:s. 

Living Bendits for VariableA.ruruities 

Vari:ible ~nnufties nuy offer a benefit at an extra cost 

fuat gW11antccs you a minimum account value, a 

minimum lifetime income, or minimum withdrawal 

amounts regardless of how your subaccounts pcrfurm. 

See "Variuk Annuity Li<umg Benefit Op!Ums" at right. 

Check your contract and disdos~ or prospectus or ask 

your annuity salespcrron ab-0-utthese optiollll. 

© 2013 National .fu!so ciation of I ru;urance Cominiooioru:.rs 

Gwa:nmteedMinlm:mn 

A.i::aimulation .Bendit (GMAB}-

Cuatllntees yo1Jr account value wlll 

equal some pen:entage (typically 

tool:) of premfums less witlidrnwals, 

crt a set future date (far example,. at 

maturity}. lf your annuity is worth 

less tltan the guaranteed amount at 

that date, yoor lru:urance compi:my 

will add the cltff ereru:e. 

~Miullnuxnlneome 

Bendit (GMIB)-Guarantees a minimum lifetlme Income. Y<>U 115uolly 

mu.>t choos-e this benefit when you 

buy the annuity alld mu.st annuftize 

to use the benefit There may be 

a waltfng period before you can 

annurttze using th/> benefit. 

Guacmteed LliWJ:ne Withdrawal 

Bendit (GLWB)-Guarantees you 

can make wfthdrt!Wals for the rest 

of your life, up to a set maximum 

percentage ead1 year. 

4 
Buyer's Guide for Variable Deferred Annuities 

5 

How Annuities Are Taxed 

Ask a tax pi:ofessional about your individual siruarlon. The information below is general and sbonld nGt be 

considered true advice. 

Current federal Jaw gives- annuities special tax 

treatment. Income tax on annuities is deferred. That 

means you areilt taxed on any interest or investment 

returns while your moacy is in the anrmity. This isn't 

the same as tax-free. You'll pay ordinary income tax 

when you tnkc a ·withdrawal, receive an income stream, 

or re~ each annuity payment. When you die, your 

survivors will typicall:y owe inoome taxe£ on any death 

benefit they receive from an annuity. 

'There are other ways to ~ave that offer tax advantages, 

including Individual Retirement Accounts (IRA$). 

You can buy an annuity to fund an IRA, hut you rtlsri 

can fond JOi4T IR.A other 'W~ and get the same tax 

advantages. When you rah: a withdrawal or receive 

paymenn;, you'll pay ordinary income tax on all of 

the money yuu receive (not jUllt the intexest or the 

investment return), You also may have to pay a 10% tax 

penalty if you withdm:w money bdnre you're age 59~. 

Finding an Annuity That's Right for You 

Payout Options 

You'll have Q choice about how to 

receive fncome payments. These 

choices usually Include: 

• For your lifetime 

• For the longer of your 

lifetime or your spo='s 

lifetime 

• For" set time period 

• For the longer of your 

llfetlmeora set time 

period 

An annuity s:ilespeGon who ouggestii itn annuity must choose one that they think is right furyou, based on 

infonnat:ion from you. They need complete infurm.ation about your life and financial situation to make a 

suitable recommendation. Expect a salesperson to ask about your age; your financial situation (a11setll, debts, 

income, tax smtus, how you plan to pay fur the annuity); your tolerance fur risk; your financial Cfbjecti"VeS 

and experience; your fiunily citcumstanc:es; and howyau plan to use the annuity. If you aren't comfortable 

with the annuity, ask your annuity sa.lespei:wn to explain why they recommended it. Don't buy an annuity 

you dcin't understand or that doesn't seem right fur you. 

W'ithin each annuity, the insurer may guarantee some ~Ines but not others. Sc>ine ~6 may be 

only fur a yei.r or less while others could be longer. Ask about risks and decide if you om accept them. For 

=tmple, it's po!lliible you won't get all of your money back or the return on your annuity may be lower than 

you expected. It's alro possible yau wun't be able to withdraw money you need from your annuity with.out 

paying fee~ or the annuity payments may P<>t be as mu.ch as you need to reach your goals. These .risks vary 

with the type of annuity you buy. All product guarantees depend on the inimrance CQmpany'& financial 

strength and claims-paying ability. 

© 2013 NatioPal A&SOciatioP oflnstm1.m:e Commi.&~i<mero 
Buyer's Guide for Variable Deferred Annuities 

Questions You Should Ask 

Do I 1.Ulderstand the risks of an ammityi' Am I comfortable with them? 

How will this annuity help me meet my overall financial objectives ancl time horizon? 

Will I use the 1UU1uity fur a. long-term goal such as retirement? If so, how could I 

rtehieve that goal .if the income from the mnuity isn't as much as I expected it to be? 

What fcatu=; and benefits in the annuity, other than tax deferral, make it 

appropriate for me? 

Does my annuity offi:r a guaranteed minimum interei;t £'.i.tei' If so, what is it? 

If the annuity includes riders, do I understand how they wodci' 

Am I talcing full -advantage of all of my other tax-deferred opportrutlties, 

such as 401(k)s, 403(1>)&, aud. IRAs? 

Do I undct0tand aU of the annuity's fi:cs, chacges, and adjustments? 

Is there a limit on how much I can take out of my annuity each year without 

paying a surrender charge? Is there a limit on the total amount I can withdraw 

during the surrender clrarge period? 

Do I intend to keep tny money in the s.nnu.ity lo.ng enough to avoid paying 

any surrender ch:nges? 

Have I consulted a bu advis()l" and/or considered how buying an annuity 

will affect my tax liability? 

How do I make sure my chosen surviwn; (beneficiaries} will receive any 

payment from my annuity if! die? 

When You Receive Your Annuity Con.tract 

"When you receive your annuity contract, carefully review it. Be sure it mati;hcs your understanding. Also, 

n::ad the disclosure or prospectus and other materials from the insumn.ce company. Ask your annuity 

salesperson to explain anything you don't understand. In many snttes, a law gives you a set number of days 

(uruilly 10 to 30 days) to change yuur mind about buying an annuity after you receive it. This often is calk:d 

a &ce look or right to reto.tn period. Your contract and disclosure or prospectus should prominently state 

your free look period. If you decide during that time that you don't want the annuity, you can cont.act the 

insurance complll}' and return the contr:oc.t. Depending on the state, you'll either get hack all of your money 

nr your current ai::co<.Lri.t value. 

C 2013 National Association ofinsru:ance Commisaioners 6