Educational PurposeUse this guide to clarify the purpose of a recommendation, understand how a proposed contract works, and identify guarantees, risks, costs, and restrictions — so you can avoid making a decision based only on a verbal explanation or sales illustration.
Consultation Information
Date
Professional’s name
Firm or agency
Phone or email
Insurance company issuing the contract
Proposed annuity name
Amount being considered
Source of funds
1. Questions About the Professional
- What licenses and registrations do you hold?
- In what capacity are you speaking with me today?
- Are you acting as an insurance agent, broker, investment adviser, or another type of professional?
- Which insurance companies are you authorized to represent?
- Are you comparing several companies or recommending only one?
- How much experience do you have with retirement-income planning?
- Have you worked with clients whose circumstances are similar to mine?
- Have you had customer complaints or disciplinary actions?
- Where can I verify your license and professional history?
FINRA recommends asking about a professional’s experience, registrations, credentials, disciplinary history, services, and conflicts of interest — and independently checking the answers.
Notes
2. Questions About Compensation
- How will you be paid if I purchase this annuity?
- Will you receive a commission?
- What is the commission amount or percentage?
- Will your firm receive additional compensation?
- Are there bonuses or incentives connected to this product?
- Would you receive different compensation if I selected another product?
- Will I also pay an advisory or management fee?
- Will you continue receiving compensation after the purchase?
Compensation explained
Do I understand how the professional is paid? (Yes / No / More explanation needed)
3. Questions About Why the Annuity Is Being Recommended
- What specific financial need would this annuity address?
- Why is this product appropriate for my retirement objective?
- Which of my expenses or risks is it intended to cover?
- How does it fit with my Social Security, pension, investments, savings, and insurance?
- Why is the recommended purchase amount appropriate?
- Why should I act now rather than wait?
- What could make this annuity unsuitable for me?
- What are the strongest reasons not to purchase it?
The need the annuity is intended to address
The professional’s reason for recommending it
My concern about the recommendation
4. Questions About the Type of Annuity
Ask the professional to identify the complete product type. Is it:
- Immediate
- Deferred
- Fixed
- Multi-year guaranteed
- Fixed indexed
- Variable
- Registered index-linked
- Deferred-income or longevity annuity
- Other
Also ask:
- How does this type differ from the other available annuity types?
- Can the contract value decline?
- Is the product an insurance product, a security, or both?
- Is the contract designed mainly for accumulation, income, or both?
- When may income begin?
- Is this intended to be a long-term contract?
Variable annuities contain both insurance and securities features and may involve complex investment options, expenses, and contract provisions.
Professional’s explanation
5. Questions About Guarantees
- What exactly is guaranteed?
- Is the principal guaranteed?
- Is an interest rate guaranteed?
- Is a minimum contract value guaranteed?
- Is lifetime income guaranteed?
- How long does each guarantee last?
- Which guarantees require an optional rider?
- What actions could reduce or eliminate a guarantee?
- Are any advertised values not guaranteed?
- Which insurance company is legally responsible for the guarantees?
Guaranteed features
Non-guaranteed features
Conditions that must be followed
Annuity guarantees are contractual obligations of the issuing insurer and depend on its financial strength and claims-paying ability.
6. Questions About Contract Value and Income Value
- What is the actual contract value?
- What is the surrender value?
- Is there a separate income or benefit base?
- Can the income base be withdrawn as cash?
- How does the income base increase?
- Is that increase guaranteed or illustrated?
- Does the income base continue increasing after income begins?
- Which value determines beneficiary benefits?
- Which value is shown most prominently in the illustration?
| Value | Amount |
|---|---|
| Initial premium | $ __________ |
| Contract value | $ __________ |
| Surrender value | $ __________ |
| Income or benefit base | $ __________ |
| Death-benefit value | $ __________ |
Can I clearly explain the difference between these values? (Yes / No / More explanation)
7. Questions About Growth or Interest Crediting
For a fixed annuity, ask:
- What interest rate is currently credited?
- How long is that rate guaranteed?
- What is the guaranteed minimum rate?
- How are renewal rates determined?
For a fixed indexed annuity, ask:
- Which index is used?
- Are dividends included?
- What is the participation rate?
- What is the cap?
- Is there a spread or margin?
- What is the floor?
- What crediting method is used?
- Can the cap, spread, or participation rate change?
For a variable annuity, ask:
- Which investment options are available?
- What are their expenses?
- Can principal be lost?
- How are investment options selected and changed?
For a registered index-linked annuity, ask:
- What portion of a market loss could I experience?
- Does the contract use a buffer or floor?
- What limits apply to gains?
- What happens if I withdraw before the index term ends?
Indexed annuities may limit credited gains through participation rates, caps, spreads, crediting formulas, or excluded dividends, so index-linked does not mean receiving the index’s full return.
Growth method explained
8. Questions About Fees and Costs
- Is there an annual contract fee?
- Is there an administrative fee?
- Is there a mortality and expense charge?
- Are there investment-option expenses?
- Is there an income-rider fee?
- Is there a death-benefit rider fee?
- Are there advisory fees?
- Are there transfer or transaction fees?
- Are there surrender charges?
- Are there indirect costs through caps, spreads, participation rates, or reduced credited rates?
- Can any fee increase?
| Cost | Percentage | Estimated Annual Amount |
|---|---|---|
| Contract expenses | ______% | $ __________ |
| Rider expenses | ______% | $ __________ |
| Investment expenses | ______% | $ __________ |
| Advisory expenses | ______% | $ __________ |
| Other | ______% | $ __________ |
| Estimated total | ______% | $ __________ |
9. Questions About Surrender Charges and Access
- How long is the surrender period?
- What is the surrender charge in each contract year?
- Does each additional contribution begin a new surrender period?
- How much may I withdraw annually without an insurer surrender charge?
- Could a market-value adjustment apply?
- Are emergency or hardship waivers available?
- What happens after an excess withdrawal?
- Would an excess withdrawal reduce future income?
- Could it reduce the death benefit?
- Can I fully surrender the contract?
- What taxes or tax penalties may apply?
| Contract Year | Surrender Charge |
|---|---|
| Year 1 | ______% |
| Year 2 | ______% |
| Year 3 | ______% |
| Year 4 | ______% |
| Year 5 | ______% |
| Later years | ______% |
Amount available annually without an insurer surrender charge
10. Questions About Retirement Income
- When can income begin?
- What happens if I begin earlier or later?
- Is income created through annuitization or an income rider?
- What is the estimated monthly and annual payment?
- Is the income for one life or two?
- Does income continue for life or for a fixed period?
- Can the payment increase?
- Can it decrease?
- Is the income election reversible?
- What happens if the contract value reaches zero?
- What happens after an excess withdrawal?
- Are rider fees still charged after income begins?
Proposed income-start date
Estimated monthly income
Income option
- Life only
- Joint and survivor
- Life with guaranteed period
- Fixed period
- Lifetime-withdrawal rider
- Other
11. Questions About Inflation
- Will the income remain level?
- Is an increasing-income option available?
- Is an increase guaranteed or dependent on performance?
- What formula determines the increase?
- Is there a maximum annual increase?
- Would choosing increasing income reduce my initial payment?
- How might the payment’s purchasing power change over 10, 20, or 30 years?
- What assets will remain available for potential long-term growth?
Inflation feature included
Effect on the starting payment
12. Questions About a Spouse and Beneficiaries
- Does the income cover one person or two?
- What amount continues after the first spouse dies?
- Does survivor protection reduce the initial income?
- What happens if I die before income begins?
- What happens if I die shortly after income begins?
- Is there a death benefit?
- Is there a guaranteed payment period?
- Is there a return-of-premium feature?
- What value will beneficiaries receive?
- How will beneficiary withdrawals or payments be taxed?
- Can beneficiaries be changed?
Expected survivor income (per month)
Expected beneficiary benefit
Important limitation
13. Questions About Taxes
- Is the contract qualified or nonqualified?
- Is it being funded with pretax or after-tax money?
- How will withdrawals be taxed?
- How will scheduled income payments be taxed?
- Could an additional tax apply before age 59½?
- Will required minimum distribution rules apply?
- Does placing the annuity inside an IRA provide any additional tax benefit?
- Could an exchange or transfer create tax consequences?
- How might beneficiaries be taxed?
- Should a qualified tax professional review this before I proceed?
Tax question requiring professional guidance
14. Questions About Replacing an Existing Contract
- Will I pay a surrender charge on the existing contract?
- Will a new surrender period begin?
- Which guarantees will I lose?
- Which riders or death benefits will I lose?
- Are any existing guarantees better than those currently available?
- What new benefit justifies the replacement?
- What is the total cost of changing contracts?
- Will the professional receive new compensation?
- Has a written side-by-side comparison been provided?
- Could the exchange qualify for tax-deferred treatment?
- Have tax consequences been reviewed?
FINRA advises comparing the new and existing contract’s investment choices, risks, fees, surrender charges, guarantees, and benefits before exchanging a variable annuity.
Main benefit being gained
Main benefit being lost
New surrender period
15. Questions About the Insurance Company
- What is the insurer’s complete legal name?
- Which company is responsible for paying benefits?
- What are its current financial-strength ratings?
- Have the ratings recently changed?
- How long has the company issued annuities?
- Where can I review state regulatory information?
- Are any other insurers involved?
- What happens if the insurer experiences financial difficulty?
Issuing insurer
Ratings reviewed
Concern requiring further research
16. Questions About Alternatives
- What alternatives did you evaluate?
- Could the same need be addressed without an annuity?
- Did you compare more than one annuity company?
- Did you compare different types of annuities?
- Could I keep part of the money liquid?
- Could systematic retirement-account withdrawals address the need?
- Could delaying retirement or Social Security reduce the income gap?
- Could a pension election provide similar income?
- What are the advantages and disadvantages of doing nothing now?
Alternatives discussed
Why the recommended annuity was preferred
Alternative I still want to investigate
17. Documents to Request Before Deciding
- Product brochure
- Complete contract
- Buyer’s guide
- Disclosure documents
- Personalized illustration
- Fee and expense schedule
- Surrender-charge schedule
- Rider documents
- Index-crediting explanation
- Prospectus, when applicable
- Replacement comparison, when applicable
- Insurer financial-strength information
- Professional compensation disclosure
- Free-look instructions
- Written summary of guarantees and non-guaranteed features
Documents received
Documents still needed
18. End-of-Consultation Review
Before leaving the meeting, ask yourself:
- Do I understand why this annuity is being recommended?
- Can I explain how the contract works?
- Do I know which benefits are guaranteed?
- Do I know which values may change or decline?
- Do I understand the income base and contract value?
- Do I know how much money remains accessible?
- Do I understand every fee and surrender charge?
- Do I know what happens after an excess withdrawal?
- Do I understand the spouse and beneficiary provisions?
- Do I know how the professional is compensated?
- Have alternatives been compared?
- Have I received the complete written documents?
- Do I have enough liquid money remaining outside the contract?
- Have I avoided making a decision under pressure?
My most important unanswered question
Information I need to verify independently
Person I may consult before deciding
- Tax professional
- Estate-planning attorney
- Independent financial professional
- Retirement-plan administrator
- State insurance department
- Other
Consultation Decision Record
My decision today
- I am not ready to decide
- I need additional information
- I want to compare other contracts
- I want independent professional guidance
- I do not believe the contract fits my needs
- I am prepared to review the formal application and contract documents
Reason
Follow-up date
Free-look period, if purchased (days)
Final review deadline
The TrueWealth Takeaway™
A productive annuity consultation should leave you with greater understanding — not greater pressure. Do not leave knowing only the illustrated income, the advertised rate, the potential bonus, or the word “guaranteed.” Leave knowing what the contract is designed to accomplish, what you may gain, what access you may give up, what it will cost, what could change, and what happens during your lifetime and after your death.
— The TrueWealth Perspective™
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Educational Disclaimer: This material is provided for educational purposes only and should not be interpreted as financial, insurance, legal, tax, or investment advice. Individual circumstances vary. Consult qualified professionals before making financial or insurance decisions.